AMRITSARIA MAL JAIN AND SONS vs. PRINCIPAL COMMISSIONER OF INCOME TAX, PATIALA

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CWP/4909/2022HC Punjab & HaryanaPHHC01024120202215 July 2022Author: MR. JUSTICE TEJINDER SINGH DHINDSA,MR. JUSTICE PANKAJ JAIN6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the writ petition was not maintainable. The Court noted that the petitioner had filed a reply to the show cause notice and subsequently filed the writ petition before any order was passed by the revisional authority. Crucially, the revisional authority had passed a final order during the pendency of the writ petition, which the petitioner failed to challenge or bring to the Court's notice. The Court emphasized that in the absence of a challenge to the final order passed pursuant to the show cause notice, and with an alternate remedy available to the petitioner to challenge that final order, the writ petition would not be maintainable. The Court relied on the Supreme Court's decision in Commissioner of Income Tax, Gujarat vs. Vijaybhai N. Chandrani (2013) 14 SCC 661, which held that aggrieved parties must exhaust alternate remedies before approaching the writ court, and that writ petitions should not be entertained against show cause notices when statutory remedies are available. The Court also distinguished the cases cited by the petitioner, stating that they did not address the issue of the availability of an alternate remedy. Therefore, the writ petition was dismissed.

What were the facts?

The petitioner, Amritsaria Mal Jain and Sons, a partnership firm, filed a writ petition challenging a show cause notice issued under Section 263(1) of the Income Tax Act, 1961, for assessment year 2017-18. The notice proposed revision of an order passed under Section 143(3). The petitioner had surrendered Rs. 30 lakhs after a survey under Section 133A on 19.09.2016, and disclosed this as an increase in closing stock and partners' capital in its return filed on 02.11.2017. The assessment order under Section 143(3) was passed on 29.05.2019, accepting the returned income. The show cause notice under Section 263(1) was issued on 05.10.2020, over three years later. The petitioner filed a reply on 17.08.2021. Before any order was passed by the revisional authority, the writ petition was filed. The petitioner's counsel admitted that the revisional authority had passed an order before 31.03.2022, during the pendency of the writ petition, but this order was not challenged.

What were the issues?

1. Whether the writ petition is maintainable against a show cause notice issued under Section 263(1) of the Income Tax Act, 1961, even after the assessee has filed a reply thereto, and when the revisional authority has already passed a final order which remains unchallenged. The petitioner argued that a writ petition is maintainable against a show cause notice under Section 263(1) even at that stage, citing judgments from other High Courts: Ashoka Buildcon Ltd. vs. Assistant Commissioner of Income Tax and another (2010) 325 ITR 574 (Bom), Virendra Kumar Jhamb vs. N.K. Vohra, Commissioner of Income Tax and others (2009) 222 CTR (Bom) 88, and LG Electronics India (P) Ltd. vs. Principal Commissioner of Income Tax (2016) 143 DTR (All) 105. The petitioner's counsel admitted that the revisional authority had passed an order during the pendency of the writ petition. The respondent (Revenue) did not file any specific arguments recorded in the judgment, but the High Court's reasoning implies reliance on the principle of exhausting alternative remedies.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 133A

AI-generated summary — verify with the full judgment below

CWP-4909-2022 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP-4909-2022 (O&M) Date of Decision: 15.07.2022 Amritsaria Mal Jain and sons

.... Petitioner Versus Principal Commissioner of Income Tax, Patiala .... Respondent CORAM: HON'BLE MR. JUSTICE TEJINDER SINGH DHINDSA HON'BLE MR. JUSTICE PANKAJ JAIN Present: Mr. S.K. Mukhi, Advocate for the petitioner. ****

PANKAJ JAIN

, J.

Petitioner an assessee under Income Tax Act, 1961 (hereinafter referred to as 'Act') is a partnership firm. By way of present writ petition, challenge has been laid to show cause notice issued under Section 263(1) of the Act qua assessment year 2017-18, whereby the revisional authority has asked the petitioner to show cause as to why order passed under Section 143(3) of the Act be not revised.

2.

