Cwp/10702/2015 Of M/S Jindal Steel And Power Tltd v. The Commissioner Of Income Tax Hissar And Anr

IN THE HIGH COURT OF PUNJAB AND HARYANAATCHANDIGARH CWP No.10702 of 2015Date of decision: 24.2.2016 M/s Jindal Steel and Power Limited ceceee Petiti The Commissioner of Income lax, Hissar and another| S.... Responde CORAM: HON’BLE MR. JUSTICEK AJAY KUMAR MITTALHON’BLE MRS. JUSTICEK RAJ RAHUL GARG 1. Whether Reporters of local papers may be allowed to see thejudgment? 2. To be referred to the Reporters or not? |YES3. Whether the judgment should be reported 1n the Digest? Present: Mr. Ajay Vohra, Sr. Advocate withMr. Vishal Gupta, Advocate and Mr. Rohit Jain,Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondent. | Ajay Kumar Mittal,J. ].The petitioner prays for quashing the order dated27.3.2015, Annexure P.1 passed under Section 263 of the Income Tax Act, 1961 (in short, “the Act’) vide which assessment order dated4.3.2013 passed under section 147 of the Act by respondent No.2 wasset aside and the Assessing Officer was directed to make freshassessment after making necessary and proper enquiry/investigation. A few facts relevant for the decision of the controversy CWP No.10702 of 2015 involved as narrated in the petition may be noticed. Ihe petitioner 1s apublic limited company. It is engaged, inter-alia, in the business ofmanutacture/generation of steel, power, iron, pig iron, sponge iron etc.at various separate and independent individual units/undertakingslocated at Raigarh and other locations. For the previous year relevantto the assessment year 2005-06 viz. the year under consideration, thepetitioner filed revised return of income on 30[th]March 2007 declaringnecome of=a92,06,88,890/-. In the return of income, the petitionerclaimed certain deductions under sections SOIJ[A and SOIB of the AcThe said deductions were supported by the audit report in prescribedForm No.l0OCCB filed alongwith the return of income. All the units inrespect of which deduction under sections 8Q0IA and 8O0IB of the Awas claimed by the petitioner in the assessment year 2005-06 wereseparate industrial units/undertakings, independently eligible fordeduction under the respective sections. The said units were set up inthe earlier assessment years and the eligibility of the petitioner to claimdeduction under sections 80IA and 80IB of the Act in respect of profitsderived from various units was subject matter of not only in the earlierassessment years but also in the assessment year under consideration,Original assessment under section 143(3) of the Act for the assessmentyear 2005-06 was completed vide order dated 31.12.2007, AnnexureP.3 after examining claim of deduction under sections 8OIA and 80IB CWP No.10702 of 2015 4 CWP No.10702 of 2015 4 Aggrieved by the order, the petitioner filed appeal before theCommissioner of Income lax (Appeals) |CIT(A)] which was partlyallowed vide order dated 11.11.2008, Annexure P.4. While adjudicatingthe appeal filed by the petitioner, the CIT(A) examined the claim ofdeduction under sections SOIA and 8OIB of the Act and therefore, onthe issue of deduction claimed under the said sections, the assessmentorder stood merged with the order of the CIT(A). Against the orderpassed by the CIT(A) dated 11.11.2008, Annexure P.4, cross appealswere filed by the petitioner and the respondents before the Tribunal.Vide order dated 6.3.2014, Annexure P.5, the appeal filed by thepetitioner was partly allowed whereas the appeal filed by the revenuewas dismissed. Thereafter, the petitioner filed appeal before this Courtbearing ITA Nos.281 and 282 of 2014 on the issue of taxability ofsubsidy/incentive which were admitted vide order dated 16.12.2014,Annexure P.6. In the meantime, reassessment proceedings for theassessment year 2005-06 1.e. the year under consideration wereinitiated by the Assessing Officer vide notice dated 23.3.2012, undersection 148 of the Act 1.e. after expiry of four years from the end of therelevant assessment year. The Assessing Officer rejected the legalobjections raised by the petitioner and proceeded to completereassessment vide order dated 4.3.2013 under section 143(3)/147 of theAct reducing the amount eligible for deduction in respect of MBF units to|232,36,61,107/-. The