M/S. DEEPAK EXTRUSIONS PVT LTD vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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WP/16380/2015HC KarnatakaKAHC01026374201510 February 2017Bench: RAGHVENDRA S.CHAUHAN5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that an assessment order is an appealable order before the Commissioner of Income Tax (Appeals). Since an alternative efficacious remedy exists, the writ petition is not maintainable.

What were the facts?

The petitioner company received Rs. 51,80,000 as share application money from Kolkata-based companies. Investigations revealed these companies were bogus and non-operational. The Assessing Officer initiated reassessment proceedings under Section 147 of the Income Tax Act.

What were the issues?

The primary issue was the maintainability of a writ petition challenging an assessment order when an alternative appellate remedy is available. The petitioner also questioned the procedure followed by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 147,Section 143,Section 68,Section 132,Section 139

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 10TH DAY OF FEBRUARY 2017

BEFORE

THE HON’BLE MR.JUSTICE RAGHVENDRA S. CHAUHAN

Writ Petition No.16380/2015 (T-IT)

Between :

M/s. Deepak Extrusions Pvt. Ltd. A Company incorporated under the Companies Act, 1956 Having its office at: No.187/780, Yeranda Halli Village, Behind Page Industries, Dommasandra Industries Area, Bangalore-562158, Represented by its Director, Mr. Deepak Bethala, S/o. Prakash Bethala, Aged about 43 years.

…Petitioner

(By Sri Harish V. S., Advocate)

And :

The Deputy Commissioner of Income Tax Central Circle-1(4), Central Revenue Building, Queens Road, Bangalore-560001.

…Respondent

(By Sri K. V. Arvind, Advocate)

This Writ Petition is filed under Articles 226 & 227 of the Constitution of India praying to quash the impugned assessment order passed by the respondent U/s.147 read with Section 143 of the Income Tax Act, 1961, dated 31.03.2015 for the Assessment Year 2007-08 i.e., Annexure- ‘E’ and consequential notice of demand issued by the Respondent, Dated 31.3.2015 for the Assessment year 2007-2008 i.e., Annexure-‘F’ and etc.

This Writ Petition coming on for preliminary hearing in ‘B’ group this day, the Court made the following :

ORDER

The petitioner, M/s. Deepak Extrusions Pvt. Ltd., is aggrieved by the Assessment Order dated 31.3.2015, whereby the Assessing Officer has issued a demand notice for a sum of Rs.51,80,000/- being the opening balance of the share application money, as unexplained cash credit, under Section 68 of the Income Tax Act, 1961 (`Act’ for short).

2.

Briefly the facts of the case are that the petitioner claims that he had filed his Income Tax Returns on 26.10.2007, under Section 139 of the Act, for the Assessment Year 2007-08. He had declared his income as Rs.46,540/-, the same was processed on 24.12.2008 under Section 143(1) of the Act, and Nil demand was discovered.

3.

However on 8.2.2013, a search was made under Section 132 of the Act in the group cases of M/s. B.B.Jewellers and Finance Pvt. Ltd., and others. During the search certain incriminating evidence was discovered against the petitioner. It was discovered that the assessee company had received an

3 investment of Rs.51,80,000/- as share application money from various Kolkata based companies. However, subsequently an enquiry was carried out through the Director of Income Tax, Kolkata, and it was revealed that none of the investing companies are operating, and existing at the address given by these companies. Therefore, these companies are bogus companies. Considering the fact that an Income of Rs.51,80,000/- had been discovered as an undisclosed income, the Assessing Officer issued a notice on 8.5.2014, to the petitioner-Company for re-assessment of the income under section 147 of the Act. Immediately the petitioner submitted his objections to said notice. Subsequently, the assessment order was passed on 31.3.2015 in the aforementioned terms. Hence, this petition before this court.

4.

Mr. Harish V. S., the learned counsel for the petitioner, has pleaded that prior to passing the assessment order, the Assessing Officer is required to give reasons for re-assessing the income after giving an opportunely of hearing. Therefore, the assessment order is beyond the jurisdiction of the Assessing Officer.

5.

However, considering the fact that an assessment order is under challenge before this Court, considering the fact that an assessment order is an appelable order before the Commissioner of Income Tax (Appeals), this Court is of the firm opinion that the contention raised by the learned counsel for the petitioner can equally be raised before the Commissioner of Income Tax (Appeals). In case the jurisdiction has been exercised wrongly, or in case a procedure for excise of jurisdiction has been overlooked, or in case the petitioner is aggrieved by the assessment made by the Assessing Officer, the petitioner is free to challenge the same before the Commissioner of Income Tax (Appeals). But, once an alternative efficacious remedy is prescribed by the Law, once a procedure has been established by law, an assessee cannot be permitted to circumvent the same, and to rush before this Court by invoking the writ jurisdiction of this Court under Article 226 of Constitution of India. To invoke the writ jurisdiction in a case where an alternative remedy does exist, is

5 to ignore the tenor of law, and to overlook the wisdom of the legislature. Therefore, this Court is of the opinion that the present writ petition is not maintainable; it is, hereby, dismissed as not maintainable.

Sd/-

JUDGE

*bk/-

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