RAM PAL SINGH V. COMMISSIONER OF INCOME TAX HARIDWAR

SPA/546/2019

AI Insights

The case involves Ram Pal Singh, the appellant-writ petitioner, who challenged the order and demand notice issued by the Assessing Authority under the Income Tax Act, claiming that his income derived from agriculture should not be assessed. The Assessing Authority had initiated proceedings based on a substantial amount found deposited in the appellant's bank account, leading to a best judgment assessment. The appellant argued that the proper procedure was not followed as no notice under Section 143(2) was issued before the assessment. The Revenue contended that the appellant had an effective alternative remedy under Section 246 of the Act, which the learned Single Judge accepted, leading to the dismissal of the writ petition. The appellant then filed an appeal against this decision.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 747261 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 27-05-2019
• Assessment Year: misc
• Other Referred Cases: Travancore Diagnostics P. Ltd. vs. Assistant Commissioner of Income Tax, Whirlpool Corporation vs. Registrar of Trade Mark, Mumbai & others, L. Chandra Kumar vs. Union of India and others
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: H M BHATIA
• Assessee Lawyers: S K POSTI
• Keywords: Best Judgment Assessment; Lack of Jurisdiction; Violation of Principles of Natural Justice; Writ of Certiorari; Writ of Mandamus
• Section: 147; 148; 144; 143(3); 142(1); 143(2)