aforesaid reassessment proceedings were CWP No.10702 of 2015 to28,83,95,939/- suffered in the MBF unit in earlier assessment yearswere required to be set off on notional basis 1n order to determine theamount of profits in respect of MBF unit eligible for deduction undersection 80IB of the Act. Against the reassessment order dated4.3.2013, Annexure P.7, the petitioner filed appeal before the CIT(A)which is pending. Subsequently, respondent No.1 issued show causenotice dated 22.10.2013, Annexure P.8 under Section 263 of the Actproposing to revise the reassessment order dated 4.3.21013. It wasalleged that the reassessment order was erroneous and prejudicial tothe interests of the revenue. Against the said notice, the petitioner filedlegal objections challenging the assumption of jurisdiction byrespondent No.1 under section 263 of the Act. The petitioner requestedrespondent No.| to either drop the revisionary proceedings undersection 263 of the Act or to dispose of the legal objections challengingthe validity of the said proceedings. The CIT, however, continued withthe revisionary proceedings and directed the petitioner to file variousdetails/documents form time to time without disposing of theobjections raised by the petitioner. On 18.3.2015, another show causenotice, Annexure P.10 was issued by respondent No.1 requiring thepetitioner to show cause why appropriate order under section 263 ofthe Act should not be passed for the assessment year underconsideration. It was alleged by respondent No.1 in the said showcause notice that separate books of account were not being maintained CWP No.10702 of 2015 5 deduction under section SOIB of the Act. The petitioner was directed tofurnish reply within three days. Ihe petitioner filed letter dated23.3.2015, Annexure P.11 inter alia reiterating in detail the legalobjections challenging the assumption of revisionary Jurisdiction undersection 263 of the Act. The petitioner again requested respondent No.1to dispose of the legal objections raised by it. Respondent No.1! withoudisposing of the legal objections raised by the petitioner passed theimpugned order dated 27.3.2015, Annexure P.l under Section 263 ofthe Act. Hence the instant petition by the petitioner. CWP No.10702 of 2015 5 deduction under section SOIB of the Act. The petitioner was directed tofurnish reply within three days. Ihe petitioner filed letter dated23.3.2015, Annexure P.11 inter alia reiterating in detail the legalobjections challenging the assumption of revisionary Jurisdiction undersection 263 of the Act. The petitioner again requested respondent No.1to dispose of the legal objections raised by it. Respondent No.1! withoudisposing of the legal objections raised by the petitioner passed theimpugned order dated 27.3.2015, Annexure P.l under Section 263 ofthe Act. Hence the instant petition by the petitioner. 3.A short reply on behalf of respondent Nos. | and 2 has beenfiled by Principal Commissioner of Income Tax, Gurgaon wherein apreliminary objection has been raised that the petitioner has a statutoryefficacious/alternative remedy of appeal before the Tribunal undersection 253(1) of the Act. On merits also, the impugned order has beensupported. 4AAfter hearing learned counsel for the parties and perusingthe record, we find force in the preliminary objection raised by therespondents.In|Titaghur Paper Mills Co. Ltd. v. State of Orissa(1983) 2SCC 433, a three-Judge Bench of the Apex Court considered the questionwhether a petition underArticle 226of the Constitution should beentertained in a matter involving challenge to the order of the assessmentpassed by the competent authority under theCentral Sales Tax Act, 1956and corresponding law enacted by the State legislature and answered thesame 1n negative by making the following observations: "Under the scheme of the Act, there 1s a hierarchy of authoritiesbefore which the petitioners can get adequate redress against thewrongful acts complained of. The petitioners have the right toprefer an appeal before the Prescribed Authority under sub-section (1) ofSection 23of the Act. If the petitioners aredissatisfied with the decision in the appeal, they can prefer afurther appeal to the Tribunal under sub-section (3) ofSection 23of the Act, and