As per the facts pleaded in the petition, survey under Section 133A of the Act was conducted at the premises of assessee on 19.09.2016. The petitioner voluntarily surrendered total amount of Rs.30 lakhs vide Annexure P-1. The petitioner claimed that he has been filing his regular return. Return for the assessment year 2017-18 was filed on 02.11.2017 declaring an income of Rs.30,78,270/-, wherein surrendered income was also disclosed treating the same as increase in closing stock and increase in capital account of partners. As per the DINESH KUMAR 2022.07.15 16:16 integrity of this document

CWP-4909-2022 (O&M) 2 petitioner, assessment order under Section 143(3) of Act was passed on 29.05.2019 accepting the returned income as submitted by the petitioner. The order has been placed on record as Annexure P-5. 3. Thereafter on 05.10.2020, after a gap of more than 3 years, the petitioner has been served with the impugned notice under Section 263(1) of the Act. The petitioner responded to the same vide reply dated 17.08.2021. Before any order could be passed by the revisional authority, the present writ petition has been filed. The matter came up for preliminary hearing on 11.03.2022. On the request made by counsel for the petitioner, the same was adjourned to 16.03.2022. On 16.03.2022, the matter was taken up through video conferencing in the light of Pandemic Covid-19. Owning to connectivity issue, the matter was again adjourned to 05.04.2022. On 05.04.2022, the following order was passed:- “Counsel seeks a short accommodation to cite certain judicial precedents of this Court to advance his contention that exercise of jurisdiction under Article 226 of the Constitution of India would be warranted even at the stage of issuance of a show cause notice under Section 263 (1) of the Income Tax Act, 1961 and that too in a situation where the assessee has already responded and submitted a reply thereto. List on 04.05.2022”

4.

On 04.05.2022, counsel further sought time to address arguments and the matter was adjourned to 25.05.2022. On 25.05.2022, again on request made by counsel for the petitioner, the matter was DINESH KUMAR 2022.07.15 16:16 integrity of this document

CWP-4909-2022 (O&M) 3 effort was made to place on record the said order and/or to challenge the same. Be that as it may, the fact remains that the final order pursuant to show cause notice already stands passed and the same is not subject DINESH KUMAR 2022.07.15 16:16 integrity of this document

CWP-4909-2022 (O&M) 4 reported as (2013) 14 SCC 661, wherein Apex Court held that: “xx xx xx

14.

In our considered view, at the said stage of issuance of the notices under Section 153C, the assessee could have addressed his grievances and explained his stand to the Assessing Authority by filing an appropriate reply to the said notices instead of filing the Writ Petition impugning the said notices. It is settled law that when an alternate remedy is available to the aggrieved party, it must exhaust the same before approaching the Writ Court. In Bellary Steels & Alloys Ltd. v. CCT, (2009) 17 SCC 547, this Court had allowed the assessee therein to withdraw the original Writ Petition filed before the High Court as the said proceedings came to be filed against the show-cause notice and observed that the High Court should not have interfered in the matter as the Writ Petition was filed without even reply to the show cause notice. This Court further observed as follows: “3.…In the circumstances, we could have dismissed these civil appeals only on the ground of failure to exhaust statutory remedy, but for the fact that huge investments involving DINESH KUMAR 2022.07.15 16:16 integrity of this document

CWP-4909-2022 (O&M) 5 the large number of industries is in issue.” 15. the said appeal with the following observations:

“5. This and the other facts cannot be taken up for consideration by this Court for the first time. In our opinion, the High Court was right in coming to the conclusion that it is appropriate for the appellants to file a reply to the show-cause notice and take whatever defence is open to them.”

16.

In the present case, the assessee has invoked the Writ jurisdiction of the High Court at the first instance without first exhausting the alternate remedies provided under the Act. In our considered opinion, at the said stage of proceedings, the High Court ought not have entertained the Writ Petition and instead should have directed the assessee to file reply to the said notices and upon receipt of a decision from the Assessing Authority, if for any reason it is aggrieved by the said decision, to question the same before the forum provided under the Act.

17.

In view of the above, without expressing any opinion on the correctness or otherwise of the construction that is placed by the High Court on DINESH KUMAR 2022.07.15 16:16 integrity of this document

CWP-4909-2022 (O&M) 6 Section 153C, we set aside the impugned judgment and order. xx xx xx”

10.

Same view has been taken by this Court in CWP-10480- 2022 titled as “Anup Transport Co. Pvt. Ltd. vs. National Faceless Assessment Centre & others, decided on 30.05.2022. 11. In the matters cited by the petitioner, we find that the question with respect to the alternate remedy being available to the petitioner has not been addressed. Hence, the same will not be applicable to the present case.

12.

As a sequel of aforesaid discussion, we find no merit in the present case and the same is dismissed. (TEJINDER SINGH DHINDSA) (PANKAJ JAIN) JUDGE JUDGE

15.07.

2022 Dinesh

Whether speaking/reasoned : Yes/No Whether Reportable : Yes/No DINESH KUMAR 2022.07.15 16:16 integrity of this document

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