RAMESH KUMAR JAIN vs. COMMISSIONER OF INCOME TAX RAIPUR

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WPT/137/2019HC ChhattisgarhCGHC01038958201910 December 2019Author: HON'BLE SHRI JUSTICE P. SAM KOSHY5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court acknowledged its authority to entertain a writ petition even when a statutory alternative remedy exists, citing a series of Supreme Court decisions. However, it emphasized that such judicial review should not be exercised routinely. The Court noted that the Supreme Court has consistently held that assessees should not abandon the statutory mechanism for assessment/reassessment and appeal provided by the Act to invoke writ jurisdiction, referencing Commissioner of Income Tax and Ors. Vs. Chhabil Dass Agrawal, Bellary Steels & Alloys Ltd. Vs. Dy. Commissioner, Commercial Taxes (Assessments) and Others, and Commissioner of Income Tax, Gujarat Vs. Vijaybhai N. Chandrani. Crucially, the Court observed that the subsequent assessment order dated 04.12.2019, passed pursuant to the Section 148 notice, was not under challenge in the present writ petition. Without the subsequent order being independently challenged or the present petition being amended to challenge it, the Court would not examine its veracity. Therefore, in light of the subsequent assessment order, the writ petition was deemed to have become infructuous.

What were the facts?

The petitioner, Ramesh Kumar Jain, filed a writ petition challenging the order dated 20.09.2019 by the Assistant Commissioner of Income Tax (ACIT) rejecting his objection to the reopening of assessment for assessment year 2014-15 under Section 147 of the Income Tax Act, 1961. He also challenged the notice dated 28.02.2019 issued under Section 148. The writ petition was filed on 15.11.2019. During the pendency of the writ petition, the ACIT passed the final assessment order on 04.12.2019. The petitioner contended that the writ petition remained maintainable on legal grounds, specifically that the reassessment was ordered without cogent material and was based on a change of opinion, citing Supreme Court judgments. The revenue argued that the writ petition had become infructuous due to the subsequent assessment order.

What were the issues?

1. Whether the High Court, in its writ jurisdiction, can entertain a challenge to an order of reassessment under Section 147 of the Income Tax Act, 1961, even when a statutory alternative remedy of appeal is available, based on grounds of lack of cogent material and change of opinion? (Question of law and mixed fact and law, concerning Section 147 and Section 148 of the Income Tax Act, 1961). Assessee's contentions: The writ petition is maintainable as the ACIT's order for reassessment was passed without strong, cogent, and tangible material, and was based solely on a change of opinion, which is impermissible. The writ court has the power of judicial review to examine such actions, citing Calcutta Discount Co. Ltd. Vs. Income Tax Officer, Companies District I, Calcutta and others, (2007) 292 ITR 49 (Delhi), (KLM Royal Dutch Airlines Vs. Assistant Director of Income Tax), 2010 (2) SCC 723 (Commissioner of Income Tax, Delhi Vs. Kelvinator of India Limited), (1968) Volume 67 ITR 11, and (2018) 406 ITR 386 (T&AP) (Kumar's Metallurgical Corporation Ltd. Vs. Joint Commissioner of Income-Tax (Assessment)). Revenue's contentions: The writ petition has become infructuous and deserves rejection because a subsequent assessment order dated 04.12.2019 has been passed. The challenge to the notice and rejection of objection is no longer relevant, making the petition of academic interest.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

AI-generated summary — verify with the full judgment below

1 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 137 of 2019 Ramesh Kumar Jain S/o Late Shri Hiralal Jain, Aged About 63 Years Resident Of Navkaar Parisar, Pulgaon Naka, Raipur-491001, Chhattisgarh ---- Petitioner Versus

1.

Commissioner Of Income Tax Raipur, Aaykar Bhavan, Civil Lines, Raipur, Chhattisgarh

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Assistant Commissioner Of Income Tax 2(1), Income Tax Office, 32/32 Bungalows, Bhilai-490001, District Durg ---- Respondents For Petitioner : Mr. Neelabh Dubey, Advocate For Respondents : Mr. Amit Choudhari, Ms. Naushina Afrin Ali & Mr. Ajay Kumrani, Advocates Hon'ble Shri Justice P. Sam Koshy Order on Board 11/12/2019

1.

Being aggrieved of the order passed by the Assistant Commissioner of Income Tax (for short “ACIT”) dated 20.09.2019 (Annexure P-8) rejecting the objection filed by the petitioner in respect of reopening of the assessment of tax made for the assessment year 2014-15 under Section 147 of the Income Tax Act, 1961. The challenge is also to the notice dated 28.02.2019 (Annexure P-2) issued in this regard under Section 148 of the Income Tax Act, 1961. 2. The present writ petition was filed as early as on 15.11.2019. Today, when the matter was taken up for hearing, counsel appearing for the petitioner as also counsel appearing for the department submitted

2 that subsequent to the filing of the writ petition, the assessment order, in the light of Annexure P-2, has already been passed on 04.12.2019. 3. According to the counsel for the petitioner, in spite of the final order of is without any basis and is liable to be set aside/quashed as there is (1968) Volume 67 ITR 11, (2018) 406 ITR 386 (T&AP) (Kumar's

3 Metallurgical Corporation Ltd. Vs. Joint Commissioner of Income-Tax (Assessment).

5.

Counsel for the Department, on the contrary, opposing the petition submits that in view of the subsequent development, the present writ petition has since become infructuous and the same deserves to be rejected only on this ground. According to the Department, what is under challenge is the show cause notice and the rejection of the objection which was questioned by the petitioner. Meanwhile, the order of assessment itself has been passed by the ACIT vide order dated 04.12.2019, therefore, the present writ petition in its present form, challenging the notice for reassessment and the rejection of the objection, is no longer relevant and the petition as such has become of only academic interest. Thus, prayed for rejection of the writ petition.

6.

Having heard the contentions put forth on either side and on perusal of the record, this Court is in agreement to the submission made by the counsel for the petitioner as regards the authority of this Court, in the course of exercising the power of judicial review entertaining a writ petition even if there is a statutory alternative remedy available. The said issue is no longer res integra as it has been by now well settled by a catena of decisions of the Supreme Court as also of this Court that in a given case, even if there is an alternative statutory remedy available to a person, the High Court still in exercise of its power of judicial review can entertain a writ petition and decide the veracity of an order or an action.

4

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But at the same time, what also cannot be lost sight of is that the Supreme Court as also this Court while taking such a view at the same breath also has held that such exercise of judicial review should not be as a matter of course or routine. The Supreme Court has time and again laying down the principle held that once when the Act provides for a complete mechanism for assessment/reassessment, imposition of penalty etc. and the Act also provides for further remedy in the event of an order passed at a lower level, the assessee should not be permitted to abandon such mechanism provided under the Act and invoking the jurisdiction of the High Court under Article 226 of the Constitution of India. Some of the recent decisions of the Supreme Court in this regard are: 2009 (17) SCC 547 Bellary Steels & Alloys Ltd. Vs. Dy. Khatai

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