Judgement Text

"IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Special Appeal No. 546 of 2019 Ram Pal Singh …….Appellant Versus Commissioner of Income Tax Haridwar & others …….Respondents Mr. S.K. Posti, Advocate for the appellant-writ petitioner. Mr. H.M. Bhatia, Senior Standing Counsel for the Income Tax. JUDGMENT Coram: Hon’ble Ramesh Ranganathan, C.J. Hon’ble N.S. Dhanik, J. Dated: 27th May, 2019 RAMESH RANGANATHAN, C.J. (Oral) This appeal is preferred against the order passed by the learned Single Judge in Writ Petition (M/S) No.595 of 2019 dated 20.05.2019. The appellant-writ petitioner invoked the jurisdiction of this Court questioning the order passed by the Assessing Authority on 26.12.2018, and the consequential demand notice dated 26.12.2018, and sought a writ of certiorari to quash the same. He also sought a writ of mandamus directing the Assessing Authority not to assess the income of the appellant-writ petitioner as the same was derived from agriculture. 2. A sum of Rs.88.73 lakhs were found deposited in the bank account of the appellant-writ petitioner. Thereafter, on the basis of the information furnished by the Directorate of Intelligence, Kanpur, the Assessing Authority issued a notice under Section 142(1) of the Income Tax Act (for short “the Act”). The appellant-writ petitioner submitted his reply thereto. Thereafter, a best judgment assessment was passed under Section 144 of the Act read with Section 147 thereof. 3. The appellant-writ petitioner contended, before this Court, that once a notice is issued under Section 142(1) to which a reply has been submitted by the assessee, it was obligatory on the part of the Assessing Authority, before proceeding to assess the appellant-writ petitioner to tax, to issue a notice again under Section 143(2) and, thereafter, pass an order under Section 143(3); and it is only if the appellant-writ petitioner does not submit 2 his reply to the notice under Section 143(2) of the Act, can the Assessing Authority then proceed to make a best judgment assessment under Section 144 of the Act. 4. Before the learned Single Judge, it was contended on behalf of the Revenue by Mr. Hari Mohan Bhatia, learned Senior Standing Counsel, that, since an efficacious remedy of an appeal was available under Section 246 of the Act, a Writ Petition, under Article 226 of the Constitution of India, was not maintainable. The learned Single Judge observed that a perusal of the assessment order revealed that the assessee had neither filed his return of income, nor had he filed his written submissions; and the appellant-writ petitioner could not be permitted to by-pass the remedy available, and invoke the writ jurisdiction of this Court. Leaving it open to the appellant- writ petitioner to avail the remedy available under Section 246 of the Act, the learned Single Judge dismissed the Writ Petition. Aggrieved thereby, the present appeal. 5. Mr. S.K. Posti, learned counsel for the appellant-writ petitioner, would rely on a judgment of the Kerala High Court in Travancore Diagnostics P. Ltd. vs. Assistant Commissioner of Income Tax: (2017) 390 ITR 167 (Ker), to submit that, in the absence of a notice being issued under Section 143(2) of the Act, no best judgment assessment, under Section 144 of the Act, could have been passed; and the impugned order, passed without even putting the assessee on notice under Section 143(2) of the Act, was not only in violation of principles of natural justice, but was also without jurisdiction. Learned counsel would rely on the judgment of the Supreme Court, in Whirlpool Corporation vs. Registrar of Trade Mark, Mumbai & others: (1998) 8 SCC 1, to submit that a Writ Petition would lie, among other grounds, in cases where the impugned order is either in violation of principles of natural justice or suffers from lack of jurisdiction; and the learned Single Judge had erred in non-suiting the appellant-writ petitioner on the ground that he has an effective and efficacious alternative remedy under Section 246 of the Act. 3 6. On the other hand Mr. H.M. Bhatia, learned Senior Standing Counsel for Income Tax, would contend that a notice, under Section 143(2) of the Act, is issued only where the assessee has filed his return of income; in the present case, on a sum of Rs.88.73 lakhs being found in the appellant- writ petitioner’s bank account, the Director of Investigation had submitted his report, based on which proceedings were initiated, and a notice was issued to the appellant-writ petitioner under Section 142(1) of the Act; after receipt of his reply thereto, a best judgment assessment was made under Section 144 read with Section 147 of the Act; an assessment, under Section 143(3) of the Act, would arise only where a return of income has been filed by the assessee; and it is only if such a return of income had been filed, would a notice under Section 143(2) of the Act be issued, and not otherwise. 7. As noted hereinabove, the learned Single Judge has relegated the appellant-writ petitioner to the remedy of approaching the Commissioner of Income Tax Appeals (the Appellate Authority) under Section 246 of the Act. When we asked Mr. S.K. Posti, learned counsel for the appellant-writ petitioner, whether or not such a remedy was available, learned counsel, while stating that a statutory remedy of an appeal was undoubtedly available, would contend that mere existence of an alternative remedy did not bar the appellant-writ petitioner from invoking the writ jurisdiction of this Court. 8. Since reliance is placed, on behalf of the appellant-writ petitioner on Whirlpool Corporation, it is useful to refer to the law declared therein. The Supreme Court held:- “….. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution This power can be exercised by the High Court not only for issuing writs in the nature of Habeas Corpus, Mandamus, prohibition, Qua Warranto and Certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for \"any other purpose\". Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this court not to operate as a 4 bar in at least three contingencies, namely, where the Writ Petition has been filed for the enforcement of any of the Fundamental rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point but to cut down this circle of forensic whirlpool we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. Much water has since flown beneath the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a Writ Petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the Writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.” (emphasis supplied) 9. The law laid down, in Whirlpool Corporation, is that existence of an alternative remedy is not a bar for this Court to exercise its writ jurisdiction under Article 226 of the Constitution. The power of the judicial review, conferred upon the High Court under Article 226 of the Constitution of India, is a part of the basic structure of the Constitution. (L. Chandra Kumar vs. Union of India and others: AIR 1997 SC 1125). Such a power cannot, therefore, be negated or circumscribed even by an amendment to the Constitution, let alone by Legislation- plenary or subordinate. Mere existence of an alternative statutory remedy would, therefore, not bar exercise of jurisdiction under Article 226 of the Constitution of India. 10. While this Court can, undoubtedly, entertain a writ against the order passed by the Assessing Authority, more so in cases where such an order suffers from lack of jurisdiction or is in violation of principles of natural justice, it must also be borne in mind that the jurisdiction exercised by this Court, under Article 226 of the Constitution of India, is discretionary; and a writ is not issued for the mere asking. 11. The High Court, while exercising jurisdiction under Article 226 of the Constitution of India, adheres to certain self-imposed limitations, and would, ordinarily, refrain from exercising its discretionary jurisdiction in 5 cases where the aggrieved party has an efficacious alternative appellate remedy under a statute. While the jurisdiction of this Court can, undoubtedly, be invoked even against the order passed by the Assessing Authority, this Court, while exercising its discretionary jurisdiction under Article 226 of the Constitution, would ordinarily exercises self-restraint and refrain from interference where the contention urged in the Writ Petition can also be urged before the Appellate Authority under the Income Tax Act. It has not been disputed before us that the contentions urged in the Writ Petition can be urged before the Commissioner of Income Tax (Appeals) i.e. the Appellate Authority under Section 246 of the Income Tax Act. 12. Yet another reason why we must refrain from interference is because the scope of interference in an intra-court appeal is extremely limited. Interference by a Division Bench, in an intra-court appeal, would be justified only if the order under appeal suffers from a patent illegality. The learned Single Judge is not a court subordinate. The Division Bench exercises the very same jurisdiction which the learned Single Judge exercises under Article 226 of the Constitution of India. Even in cases where two views are possible, and one of the possible views has found acceptance with the learned Single Judge, the Division Bench would refrain from interfering with the order under appeal, even if it is satisfied that a view, other than the view which found favour with the learned Single Judge, is more attractive. In the present case, the learned Single Judge has relegated the appellant-writ petitioner to avail his statutory remedy of an appeal under Section 246 of the Income Tax Act. It has not been contended before us that exercise of discretion by the learned Single Judge, to relegate the appellant- writ petitioner to avail the appellate statutory remedy, is an order which could not have been passed, or that the Appellate Authority cannot examine the contentions now urged before us in these writ proceedings. 13. We are satisfied, therefore, that the order under appeal does not necessitate interference. Suffice it to make it clear that neither has the learned Single Judge, nor this Division Bench, expressed any opinion on the merits of the rival contentions; and, in case the appellant-writ petitioner avails the appellate remedy under Section 246 of the Income Tax Act, the 6 Appellate Authority [i.e. the Commissioner of Income Tax (Appeals)] shall examine the rival contentions on its merits uninfluenced by any observations made either in the order under appeal or in this order. 14. Subject to the aforesaid observations, the appeal fails and is, accordingly, dismissed. No costs. (N.S. Dhanik, J.) (Ramesh Ranganathan, C. J.) 27.05.2019 27.05.2019 NISHANT "