M/S SOUTHERN ISPAT AND ENERGY LIMITED vs. UNION OF INDIA

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WPT/169/2021HC ChhattisgarhCGHC01022414202116 March 2022Bench: HON'BLE SHRI JUSTICE PARTH PRATEEM SAHU5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the writ petition was not maintainable. The primary challenge was to the initiation of proceedings under Section 148 based on the alleged non-issuance of a valid sanction order under Section 151. The Court perused the sanction order, which was placed on record, and found that it bore a DIN and document number, along with the name and designation of the authority granting the sanction. Therefore, the submission of the petitioner regarding the invalidity of the sanction due to lack of DIN was found to be without merit. The Court also noted that the respondents had pleaded in their reply that the case record was forwarded for approval under Section 151. The argument that the sanction was granted in a perfunctory manner was also not sustainable. Crucially, the Court referred to the Supreme Court's decision in *The Assistant Commissioner (supra)*, which held that while an alternative remedy is not an absolute bar to writ jurisdiction, a writ petition can only be entertained in exceptional circumstances such as a breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or challenge to the vires of a statute. The Court found that none of these exceptions were established in the present case. Given the availability of the alternative remedy under Section 246A of the IT Act and the absence of exceptional circumstances, the Court was not inclined to entertain the writ petition. The petition was accordingly dismissed, with liberty granted to the petitioner to approach the appellate authority.

What were the facts?

The petitioner, M/s Southern Ispat And Energy Limited, challenged the issuance of a notice under Section 148 of the Income Tax Act, 1961, by the Income Tax department. The primary grounds for challenge were that the sanction under Section 151 of the IT Act was void due to the absence of a valid digital signature and a verified Document Identification Number (DIN), and that objections were dealt with mechanically, violating principles of natural justice. The respondents contended that the approval under Section 151 bore the DIN of the competent authority and that the petitioner had already filed objections, which were dismissed, leading to a final assessment order. They argued that the petitioner's remedy lay in filing an appeal under Section 246A of the IT Act. The petitioner maintained that a writ petition could be entertained even after the final assessment order, as the very authority of the sanctioning authority was challenged.

What were the issues?

1. Whether the writ petition is maintainable despite the existence of an alternative remedy under Section 246A of the Income Tax Act, 1961, given the challenge to the validity of the sanction under Section 151 of the IT Act. (Question of law and fact) 2. Whether the sanction granted under Section 151 of the IT Act is void for not bearing a valid digital signature and a verified DIN, thereby vitiating the proceedings under Section 148 of the IT Act. (Question of law and fact) Assessee's Contentions: - The sanction under Section 151 of the IT Act is void as it lacks a valid digital signature and verified DIN. Verification of the provided DIN online showed 'no record'. - The objections raised were decided mechanically, violating principles of natural justice. - Even with a final assessment order, a writ petition can be entertained when the authority of the sanctioning authority is challenged. - Reliance was placed on CBDT circular dated 14.08.2019, stating that proceedings without DIN are invalid. - Reliance was placed on Supreme Court judgments in *The Assistant Commissioner of State Tax and others Vs M/s Commercial Steel Limited* and *Radha Krishan Industries Vs State of Himachal Pradesh and others* to argue that the alternative remedy does not bar writ jurisdiction in exceptional circumstances. Revenue's Contentions: - The approval under Section 151 of the IT Act bears the DIN of the competent authority, which is computer-generated. - The petitioner has an alternative remedy of appeal under Section 246A of the IT Act, as a final assessment order has been passed. - The ground regarding DIN verification is not acceptable as the requirement is the mention of DIN, which is present. - Digital signatures are not required for internal communication, and Section 282A of the IT Act mandates the mention of name and designation, which is present. - Reliance was placed on a Division Bench judgment of the High Court in WA-521 of 2018, stating writ petitions are not maintainable after final assessment order when appeal is available.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 246A,Section 282A

AI-generated summary — verify with the full judgment below

NAFR HIGH COURT OF CHHATTISGARH, BILASPUR WPT No. 169 of 2021 • M/s Southern Ispat And Energy Limited Through Its Managing Director Shri Vivek Agarwal, Aged About 47 Years, Having Its Registered Office At 14/448(2) Ksn Illam, Ground Floor, Near Sbi Kunnathurmedu (Po), Palakkad, Kerala 678013, District : Palakkad, Kerala ---- Petitioner Versus 1. Union Of India Through Its Secretary, Ministry Of Finance, (Department Of Revenue) No. 137, North Block, New Delhi - 110001 2. National Faceless Assessment Centre, Delhi Through Additional / Joint / Deputy / Assistant Commissioner Of Income Tax / Income Tax Officer, Income Tax Department, North Block, New Delhi - 110001 3. National E-Assessment Centre, Delhi Through Additional / Joint / Deputy / Assistant Commissioner Of Income Tax / Income Tax Officer, Income Tax Department, North Block, New Delhi - 110001. 4. Principal Commissioner Of Income Tax - 2 Raipur, Office Of Commissioner Of Income Tax, New C.R. Building, Civil Lines, Raipur, Chhattisgarh. 5. Joint Commissioner Of Income Tax Range 4, Raipur, New C.R. Building, Civil Lines, Raipur, Chhattisgarh. 6. Income Tax Officer Ward 4(1), Raipur, Office Of Income Tax Officer, Raipur, Civil Lines, Raipur, Chhattisgarh ---- Respondents ------------------------------------------------------------------------------------------------------------------ For Petitioner : Shri Apurv Goyal, Advocate For Respondents-1 to 3 : Shri Bhupendra Kumar Pandey, Advocate For Respondents- 4 to 6 Shri Amit Chaudhary, and Shri Ajay Kumrani, Advocates ------------------------------------------------------------------------------------------------------------------ Hon'ble Shri Justice Parth Prateem Sahu Order on Board 17.03.2022 1. Petitioner/Company in this writ petition has challenged issuance of notice under Section 148 of the Income Tax Act, 1961 (for short,’IT Act’) by Income Tax department on the ground mentioned therein, particularly raising ground that sanction under Section 151 of the IT Act is void, because sanction does not bear a valid digital signature as well as does not have verified DIN (Document Identification Number) and further, objections raised are decided in

