Midland Polymers Limited Through Director Shri Satyanarayan Rathi vs. Income Tax Department

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WP/4926/2022HC Madhya Pradesh11 April 2022Bench: HON'BLE SHRI JUSTICE VIVEK RUSIA4 pages
For Petitioner: Ashish GoyalFor Respondent: Veena Mandlik
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petitions. The Court noted that the petitioner had initially challenged the show-cause notice under Section 148, but during the pendency of the petitions, the final assessment orders were passed. The petitioner had not amended the writ petitions to challenge these assessment orders, and therefore, they could not be examined in the present petitions. The Court acknowledged that the assessment orders are appealable and that there is a mandatory pre-deposit condition which cannot be waived. While the petitioner challenged the jurisdiction, the Court held that examining the merits of whether there was material before the Assessing Officer to initiate proceedings under Section 148 would require delving into the merits of the case, which is not permissible under Article 226 of the Constitution. The appellate authority is competent to decide such issues. Furthermore, the impugned show-cause notice under Section 148 no longer survived as the final assessment order had been passed. The dismissal of the petitions was without prejudice to the appellate authority's right to decide the appeal on its merits, as the High Court had not expressed any opinion on the merits.

What were the facts?

The petitioner, Midland Polymers Limited, filed writ petitions challenging notices issued under Section 148 of the Income Tax Act, 1961, by the Income Tax Department (respondents) to re-open the income tax return for the assessment year 2013-2014. The petitioner contended that the Assessing Officer had not obtained the requisite approval from the specified authority under Section 151 of the Act before issuing the notice and that the reasons recorded for re-opening were unsustainable. During the pendency of the writ petitions, the Assessing Officer completed the assessment and passed final assessment orders and demands for assessment years 2013-2014, 2014-2015, and 2015-2016. The petitioner subsequently filed applications for stay.

What were the issues?

1. Whether the High Court can entertain a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961, when the assessment proceedings have been completed and a final assessment order has been passed, despite the availability of an alternative remedy of appeal? (Question of law and mixed fact and law, concerning Section 148 and Article 226 of the Constitution of India). Assessee's Contentions: - The action of re-opening the assessment is illegal, arbitrary, and beyond the Assessing Officer's jurisdiction, as the requisite approval under Section 151 was not obtained. - The reasons recorded for re-opening are unsustainable and show non-application of mind. - The Court can interfere at this stage despite the alternative remedy, citing violations of natural justice, lack of jurisdiction, or lengthy proceedings. - The demand is substantial (crores of rupees), and the mandatory pre-deposit for appeal makes the alternative remedy inefficacious. Revenue's Contentions: - The writ petition is liable to be dismissed for want of an alternative and efficacious remedy, as the petitioner has the right to appeal against the assessment order before the appellate authority. - All grounds raised in the petition can be raised before the appellate authority.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 143(1),Section 139(1)

AI-generated summary — verify with the full judgment below

Before: HONBLE SHRI JUSTICE VIVEK RUSIA & HONBLE SHRI JUSTICE AMAR NATH (KESHARWANI) & AND

- : 1 :- W.P. Nos. 4926/2022, 4930/2022 & 4931/2022 HIGH COURT OF MADHYA PRADESH: BENCH INDORE BEFORE HON'BLE SHRI JUSTICE VIVEK RUSIA & HON'BLE SHRI JUSTICE AMAR NATH (KESHARWANI) ON THE 11th OF APRIL, 2022 WRIT PETITION No. 4926 of 2022 Between:- MIDLAND POLYMERS LIMITED THROUGH DIRECTOR SHRI SATYANARAYAN RATHI S/O SHRI GHISALAL RATHI , AGED ABOUT 59 YEARS, OCCUPATION: BUSINESS 101, FIRST FLOOR, 251 NAYAPURA, INDORE (MADHYA PRADESH) .....PETITIONER AND 1. INCOME TAX DEPARTMENT CENTRAL CIRCLE-2, INDORE AAYAKAR BHAWAN, OPP. WHITE CHURCH ROAD, RESIDENCY AREA, INDORE (MADHYA PRADESH) 2. PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) AAYAKAR BHAWAN, HOSHANGABAD ROAD (MADHYA PRADESH) .....RESPONDENTS WRIT PETITION No. 4930 of 2022 Between:- MIDLAND POLYMERS LIMITED THRUGH DIRECTOR SHRI SATYANARAYAN RATHI S/O SHRI GHISALAL RATHI , AGED ABOUT 59 YEARS, OCCUPATION: BUSINESS 101, FIRST FLOOR, 251 NAYAPURA, INDORE (MADHYA PRADESH) .....PETITIONER AND 1. INCOME TAX DEPARTMENT CENTRAL CIRCLE-2, INDORE, AAYAKAR BHAWAN, OPP. WHITE CHURCH ROAD, RESIDENCY AREA, INDORE (MADHYA PRADESH) 2. PRINCIPAL COMMISSIONER INCOME TAX (CENTRAL) AAYAKAR BHAWAN, HOSHANGABAD ROAD (MADHYA PRADESH) .....RESPONDENTS WRIT PETITION No. 4931 of 2022 - : 2 :- W.P. Nos. 4926/2022, 4930/2022 & 4931/2022 Between:- MIDLAND POLYMERS LIMITED THROUGH DIRECTOR SHRI SATYANARAYAN RATHI S/O SHRI GHISALAL RATHI, 101, FIRST FLOOR, 251 NAYAPURA (MADHYA PRADESH) .....PETITIONER AND 1. INCOME TAX DEPARTMENT CENTRAL CIRCLE 2 INDORE INCOME TAX DEPARTMENT CENTRAL CIRCLE 2 AAYKAR BHAWAN, OPP. WHITE CHURCH ROAD, RESIDENCY AREA (MADHYA PRADESH) 2. PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) AAYAKAR BHAWAN, HOSHANGABAD ROAD (MADHYA PRADESH) .....RESPONDENTS

