THE HIGH COURT BAR ASSOCIATION ALLAHABAD V. UNION OF INDIA AND 5 OTHERS

WTAX/352/2021

AI Insights

The case involves the High Court Bar Association, Allahabad, which filed a writ petition challenging an assessment order dated 24.12.2019 passed by the Income Tax Officer-1 (5), Allahabad, under Section 144 of the Income Tax Act, 1961 for the assessment year 2017-18. The petitioner argued that the assessment was made without jurisdiction and without satisfying the pre-conditions required for invoking Section 144. The respondent, represented by the counsel for the revenue and the Union of India, contended that the writ petition was not maintainable as the petitioner had already filed a revision under Section 264 of the Act, which was pending. The court dismissed the writ petition, citing the availability and availing of an alternative statutory remedy as a bar to entertaining the writ petition.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 721828 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 09-09-2021
• Assessment Year: misc
• Other Referred Cases: State of Uttar Pradesh vs. Union of India, Commissioner of Income Tax vs. Chhabil Dass Agarwal, M/s Shahnaz Ayurvedic vs. Commissioner of Central Excise, Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai, Harbans Lal Sahania and Another vs. IOC, Gurgaon Realtek Limited vs. National Faceless Assessment Centre, Delhi
• Laws Referred To: The Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: A S G I; GAURAV MAHAJAN
• Assessee Lawyers: AJAY SINGH; RAMANUJ TIWARI
• Keywords: Alternate remedy; Assessment Order; Income Tax Officer; Mutual Benefit; Revision; Taxability; Delay/latches
• Section: 144; 264; 270(A); 270 AA

