P M RASHEED vs. THE CENTRAL BOARD OF DIRECT TAXES

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WP(C)/1775/2023HC KeralaKLHC01004394202319 January 2023Author: HONOURABLE MR. JUSTICE GOPINATH P.5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the petitioner had not made out any jurisdictional grounds warranting the exercise of jurisdiction under Article 226 of the Constitution of India, despite the availability of an alternative remedy. The Court found considerable merit in the respondent-Department's contention that the return was filed beyond the stipulated time, rendering it invalid for consideration during the best judgment assessment. Therefore, the Court declined to interfere with the impugned orders under Article 226 and dismissed the writ petition. However, the Court granted liberty to the petitioner to file an appeal before the first appellate authority within three weeks, along with an application for condonation of delay and a stay petition. The appellate authority was directed to condone the delay, consider and dispose of the appeal on merits, and keep any demand pursuant to the assessment order in abeyance until a decision on the stay petition.

What were the facts?

The petitioner, P.M. Rasheed, is challenging an assessment order (Ext.P8) passed under Section 144 of the Income Tax Act, 1961, for the assessment year 2017-18. The assessment was completed to the best of judgment as the petitioner failed to file a return of income despite receiving a notice under Section 142(1) of the Act. The petitioner's subsequent application for rectification was also rejected by an order (Ext.P12). The petitioner contends that the assessment was completed without considering a return of income (Ext.P7) that was allegedly filed.

What were the issues?

1. Whether the assessment order passed under Section 144 of the Income Tax Act, 1961, is without jurisdiction because a return of income (Ext.P7) was filed by the petitioner, and if so, is it amenable to challenge under Article 226 of the Constitution of India? Assessee's Contention: The completion of assessment under Section 144 without considering the return of income filed as Ext.P7 is without jurisdiction and warrants interference under Article 226 of the Constitution of India. Revenue's Contention: The return (Ext.P7) was filed beyond the time specified in the notice under Section 142(1) and therefore could not be accepted or considered. There is no jurisdictional error in completing the assessment under Section 144 as no valid return was available. The petitioner has an effective alternative remedy of appeal, and no grounds are made out for interference under Article 226.

Which sections of the Income-tax Act were involved?

Section 144,Section 142(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 19TH DAY OF JANUARY 2023 / 29TH POUSHA, 1944 WP(C) NO. 1775 OF 2023 PETITIONER/S: P M RASHEED AGED 50 YEARS S/O PUNNILATH MEERAS, PUNNILATHU HOUSE, ALLAPRA P.O, VENGOLA PERUMBAVOOR , PIN - 683556 BY ADVS. K.P.PRADEEP SANAND RAMAKRISHNAN HAREESH M.R. T.T.BIJU T.THASMI M.J.ANOOPA SANU S MALAKEEL RESPONDENT/S: 1 THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI- , REPRESENTED BY ITS CHAIRMAN , PIN - 110001 2 INCOME TAX OFFICER, WARD 3, ALUVA INCOME TAX DEPARTMENT, K.A.P.COMMERCIAL COMPLEX, OFFFICE OF ADDITIONAL CIT, ALUVA RANGE, R.S ROAD, ALUVA , PIN - 683101 3 INCOME TAX OFFICER, WARD 2, ALUVA INCOME TAX DEPARTMENT, K.A.P.COMMERCIAL COMPLEX, OFFFICE OF ADDITIONAL CIT, ALUVA RANGE, R.S ROAD, ALUVA , PIN - 683101 ADV.CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 1775 OF 2023 2

JUDGMENT

Petitioner suffered Ext.P8 order of assessment under the provisions of Section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for the assessment year 2017-18. Even after receiving a notice under Section 142(1) of the Act, the petitioner did not file any return of income, following which the assessment was completed to the best of judgment under Section 144 of the Act. The petitioner filed an application for rectification, which was also rejected by Ext.P12 order.

2.