Shri Ashish Goyal, learned counsel for the petitioner in all the aforesaid writ petitions.

Ms. Veena Mandlik, learned counsel for the respondents. O R D E R Per Vivek Rusia, J :

As the identical issues are involved in all the aforesaid writ petitions, therefore, they are being disposed of by this common order. For the sake of convenience, facts narrated in W.P. No.4926/2022 are being taken into consideration.

The petitioner has filed this petition being aggrieved by notice issued u/s. 148 of the Income Tax Act by the respondents whereby the respondents have re-opened the income tax return submitted by him for the year 2013-2014.

According to the petitioner, the aforesaid action is wholly illegal, arbitrary and beyond jurisdiction of the Assessing Officer. Respondent No.1 has not obtained the requisite approval of the specified authority u/s. 151 of the Income Tax Act before the issuing the impugned notice. - : 3 :- W.P. Nos. 4926/2022, 4930/2022 & 4931/2022

The shares of the petitioner company were traded on Bombay Stock Exchange. The return of the income u/s. 139(1) at Rs.17,08,055/- claiming refund of Rs.37,460/- was processed u/s. 143(1) of the Act on 18.2.2015.

According to Shri Ashish Goyal, learned for the petitioner, the reasons recorded by the Assessing Officer for re-opening of the assessment are not sustainable and suffers from non-application of mind. In support of his contention he has placed reliance over various judgments passed by the High Court of Bombay and High Court of Delhi and submits that this Court can interfere at this stage with the impugned notice issued u/s. 148 of the Income Tax Act despite availability of alternate remedy of appeal.

During pendency of this petition, the Assessing Officer has completed the assessment and has passed the final assessment order and demand for the year 2013-2014, 2014-2015 and 2015-2016 which the petitioner has filed along with the application for stay.

Ms. Veena Mandlik, learned counsel appearing for the respondents/revenue, submits that now the present petition is liable to be dismissed for want of alternative and efficacious remedy as the petitioner is having remedy of appeal before the appellate authority i.e. the Commissioner against the assessment order. All the grounds raised in the present petition are available to the petitioner to be raised before the appellate authority.

Learned counsel for the petitioner submits that it is settled law that where there has been violation of principle of natural justice; order or proceedings are without jurisdiction or availing of alternative efficacious remedy subjects a person to a very lengthy proceedings, the writ petition can be entertained by this Court. It is further - : 4 :- W.P. Nos. 4926/2022, 4930/2022 & 4931/2022 submitted that the demand is of Crores of rupees which the petitioner is unable to pay and for filing an appeal, there is a mandatory requirement of pre-deposit, hence this petition be entertained.

Initially, the petitioner has filed the present petitions challenging the show-cause notice and during pendency of the petitions, the assessment proceedings have been completed and final order has been passed. The petitioner has not amended the writ petition challenging the validity of the assessment order, hence the same cannot be examined in this petition. Admittedly, the assessment order is appellable and there is a pre-deposit condition which cannot be relaxed or waived. The petitioner is challenging the jurisdiction of the authority mainly on the ground that there was no material before the Assessing Officer to initiate the proceedings u/s. 148 of the Income Tax Act. In order to decide this issue, this Court is required to examine the merits of the case which is not permissible under Article 226 of the Constitution of India. The appellate authority is competent to decide as to whether there was any material before issuing the show-cause notice or not? Even otherwise, the impugned show-cause notice does not survive now as the final assessment order has been passed. Hence, these petitions are liable to be dismissed.

Accordingly, all these petitions are dismissed. However, it is made clear that dismissal of these petitions shall not come in the way of appellate authority to decide the appeal on merits of the case as this Court has not expressed any opinion on the merits of the case. [ VIVEK RUSIA ] [AMAR NATH (KESHARWANI)]

JUDGE. JUDGE. Alok/- Digitally signed by ALOK GARGAV Date: 2022.04.19 13:12:48 +05'30'

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