Judgement Text

"Court No. - 3 Case :- WRIT TAX No. - 352 of 2021 Petitioner :- The High Court Bar Association Allahabad Respondent :- Union Of India And 5 Others Counsel for Petitioner :- Ajay Singh,Ramanuj Tiwari Counsel for Respondent :- A.S.G.I.,Gaurav Mahajan Hon'ble Naheed Ara Moonis,J. Hon'ble Saumitra Dayal Singh,J. Heard Sri Rakesh Ranjan Agrawal, Sri Amrendra Nath Singh, learned Senior Advocates with Sri Prabha Shankar Mishra, Sri Vinay Kumar Tiwari, Sri Anil Pathak, Sri Ramanuj Tiwari, Sri Amitabh Agrawal and Sri Ajit Kumar, learned Advocates, for the petitioner; Sri Gaurav Mahajan learned counsel for the revenue and Sri Krishna Agarwal, learned counsel for the union of India. The present petition has been filed by the High Court Bar Association, Allahabad to quash the assessment order dated 24.12.2019 passed by the Income Tax Officer-1 (5), Allahabad assessing the petitioner society to tax for the assessment year 2017-18 under the provisions of Section 144 of The Income Tax Act, 1961 (hereinafter referred as to the 'Act'). The writ petition appears to have been filed in June, 2021 i.e. with laches of more than one and a half year. At the fresh stage itself, affidavits have been exchanged. The orders contained on the order sheet do not reflect any substantial hearing has taken place, till now. However, by the order dated 25.06.2021, on the prayer of learned counsel for the Revenue, time was granted to file a counter affidavit. Thus, affidavits came to be exchanged at the fresh stage itself. Upon the matter being heard, preliminary objection has been raised by Shri Gaurav Mahajan, learned counsel for the revenue that the present petition may not be entertained as the impugned order is appealable. In any case, in paragraph no. 58 of the writ petition, it is specifically admitted that the petitioner has not filed any appeal within the period of limitation as provided by the Act and instead, filed a revision under Section 264 of the Act. For ready reference averment contained in the paragraph no. 58 of the writ petition is reproduced as under:- \" 58. That the HCBA Allahabad has not filed appeal before CIT (Appeals) and time has also expired. The HCBA Allahabad expressly waives their rights to file appeal before CIT (Appeals). Aggrieved with the Assessment Order, Revision Petition has been filed under Section 264. Revision Petition is in time and is maintainable.\" Relying on a decision of the co-ordinate Bench of this Court in the State of Uttar Pradesh vs. Union of India (2003) 264 ITR 239 (Allahabad) and Commissioner of Income Tax vs. Chhabil Dass Agarwal (2013) 357 ITR 357 (SC), it has been vehemently contended that the petitioner had available to it and it has availed the alternate remedy of Revision against the order. Therefore, the writ petition is liable to be dismissed on the ground of having availed alternate remedy. It has also been objected by Shri Mahajan that in any case, the present writ petition has been filed with a long delay/latches which has not been explained. The above preliminary objection has been refuted by learned Senior Counsel for the petitioner by submitting that in the first place, the preliminary objection was not raised at the stage of initial hearing in the matter. Then, it has been submitted that the petitioner had responded to all the notices issued by the Assessing Authority in the course of the assessment proceedings. Thereby, it had brought on record the bye-laws of the petitioner society to establish that it exists for the mutual benefit of the members and that all its receipts are excluded from the taxability of the Principle of Mutuality. The petitioner society is also stated to have participated on all dates fixed in the assessment proceedings. Without adverting to the merits of the objections raised by the petitioner society and without reaching any conclusion as to non-compliance made by the petitioner society to any of the notices issued during the course of the proceedings, the assessing authority has, without any jurisdiction, framed the assessment order under Section 144 of the Act which provision could only be resorted upon the satisfaction of the pre-conditions for its exercise. None of the pre-conditions have been satisfied and therefore the same is stated to be a nullity. In that regard, learned Senior Advocate would also submit if any application of mind had been made by the assessing authority, it would have become plainly clear that there was no business or taxable income of the petitioner society. Thus, it has been hinted that the assessment order has been passed for oblique motives to cause harassment to the petitioner society which is comprised of practicing lawyers of the Allahabad High Court. In support, reliance has been placed on the decision of Division Bench of this Court in M/s Shahnaz Ayurvedic vs. Commissioner of Central Excise and others 2004 UPTC 737; decisions of the Supreme Court in Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai JT 1998 (7) SC 243; Harbans Lal Sahania and Another vs. IOC 2003 (2) SCC 107 and a decision of the Delhi High Court in Gurgaon Realtek Limited vs. National Faceless Assessment Centre, Delhi reported in 2021 (127) Taxmann.com 726, Delhi. Further, it has been submitted that at present, the remedy of Revision is clearly not available as at the stage of filing of the revision, the petitioner society had not been informed of the penalty proceedings under Section 270-A of the Act having been dropped. Referring to the order passed by the Assessing Authority dated 17.01.2020 (Annexure no. 27 of the writ petition), it has been submitted, by that order, the assessing authority has dropped the penalty proceedings against the petitioner for the assessment year 2017-18 under Section 270-A of the Act. Relying on Section 270 AA (2) of the Act read with Sub Section 3, it has been submitted, since that penalty proceedings had earlier been initiated, the petitioner could not have filed any revision. Since the penalty was initiated and dropped completely behind the back of the petitioner inasmuch as neither any notice, initiating penalty, under Section 270 A was served upon the petitioner nor the petitioner ever applied on form 68 of the Rules to drop those proceedings, once the penalty proceedings had been thus dropped, the declaration made by the petitioner for filing the revision has been rendered false. Therefore, the revision is liable to the dismissed as not maintainable. Having heard learned counsel for the parties and having perused the record, it is fundamental and well settled principle in tax jurisprudence that the Writ Court may not readily interfere with assessment orders, in face of statutory alternate remedy. Approached from that view point, the decision in the case of M/s Shahnaz Ayurvedic vs. CCE (supra) is clearly distinguishable. In that case, an objection had been raised not so much as to alternate remedy but as to the competence of the Writ Court to deal with the challenge to an assessment order. At the same time, in that case, no remedy of appeal or revision had been availed by the assessee. Answering the preliminary objection raised by the Revenue, in that case, the Division Bench observed as under:- \"The power of judicial review being a basic feature of the Constitution, cannot be taken away by the Legislature by providing the remedy of appeal before the Hon'ble Supreme Court. The petition cannot be rejected on this sole ground.