then ask for a case to be stated upon a question oflaw for the opinion of the High Court underSection 24oft theAct.The Actprovides for a complete machinery to challenge anorder of assessment, and the impugned orders of assessment canonly be challenged by the mode prescribed by the Act and not bya petition under|Article 226of the Constitution. It 1; now wellrecognised that where a right or liability is created by a statutewhich gives a special remedy for enforcing it, the remedyprovided by that statute only must be availed of. This rule wasstated with great clarity by Willes, J. in Wolverhampton NewWaterworks Co. v. Hawkesford in the following passage: "There are three classes of cases in which a liability may beestablished founded upon statute. ... But there 1s a third class,viz. where a liability not existing at common law Is created bya Statute which at the same time gives a special and particularremedy for enforcing it. . .the remedy provided by the statutemust be followed, and it 1s not competent to the party topursue the course applicable to cases of the second class. Theform given by the statute must be adopted and adhered to." The rule laid down in this passage was approved by the House ofLords 1nNeville v. London Express Newspapers Ltd_ and hasbeen reaffirmed by the Privy Council 1n|Attorney-General ofTrinidad and Tobago v. Gordon Grant & Co. Ltd.andSecretary of State v. Mask & Co.Ithas also been held to beequally applicable to enforcement of rights, and has beenfollowed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions 1n limine." 4.|Following the above judgment, the Apex Court inAssistantCollector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others(1985) 1 SCC 260 observed as under: The rule laid down in this passage was approved by the House ofLords 1nNeville v. London Express Newspapers Ltd_ and hasbeen reaffirmed by the Privy Council 1n|Attorney-General ofTrinidad and Tobago v. Gordon Grant & Co. Ltd.andSecretary of State v. Mask & Co.Ithas also been held to beequally applicable to enforcement of rights, and has beenfollowed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions 1n limine." 4.|Following the above judgment, the Apex Court inAssistantCollector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others(1985) 1 SCC 260 observed as under: EArticle 2261S not meant to short-circuit or circumvent statutoryprocedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as forinstance where the very vires of the statute is in question orwhere private or public wrongs are so inextricably mixed up andthe prevention of public injury and the vindication of publicJustice require it that recourse may be had toArticle 226of theConstitution. But then the Court must have good and sufficientreason to bypass the alternative remedy provided by statute.Surely matters involving the revenue where statutory remediesare available are not such matters. We can also take judicialnotice of the fact that the vast majority of the petitions underArticle 226of the Constitution are filed solely for the purposeof obtaining interim orders and thereafter prolong theproceedings by one device or the other. The practice certainlyneeds to be strongly discouraged." 6.Further, the Apex Court 1nCommissioner ofIncome Tax and others vs. Chhabil Dass Agarwal,(2013) 357 ITR 357, considered thequestion of entertaining writ petition where alternative statutory remedywas available. After examining the relevant case law on the point, it wasrecorded as under:- “14. In the instant case, the only question which arises for ourconsideration and decision is whether the High Court wasJustified in interfering with the order passed by the assessingauthority underSection 148ot the Act 1n exercise of itsJurisdiction underArticle 226when an equally efficaciousalternate remedy was available to the assessee under the Act. 15. Before discussing the fact proposition, we would notice theprinciple of law as laid down by this Court. It 1s settled law thatnon-entertainment of petitions under writ jurisdiction by theHigh Court when an efficacious alternative remedy 1s availableis a rule of self-imposed limitation. It 1s essentially a rule ofpolicy, convenience and discretion rather than a rule of law.Undoubtedly, it 