SHRI. RAJENDRA S/O. SHANTILAL SHAH V. THE INCOME TAX OFFICER,

WP/107268/2018

AI Insights

The case involves Shri Rajendra, the petitioner, who filed writ petitions against the notices issued by the Income Tax Officer, Ward No.1, Nippani, and the Principal Commissioner of Income Tax, Belagavi. The notices were related to the denial of reasons for the issuance of notices under Section 153A of the Income Tax Act, 1961. The petitioner contended that the notices were issued in gross violation of law and that his tax returns, filed before the prescribed date, were ignored by the Income Tax Officer. The respondents opposed the writ petitions, citing the availability of an alternate and efficacious remedy of appeal under the Income Tax Act, 1961. The court, after considering the submissions and relevant legal precedents, partially allowed the writ petitions, emphasizing the need for the petitioner to be furnished with reasons for the notices and granting him the opportunity to appeal without the constraints of delay and limitation.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 698063 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-04-2019
• Assessment Year: misc
• Other Referred Cases: Garikapati Veeraya V. N. Subbiah Choudhry, Commissioner of Income Tax Vs. Chhabil Dass Agarwal, Ram and Shyam Co. vs. State of Haryana, UTI Mutual Funds Vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: SANGRAM KULKARNI; PRAMOD VAIDYA
• Keywords: Assessment orders; Income Tax; Mandamus; Notice; Writ petition
• Section: 153A; 226; 227

