Bright Packaging Pvt. Ltd. V. Commissioner of Income Tax and Income Tax Officer Ward-1(2)

WP/10089/2015

AI Insights

M/s. Bright Packaging Pvt. Ltd. filed a writ petition against the assessment order and demand notice issued by the Income Tax Officer, which demanded a sum of Rs.2,01,06,680. The assessment was based on the non-genuine nature of certain share capital contributions, which the petitioner contested. The court examined whether the petitioner had been denied the principles of natural justice and whether the extraordinary jurisdiction under Article 226 should be invoked despite the availability of an alternative remedy through the statutory appeal process. The court concluded that the petitioner had not complied with the procedural requirements within the given time frame, and thus, the assessment order was upheld.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 812363 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 24-04-2015
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX AND OTHERS vs. CHHABIL DASS AGARWAL (2014) 1 SCC 603
• Laws Referred To: Income Tax Act, 1961, Article 226 of the Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: ANIL B
• Keywords: Appealable order; Assessment Order; Income Tax; Investment; Natural Justice; Scrutiny
• Section: 143(2); 68; 133(6); 246A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF APRIL, 2015 BEFORE THE HON’BLE MR.JUSTICE ARAVIND KUMAR WRIT PETITION NO.10089/2015 (T-IT) BETWEEN: M/S.BRIGHT PACKAGING PVT. LTD. REP. BY ITS MANAGING DIRECTOR, SRI.A.K.BANSAL, NO.162-B, BYKAMPADY INDUSTRIAL AREA, NEW MANGALORE – 575 011 ... PETITIONER (BY SRI.ANIL KUMAR.B, ADVOCATE) AND: 1. COMMISSIONER OF INCOME TAX C.R.BUILDING, ATTAVARA, N.G.ROAD, MANGALORE – 570 001 2. INCOME TAX OFFICER WARD-1(2), IST FLOOR, C.R.BUILDING, ATTAVARA, MANGALORE – 570 001 …..RESPONDENTS (BY SRI.E.I.SANMATHI, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER AND DEMAND NOTICE BOTH DTD. 20.02.2015, PASSED BY THE R-2 DEMANDING RS.2,01,06,680/- VIDE ANNEX-A AND B TO THE W.P. 2 THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R Petitioner is an assessee under Income Tax Act, 1961 (for short the ‘Act’) and for the assessment year 2012-13 return of income came to be filed electronically on 28.09.2012. Said return of income was selected for scrutiny and as such, notice under Section 143(2) of the Act came to be issued to petitioner on 26.08.2013 and accordingly, petitioner has appeared before second respondent on various dates and is said to have submitted details sought for by the Department. During the course of adjudication proceedings second respondent noticed that petitioner had raised Rs.20 Crores by issuance of two (2) lakh shares for Rs.10/- each at a premium of Rs.990/- per share and as such, notice under Section 133(6) of the Act came to be issued to all the 21 share holders to whom the shares had been issued by the petitioner. Nine (9) noticees responded to same and confirmed the investment. Remaining 12 is 3 said to have not responded to the said notice. As such, second respondent proposed to treat a sum of Rs.12,60,00,000/- received by the petitioner from 12 companies, as not genuine and proposed to add to the income of petitioner under Section 68 of the Act. 2. Petitioner was called upon to file objections, if any, on or before 18.02.2015 by issuance of notice dated 11.02.2015, Annexure-C and corrigendum also came to be issued by second respondent to said notice by another notice dated 13.02.2015, Annexure-D and on receipt of same, petitioner is said to have taken steps to collect the information from such noticees and as such petitioner sought for an adjournment by its reply dated 14.02.2015, Annexure-E, submitted on 16.02.2015. Thereafter, petitioner is said to have furnished the details of persons who have invested with proof of acknowledgement / consent to second respondent on 20.02.2015 vide Annexure-F. In the meanwhile, second respondent on account of petitioner 4 not complying with the demand made under notice dated 13.02.2015 has proceeded to examine available records and passed an assessment order under Section 143(3) of the Act on 20.02.2015 vide Annexure-A. It is this order which is impugned in the present writ petition contending interalia that even before petitioner could furnish reply, second respondent has hurriedly proceeded to frame the assessment order and same is in violation of principles of natural justice. Hence, it is prayed by petitioner to set aside the said order. 