\" In the present case, neither that objection has been raised nor there is any fact similarity between the two cases. Here, on the admission of the petitioner though it did not file an appeal, yet it has filed a revision which is still pending consideration. In our opinion, the ratio in the case of Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai (supra), is distinguishable, inasmuch as the ratio in that case contained in paragraph no. 13 of the report reads as under:- \"13. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a 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 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.\" Undisputedly, in the facts of the present case, there is no violation of fundamental rights of the petitioner or there is a violation of principle of natural justice as the petitioner admits, it was issued notices during the assessment proceedings and it had responded to the same. Whether an order under Section 144 of the Act could have been passed in the facts and circumstances claimed by the respective parties, may involve factual issues. Even otherwise, that objection may lead to an inference of irregular exercise of power but not inherent lack of jurisdiction. Such objections may be adequately addressed by the statutory authorities as well. On their face, such objections do not always commend to the Court to offer interference when ever such objections are raised. In the present case, the petitioner having already filed a revision prior to filing of the writ petition, we are not inclined to lift to bar of alternate remedy. For that reason, the other decision of the Supreme Court relied by the learned Senior Advocate in the case of Harbans Lal Sahania (supra) is also of no help to the petitioner. As to the last decision relied by learned Senior Advocate is of the Gurgaon Realtek Limited vs. National Faceless Assessment Centre, Delhi (supra), we find, in that case, a remedy of appeal had been availed by the assessee. However, the Delhi High Court lifted the bar of alternate remedy taking note of the ground of lack of jurisdiction on account of limitation. In that case, the Delhi High Court reached a conclusion that the assessment order could not have been passed under Section 143 (3A) and 143 (3B) on 15.04.2021 as that date fell after the date 31.03.2021. Here we are unable to reach that conclusion. The facts are otherwise. There is no bar of limitation being pressed into service. The other contention of learned Senior Counsel for the petitioner that the preliminary objection has been raised for the first time today by means of the counter affidavit and that had not been pressed earlier cannot be accepted for the simple reason that the order sheet does not offer any assistance in that regard. The matter does not appear to have been heard on merits nor such hearing could be inferred from the perusal of the order sheet. At the same time, the order sheet only indicates that on the first date itself, the revenue sought and was granted time to file counter affidavit. Only contention advanced appears to have be as to the time sought and granted by the Court. However, it does not appear that the preliminary objection was either raised or waived at that stage. In any case, the matter has remained on the fresh list and the Court cannot act unmindful on the statutory provisions and the conduct of the parties. Here, the assessment order is dated 24.12.2019. The revision itself was filed on 17.12.2020 and the writ petition has been filed six months thereafter in June, 2021. The alternate remedy had already been availed before the writ petition came to be filed. Therefore, notwithstanding the fact that such preliminary objection had not been raised on the first hearing, the court cannot ignore on the admitted fact that before approaching the Court, the petitioner had already availed the statutory remedy of revision. To entertain such a writ petition would also affect the judicial policy of the Court which it consistently follows of not entertaining such writ petitions, where alternative remedy has already been availed. Being discretionary in nature, the Court remains as consistent as is humanly possible. No exceptional circumstance is made out as may commend to the Court to lift the bar of alternate remedy. Merely, because the petitioner society is a body of lawyers regularly practising before this Court cannot make out a case of exception. As to the last submission of learned Senior Counsel that by virtue of proceedings under Section 270 A of the Act having been dropped, the petitioner's revision became infructuous, we may only observe that the submission is ill-conceived. The remedy of Revision is a statutory remedy. Once availed, it may never be adversely affected by the conduct of the respondent- authority, unless it has a beneficial impact on the assessee. Needless to clarify that the revision filed by the petitioner/assessee shall be dealt with and decided by the Revising Authority, as expeditiously as possible, preferably within a period of three months subject to the petitioner not seeking any undue adjournment. The said revision shall be decided on its own merits without being influenced by the fact that the penalty proceeding had been initiated and dropped by the Assessing Authority, behind the back of the petitioner. With the above observations, the writ petition is dismissed. Order Date :- 9.9.2021 Saurabh Digitally signed by NAHEED ARA MOONIS Date: 2021.09.14 16:47:44 IST Reason: Document Owner Location: High Court of Judicature at Allahabad Digitally signed by SAUMITRA DAYAL SINGH Date: 2021.09.14 16:48:23 IST Reason: Document Owner Location: High Court of Judicature at Allahabad "