M/S SVC TEXTILE COMPANY PVT. LTD. vs. INCOME TAX OFFICER LUDHIANA AND ANR

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CWP/10174/2022HC Punjab & HaryanaPHHC01050474202230 May 2022Author: MR. JUSTICE TEJINDER SINGH DHINDSA,MR. JUSTICE PANKAJ JAIN4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the petitioner-company ought to avail of the statutory remedy of appeal under Section 246-A of the Income Tax Act. The Court referred to Supreme Court judgments in Munshi Ram vs. Municipal Committee, Chheharta, (1979) 3 SCC 83, Union of India vs. Guwahati Carbon Limited 2012 (11) SCC 651, and Commissioner of Income Tax and another vs. Chhabil Dass Aggarwal and another 2014(1) SCC 603, which emphasize that where a revenue statute provides a specific remedy, it must be sought in that forum and manner. While acknowledging that writ jurisdiction can be exercised in extraordinary circumstances and in cases of blatant violation of natural justice, the Court found that the assertion of violation of principles of natural justice in this case raises a question of fact. Such an issue should be raised in the appeal itself. The Court quoted from Magadh Sugar's case, stating that resort must be had to the statutory remedy before invoking the discretionary remedy under Article 226. Therefore, the writ petition was disposed of by granting liberty to the petitioner to avail the statutory remedy of appeal.

What were the facts?

The petitioner, M/s SVC Textile Company Pvt. Ltd., filed a writ petition before the High Court of Punjab & Haryana at Chandigarh, seeking to quash an assessment order dated 30.03.2022 passed by the Income Tax Officer, Ludhiana, along with a computation sheet and demand notice. The petitioner contended that while an appeal remedy exists, it would not be efficacious. They argued that the reopening of assessment was based on third-party information not shared with them, despite requests, thus violating principles of natural justice. The petitioner had replied to notices and requested details of the bank account where credit entries were alleged to have occurred, but the respondent proceeded with the assessment without providing this information.

What were the issues?

1. Whether the writ petition under Article 226 of the Constitution of India is maintainable despite the availability of an alternative statutory remedy of appeal under Section 246-A of the Income Tax Act, 1961, particularly when the petitioner alleges a violation of principles of natural justice due to non-disclosure of third-party information used for reopening assessment. Assessee's Contentions: - The statutory appeal remedy is not efficacious in this case. - The reopening of assessment is based on third-party information that was never shared, violating principles of natural justice. - Due to the violation of natural justice, the writ petition under Article 226 is maintainable, overriding the bar of alternative remedy. Reliance was placed on Magadh Sugar and Energy Ltd. Vs. State of Bihar and others, 2021 SCC Online SC 801. Revenue's Contentions: - The judgment does not record specific contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 246-A

AI-generated summary — verify with the full judgment below

CWP-10174-2022 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH 128 CWP-10174-2022 Date of Decision : 30.05.2022 M/s SVC Textile Company Pvt. Ltd. --Petitioner Versus Income Tax Officer Ludhiana and another --Respondents CORAM:- HON'BLE MR.JUSTICE TEJINDER SINGH DHINDSA HON'BLE MR.JUSTICE PANKAJ JAIN Present:- Mr. K.L.Goyal, Sr. Advocate with Mr. Rishab Singla, Advocate for the petitioner. ... TEJINDER SINGH DHINDSA, J.(ORAL). Petitioner-company has filed the instant petition seeking quashing of the order dated 30.03.2022 (Annexure P-12) passed by the 2nd respondent along with computation sheet dated 30.03.2022 (Annexure P-13), notice of the demand dated 30.03.2022 (Annexure P-14), whereby assessment of the petitioner-company has been framed.

We have heard learned senior counsel at length. Even though in para 22 of the writ petition, it has been averred that remedy of the appeal does lie under the statute itself but it has been contended that same would not be an efficacious remedy. It was primarily contended that during the course of proceedings the petitioner has replied to the notices served and have requested for copy of details of the bank account in which the credit ANJU GOEL 2022.05.31 18:40 I attest to the accuracy and integrity of this document Chandigarh

CWP-10174-2022 -2- entries in question have taken place as had been alleged. However, instead of providing the same, respondent No.2 has proceeded with the assessment proceedings and has passed the impugned order. Further contended that the reopening of the assessment is based upon third party information which was never shared with the petitioner despite repeated requests and as such the action is in negation of the principles of natural justice. It is strenuously urged that under such circumstances, the alternative remedy of an statutory appeal would not be seen as a bar as regards the maintainability of a writ petition under Article 226 of the Constitution of India. Having heard learned counsel at length, we are, however, of the considered view that the petitioner-company ought to avail of a statutory remedy of appeal under Section 246-A of the Income Tax Act. In taking such view, we may refer to the judgment of the Hon'ble Supreme Court in Munshi Ram vs. Municipal Committee, 2022.05.31 18:40 I attest to the accuracy and integrity of this document Chandigarh

CWP-10174-2022 -3- placed reliance upon a recent judgment of the Hon'ble Supreme Court It is an issue which the petitioner-company ought to raise in appeal itself. Even in the case of Magadh Sugar's case (supra) it had been observed as follows : “Wherein a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.”

In view of the above and without opining on the merits of the case, the writ petition is disposed of in terms of granting liberty to the ANJU GOEL 2022.05.31 18:40 I attest to the accuracy and integrity of this document Chandigarh

CWP-10174-2022 -4- petitioner-company to avail of the statutory remedy as has been provided under the statute. (TEJINDER SINGH DHINDSA) JUDGE (PANKAJ JAIN ) JUDGE 30.05.2022 anju i) Whether speaking/reasoned? Yes/No ii) Whether reportable? Yes/No ANJU GOEL 2022.05.31 18:40 I attest to the accuracy and integrity of this document Chandigarh

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