Wpt 169 of 2021 2 a very mechanical manner, without considering the same in objective manner. Hence there is violation of principles of natural justice. 2. Respondents submitted reply to Writ Petition pleading that approval has been accorded by competent authority. Approval under Section 151 of the IT Act bears DIN of competent authority, which is a computer generated number. He also submits that after receiving notice under Section 148 of the IT Act, petitioner has already submitted an objection to proceeding, which was considered and objection raised by petitioner has been dismissed. Thereafter, final assessment order was passed on 23.09.2021, and therefore, petitioner is having remedy to appeal under Section 246A of the IT Act. 3. Shri Apurv Goyal, learned counsel for the petitioner would submit that in the facts and circumstances of case, even if final assessment order is passed, Writ Petition can be entertained as petitioner has challenged the very authority of sanctioning /approval authority, as the sanction under Section 151 of the IT Act has not been accorded by any competent authority. He submits that after receiving sanction accorded under Section 151 of IT Act, he verified DIN online, but computer shown as ‘no record’ for the given document number. Hence, prima facie the DIN mentioned in the sanction order itself is not correct. He submits that in view of circular dated 14.08.2019 issued by the Central Board of Direct Taxes (CBDT), when proceedings initiated by the Department, does not bear DIN, it shall be treated as invalid and shall be deemed to have never been issued. Hence, in the facts of the case, sanction/ approval accorded under Section 151 of the IT Act is to be treated as not granted by competent authority. Proceeding under Section 148 of the IT Act is initiated without sanction or approval hence in absence of sanction to proceeding, entire proceeding is vitiated in the eyes of law. He also submits that in para-4 of reply filed by respondent it is mentioned that when Assessing Officer

Wpt 169 of 2021 3 forwarded the case, sanction has been granted initially manually, but as per document placed on record, it would show that sanction has been accorded on 22.02.2020. Counsel for petitioner places reliance upon judgments passed by Hon’ble Supreme Court in cases of The Assistant Commissioner of State Tax and others Vs M/s Commercial Steel Limited in Civil Appeal- 5121 of 2021 dated 03.09.2021 and Radha Krishan Industries Vs State of Himachal Pradesh and others reported in 2021 SCC Online SC 334 in support of his contention that availability of alternative remedy of appeal will not come in the way in exercise of jurisdiction under Article 226 of Constitution of India. 4. Shri Amit Chaudhary, learned counsel for respondent would submit that as final assessment order has already been issued on 23.09.2021, in view of judgment passed by Division Bench of this Court in WA-521 of 2018, Writ petition will not be maintainable and petitioner is required to file duly constituted appeal under Section 246A of the IT Act. He also submits that ground raised by learned counsel for the petitioner that DIN could not be verified hence, the proceeding is vitiated is not acceptable because, DIN is computer generated number and it is specifically mentioned in sanction order under Section 151 of the IT Act. Requirement under Circulars and provisions of law under the IT Act is that, there shall be mention of DIN in the document issued by competent authority, which is available in the document. He contended that digital signature in internal communication is not required because sanction order is addressed to assessing Officer. Under Section 282A of the IT Act, it mandates that document shall bear name and designation of authority which is already part of sanction order under Section 151 of the IT Act. He contended that last submission of learned counsel for the petitioner that manual sanction was accorded on 06.02.2020 as pleaded in their reply is also not correct.

Wpt 169 of 2021 4 5. I have heard learned counsel for the parties. 6. Challenge in this Writ Petition is primarily with respect to initiation of proceeding under Section 148 is raised only on the ground of non-issuance of sanction order under Section 151 of IT Act by competent authority. Perusal of sanction granted by competent authority at Page-35 would reflect that it bears DIN and document number. This document specifically bears name and designation of authority according sanction/approval under Section 151 of the IT Act. Hence, in view of submission of learned counsel for the respective parties and considering documents placed on record, wherein DIN is specifically mentioned, I do not find any merit in submission of learned counsel for the petitioner. 7. Pleading in reply, particularly in paragraph-4, respondents have very categorically pleaded that for obtaining approval under Section 151 of the IT Act, case record was also forwarded to respondent-4. Submission of learned counsel for the petitioner that sanction has been accorded in a perfunctory manner is also not sustainable. Undisputedly, final assessment order has already been passed on 23.09.20221. 8. Hon’ble Supreme Court in case of The Assistant Commissioner (supra) has considered the maintainability of writ petition when alternative statutory remedy is available and held as under: “11. The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights;

Wpt 169 of 2021 5 (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation” 9. Hon’ble Supreme Court has held that writ petition can be entertained in exceptional circumstances, which are mentioned therein. In the opinion of this Court, none of above exceptions is established. Hence, in view of alternative remedy available in favour of petitioner under Section 246 A of the IT Act. 10. I am not inclined to entertain this writ petition. Case law relied upon by learned counsel for the petitioner to support his contention that writ petition is maintainable is also mentions that writ petition can be entertained only in exceptional circumstances. Hence petitioner cannot get any benefit of aforementioned judgment relied upon. 11. For the foregoing discussions, I do not find any merit in writ petition. It is liable to be dismissed and is accordingly dismissed. However, petitioner will be at liberty to approach appellate authority by way of filing an appeal challenging order of assessment. Sd/- (Parth Prateem Sahu) JUDGE

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