Learned counsel appearing for the petitioner submits that the completion of assessment, without taking into consideration the return of income filed by the petitioner, as Ext.P7, is completely without jurisdiction and is therefore, liable to be interfered with in exercise of jurisdiction under Article 226 of the Constitution of India. It is submitted that there was no reason to complete the assessment to the best judgment under Section 144 of the Act, even though the petitioner had filed a return of income as disclosed by Ext.P7. 3. Learned Standing Counsel appearing for the respondent-Department would point out that Ext.P7 return

WP(C) NO. 1775 OF 2023 3 was filed beyond the time specified in the notice issued under Section 142(1) of the Act and therefore, it could not have been treated as a return which could be accepted and considered while completing the assessment. It is submitted that there is absolutely no jurisdictional error in completing the assessment under Section 144 of the Act, to the best of judgment, as admittedly, there was no valid return available for completing the assessment. It is submitted that the petitioner has an effective alternative remedy by way of appeal against the assessment order/order rejecting the application for rectification and no grounds have been made out to interfere in the proceedings under Article 226 of the Constitution of India.

4.

Having heard the learned counsel appearing for the petitioner and the learned Standing counsel appearing for the respondent-Department, I am of the view that there is considerable merit in the contention taken by the respondent- Department that the petitioner has not made out any jurisdictional grounds warranting the exercise of jurisdiction under Article 226 of the Constitution of India, notwithstanding the availability of an alternative remedy. Therefore, declining interference with the impugned orders under Article 226 of WP(C) NO. 1775 OF 2023 4 the Constitution of India, the writ petition is dismissed. However, if the petitioner files an appeal before the first appellate authority along with an application for condonation of delay and an application for stay, within a period of three weeks from today, the appellate authority shall condone delay in filing the appeal and consider and dispose of the appeal on merits. If the petitioner files a stay petition as aforesaid along with the appeal , any demand pursuant to the orders of assessment shall be kept in abeyance till a decision is taken on the stay petition by the appellate authority. GOPINATH P. JUDGE ajt

WP(C) NO. 1775 OF 2023 5

Appendix — schedule of exhibits
APPENDIX OF WP(C) 1775/2023 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE NOTICE NO W-3/AWY/144(1)/AIZPR7963G/2019-2020 DATED 03- 09-2019 UNDER SECTION 142(1) ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P2 TRUE COPY OF THE TRACK CONSIGNMENT OF REGISTERED POST Exhibit P3 TRUE COPY OF THE ADJOURNMENT REQUEST DATED 16-09-2019 SEND THROUGH EMAIL BY THE PETITIONER TO THE 2ND RESPONDENT Exhibit P4 TRUE COPY OF THE SHOW CAUSE NOTICE NO ITBA/AST/F/144(SCN)/2019-20/1019513009(1) DATED 28-10-2019 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P5 TRUE COPY OF THE REPLY DATED 07-11-2019 SEND THROUGH EMAIL BY THE PETITIONER TO THE 2ND RESPONDENT Exhibit P6 TRUE COPY OF THE E-PROCEEDINGS RESPONSE ACKNOWLEDGEMENT DATED 04-11-2019 Exhibit P7 TRUE COPY OF THE RETURN OF INCOME DATED 16- 11-2019 FILED BY THE PETITIONER FOR THE ASSESSMENT YEAR 2017-18 Exhibit P8 TRUE COPY OF THE ASSESSMENT ORDER NO ITBA/AST/S/144/2019-20/1023400666(1) DATED 30-12-2019 ISSUED FOR THE YEAR 2017-18 BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P9 TRUE COPY OF THE COMPUTATION SHEET ATTACHED WITH THE ASSESSMENT ORDER DATED 30-12-2019 ISSUED FOR THE YEAR 2017-18 BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P10 TRUE COPY OF THE DEMAND NOTICE ITBA/AST/S/156/2019-20/1023400679 (1) DATED 30-12-2019 ISSUED FOR THE YEAR 2017-18 BY THE 2ND RESPONDENT Exhibit P11 TRUE COPY OF THE RECTIFICATION PETITION DATED 22-02-2022 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P12 TRUE COPY OF THE RECTIFICATION ORDER DATED 03-06-2022 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER

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