Judgement Text

" : 1 : IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 4TH DAY OF APRIL 2019 BEFORE THE HON’BLE MR.JUSTICE KRISHNA S.DIXIT WRIT PETITION NOS.107268-107272 OF 2018 & WRIT PETITION NO.108492 OF 2018 (T-IT) Between Shri Rajendra, S/o Shantilal Shah, Age: 59 years, Occ: Business, R/o: 39, Ashok Nagar, Nippani, Tal. Chikkodi, Dist. Belagavi. …Petitioner (By Sri Sangram S.Kulkarni & Sri Pramod Y. Vaidya, Advocates) A n d 1. The Income Tax Officer, Ward No.1, Nippani, Tal. Chikkodi, Dist. Belagavi. 2. The Principal Commissioner of Income Tax, Khimjibhai Complex, Opp. Civil Hospital, Belagavi. …Respondents (By Sri Y.V.Raviraj, Advocate) These Writ Petitions are filed under Articles 226 and 227 of the Constitution of India, praying to quash the impugned noticed dated 11.09.2017 issued by the : 2 : respondent No.1 the Income Come Tax Officer, Ward No.1, Nippani, vide Annexures-A to A5 and also quash the notice dated 10.10.2018 issued by the respondent No.1 the Income Tax Officer Ward No.1, Nippani, denying to furnish the reasons for issuance of notice under Section 153A to the petitioner vide Annexure-D bearing No.F.No.ITO.W-1/NPN/153A/2018-19; and issue a writ of mandamus to the respondent NO.1 the Income Tax Officer, Ward No.1, Nippani to furnish the reasons for issuance of the notice under Section 153A of the Income Tax Act, 1961 within 15 days. These Writ Petitions coming on for Preliminary Hearing, this day, the Court made the following:- ORDER Petitioner-Assessee has invoked the writ jurisdiction of this Court seeking invalidation of the impugned notices dated 11.09.2017 issued by the first respondent-Revenue at Annexures-A, A1 to A5; he has also sought for quashing of the endorsement dated 10.10.2018, a copy whereof is at Annexure-D, whereby the said respondent has refused to furnish the reasons for issuing the subject notices. 2. The petitioner has also filed an application in I.A. No.1/2019 seeking remedy against the Assessment : 3 : Orders that have been passed after the filing of the writ petitions and that the same are taken on record. 3. After service of notice, the Revenue has entered appearance through the learned panel counsel, Sri Y.V. Raviraj who opposes the writ petitions. 4. Learned counsel for the petitioner contends that the impugned demand notices are liable to be struck down have been made in gross violation of law and that the errors of great magnitude are apparent on the face of the record in as much as though the petitioners had filed the Returns much before the prescribed date, the respondent-Income Tax Officer conveniently has ignored the same and wrongly stated that no Returns were filed. That being so, petitioner being an honest tax payer is entitled to the relief at the hands of this Court. 5. Learned panel counsel for the Revenue banking upon the decisions of the Apex Court, opposes : 4 : the writ petitions inter alia contending that the petitioner has an alternate and efficacious remedy of appeal provided by the Income Tax Act, 1961. No explanation is offered by the petitioner in his pleadings as to why this remedy cannot be availed. It is a settled position of law that, in all disputes arising from the fiscal legislations, ordinarily, the writ jurisdiction is not invocable, of course, subject to all just exceptions, within which the case of the petitioner does not fit. On the basis of these orders, learned panel counsel intends to strengthen his submission on the ground of alternative remedy. 6. To the other contention of the petitioners that the respondent-Income Tax Officer was supposed to give reasons for issuing the notices in question, the learned panel counsel banking upon another decision of the Apex Court submits that for soliciting such reasons, filing of the Returns is a pre-condition and therefore, the petitioner does not have a cohate right to solicit the reasons as on the date he did. : 5 : 7. I have heard learned counsel for the petitioner and the learned panel counsel for the Revenue. I have perused the petition papers and the decisions cited at the bar. 8. The petitioner has suffered the Assessment Orders that are now produced before this Court through the application in I.A.No.1/2019; these Assessment Orders can be the subject matter of scrutiny at the hands of the Appellate Authority statutorily instituted in the scheme of the Act viz., the Commissioner of Income Tax (Appeals); the petitioner has not offered any explanation in the pleadings as to why such statutory alternate remedy cannot be availed. However, in the course of hearing, learned counsel for the petitioner submitted that the appeal remedy is conditioned by payment of minimum twenty per cent of the amount due under the Assessment Orders; the amount is huge in size and therefore, the petitioner not being able to pay : 6 : the same is not in a position to avail the alternate remedy. 9. The Constitution Bench of the Apex Court in the case of Garikapati Veeraya V. N.Subbiah Choudhry and Other reported in AIR 1957 SC 540, has held that the right of appeal is a creature of law and where the law prescribes certain conditions, the right is conditioned/curtailed and that the litigant can avail his right of appeal subject to complying with such conditions if any. That being so, the explanation offered by the petitioners for not availing the statutory appeal remedy, does not constitute a valid ground. 10. The above apart, the Apex Court, in the case of Commissioner of Income Tax Vs. Chhabil Dass Agarwal (Civil Appeal No.6704 of 2013 disposed off on 08.08.2013), at para 20, has observed as under: “20. In the instant case, the Act provides complete machinery for the assessment/re- assessment of tax, imposition of penalty and for : 7 : obtaining relief in respect of any improper orders passed by the 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. vs. State of Haryana, (1985) 3 SCC 267 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. In the instant case, neither has the assessee-writ petitioner 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 instant case.” Thus, the contention of the panel counsel for the Revenue that the petitioner should be relegated to the statutory remedy of appeal is further strengthened. : 8 : 11. The contention of the petitioner that he had sought for reasons for issuing the impugned notices from the Revenue and that the said solicitation having not been complied with, the action of the Revenue is vulnerable, is sustainable. However, much is not deliberated on this issue in asmuchas the learned counsel for the Revenue fairly submits that the petitioner would be furnished the reasons in view of the fact that he has now filed the Returns. 12. There is one aspect of equity which the Writ Court needs to take into account; the petitioner has invoked the writ jurisdiction of this Court much before the Re-assessment Orders were passed by the first respondent-Income Tax Officer; there appear to be some procedural defects in making these orders, as pointed out by learned counsel for the assessee; however, deeper consideration at the hands of the Appellate Authority, if and when an appeal is filed, may be warranted in this regard. In view of this, the : 9 : petitioner need to be given some limited protection in order to make his right of appeal meaningful as held by the Hon’ble Bombay High Court in the case of UTI Mutual Funds Vs. Income Tax Officer in W.P. No.606/2012 disposed off on 14.03.2012, para 9 whereof reads as under: “9. ………………………….The submission of the petitioner is that if at all, an assessment could have only been made in the hands of the petitioner as the transferor of a revocable trust, in which event the income would be exempt under Section 10(23D). Whether the submission should be accepted is again a matter which would have to be determined in the course of the appellate proceedings arising from the order of assessment. The petitioner has intervened before the appellate authority. In our view, the Revenue has made an unfortunate and hasty attempt to make a recovery of the demand which has been imposed on the trust pursuant to the order of assessment, against the petitioner without enabling the petitioner to take reasonable recourse to the remedies available in law. ……………………………….…………… Administrative directions for fulfilling recovery targets for the : 10 : collection of revenue should not be at the expense of foreclosing remedies which are available to assessees for challenging the correctness of a demand. The sanctity of the rule of law must be preserved. The remedies which are legitimately open in law to an assessee to challenge a demand cannot be allowed to be foreclosed by a hasty recourse to coercive powers. Assessing Officers and appellate authorities perform quasi-judicial functions under the Act” In the above circumstances, these writ petitions succeed in part; the respondent-Income Tax Officer shall furnish reasons to the petitioners for issuing of the subject notices forthwith; the petitioner is reserved liberty to lay challenge to the Re-assessment Orders in appeal before the Commissioner of Income Tax (Appeals) or such other competent authority within a period of four weeks; if appeals are accordingly filed, the issue of limitation and delay shall not be raised by the Appellate Authority; the petitioner shall not be coerced with the Re-assessment Orders or the impugned notices : 11 : to make payment for a period of four weeks so that the filing of the appeal is meaningfully facilitated. All contentions of the parties are kept open. This order having been made in the peculiar fact matrix of this case, and therefore the Revenue need not have the apprehension of it being used as precedent or parity. Sd/- JUDGE Kms "