3. Perusal of corrigendum notice dated 13.02.2015 would clearly indicate that petitioner was extended opportunity to furnish the details on or before 18.02.2015 and in reply to same petitioner vide its communication dated 14.02.2015 submitted on 16.02.2015, Annexure-E, had requested second respondent to extend time to submit the details on or before 25.02.2015. On account of petitioner not furnishing the details within the date stipulated in the 5 corrigendum, notice dated 13.02.2015, Annexure-D, the second respondent / Assessing Officer left with no other option has proceeded to frame the assessment order. The procedure adopted by the Assessing Officer cannot be found fault with. 4. Undisputedly, order impugned in the present writ petition is appealable order under Section 246A of the Act. Petitioner is having an alternate and efficacious remedy available under law and as such, this court would not interfere under exercise of extraordinary jurisdiction i.e., under Article 226 of the Constitution of India to examine the correctness or otherwise of assessment order. Hon’ble Apex Court in the case of COMMISSIONER OF INCOME TAX AND OTHERS vs. CHHABIL DASS AGARWAL reported in (2014) 1 SCC 603 has held that Income Tax Act provides complete machinery for reassessment of tax against any improper orders passed by the Revenue Authorities and as such, assessee cannot be permitted to abandon that 6 machinery to invoke the jurisdiction of the High Court under Article 226 when the assessee is having an adequate remedy open by filing an appeal. It has been held by the Hon’ble Apex Court as under: “15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case22, Titaghur Paper Mills case3 and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 16. In the instant case, the Act provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the 7 Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In Ram and Shyam Co. v. State of Haryana this Court has noticed that if an appeal is from “Caesar to Caesar’s wife” the existence of alternative remedy would be a mirage and an exercise in futility. 17. In the instant case, neither has the writ petitioner assessee described the available alternate remedy under the Act as ineffectual and non-efficacious while invoking the writ jurisdiction of the High Court nor has the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction in the facts of the instant case. In light of the same, we are of the considered opinion that the writ court ought not to have entertained the writ petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the reassessment orders passed and the consequential demand notices issued thereon.” 5. In that view of the matter, prayer sought for by petitioner cannot be granted. 8 6. Be that as it may. Petitioner has undisputedly submitted the details sought for by the Assessing Officer as per Annexure-F dated 14.02.2015 on 20.02.2015 namely, date on which assessment order came to be passed. Petitioner would be at liberty to produce said material also before the Appellate Authority namely, Commissioner of Income Tax (Appeals) and in the event of petitioner were to file an appeal before the jurisdictional Commissioner of Income Tax (Appeals) within three (3) weeks from today, said Authority shall without reference to delay proceed to adjudicate the appeal on merits. Petitioner shall, if so advised, file an application for stay of the impugned demand before the Commissioner of Income Tax (Appeals) and said Authority would be at liberty to examine the claim or prayer of petitioner on merits and in accordance with law and shall pass orders on the said application for stay expeditiously at any rate within three (3) weeks from the date of filing of such appeal / application and till such period, jurisdictional Assessing 9 Officer shall not take any precipitative action against the petitioner to recover the amounts demanded pursuant to assessment order dated 20.02.2015, Annexure-A. However, in the event of either Appellate Authority refusing to grant an interim order of stay or rejecting the application for stay, or if no such application is filed within three (3) weeks from today, second respondent would be at liberty to enforce the demand. Accordingly writ petition stands disposed of. 7. Registry is directed to return the original documents forthwith, if sought for and on same being substituted by duly attested photocopies. Ordered accordingly. Sd/- JUDGE DR "