1s within the discretion of the High Court togrant relief under Article 226despite the existence of analternative remedy. However, the High Court must not interfereif there 1s an adequate efficacious alternative remedy availableto the petitioner and he has approached the High Court withoutavailing the same unless he has made out an exceptional casewatranting such interference or there exist sufficient grounds toinvoke the extraordinary jurisdiction underArticle 2726(See:State of U.P. vs. Mohammad Nooh, AIR 1958 SC 8&6Titaghur Paper Mills Co. Ltd. vs. State of Orissa%(1983) 2 SCC433:Harbanslal Sahnia vs. Indian Oil Corpn. Ltd., (2003) 2SCC 107;State of H.P. vs. Gujarat Ambuja Cement Ltd, (2005)6 SCC 499), 16. The Constitution Benches of this Court 1nK.S. Rashid andsons vs. Income Tax Investigation Commission%AIR 1954 SC207;sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC425;.Union of India vs. T.R. Varma, AIR 1957 SC 882;State ofU.P. vs. Mohd. Nooh%AIR 1958 SC 8&6 andK.S. Venkataramanand Co. (P) Ltd. vs. State of Madras%AIR 1966 SC 1089 haveheld that thoughArticle 226confers a very wide powers in thematter of issuing writs on the High Court, the remedy of writabsolutely discretionary in character. If the High Court issatishied that the aggrieved party can have an adequate orsuitable relief elsewhere, it can refuse to exercise itsjurisdiction. The Court, in extraordinary circumstances, mayexercise the power if it comes to the conclusion that there hasbeen a breach of principles of natural justice or procedurerequired for decision has not been adopted. (See:N.T. Veluswami Thevar vs. G. Raja Nainar%AIR 1959 SC422;Municipal Council, Khurai vs. Kamal Kumar, (1965) 2SCR 653;Siliguri Municipality vs. Amalendu_ Da, (1984) 2SCC 436;8.1. Muthusami vs. K. Natarajan%(1988) 1 SCC 572;Rajasthan SRTC vs. Krishna Kant%(1995) 5 SCC 75; KeralaSEB vs. Kurien E. Kalathil, (2000) 6 SCC 293;A.Venkatasubbiah Naidu vs. S. Chellappan, (2000) 7 SCC 695;L.L. Sudhakar Reddy vs. State of A.P, (2001) 6 SCC 634;Shrisant Sadguru_ Janardan Swami (Moingiri Maharaj) SahakariDugdha Utpadak Sanstha vs. State of Maharashtra, (2001) 8SCC 509;Pratap Singh vs. State of Haryana, (2002) 7 SCC 484andGKN Driveshafts (India) Ltd. vs. ITO, (2003) | SCC 72).17. In Nivedita Sharma vs. Cellular Operators Assn. of India,(2011) 14 SCC 337, this Court has held that where hierarchy ofappeals is provided by the statute, party must exhaust thestatutory remedies before resorting to writ Jurisdiction for reliefand observed as follows: 12.In Thansingh Nathmal v. Supdt. of Taxes%AIR 1964 SC1419 this Court adverted to the rule of self-imposed restraintthat the writ petition will not be entertained 1f an effectiveremedy is available to the aggrieved person and observed: (AIR p. 1423, para 7). “7. ... The High Court does not therefore act as a court appeal against the decision of a court or tribunal, to correcterrors of fact, and does not by assuming jurisdiction underArticle 226trench upon an alternative remedy provided bystatute for obtaining relief. Where it 1s open to the aggrievedpetitioner to move another tribunal, or even itself in anotherJurisdiction for obtaining redress in the manner provided by astatute, the High Court normally will not permit byentertaining a petition under Article 226ot the Constitutionthe machinery created under the statute to be bypassed, andwill leave the party applying to it to seek resort to themachinery so set up.” 13.In Titaghur Paper Mills Co. Ltd. v. State of Orissa%(1983) 2SCC 433 this Court observed: (SCC pp. 440-41, para 11) (AIR p. 1423, para 7). “7. ... The High Court does not therefore act as a court appeal against the decision of a court or tribunal, to correcterrors of fact, and does not by assuming jurisdiction underArticle 226trench upon an alternative remedy provided bystatute for obtaining relief. Where it 1s open to the aggrievedpetitioner to move another tribunal, or even itself in anotherJurisdiction for obtaining redress in the manner provided by astatute, the High Court normally will not permit byentertaining a petition under Article 226ot the Constitutionthe machinery created under the statute to be bypassed, andwill leave the party applying to it to seek resort to themachinery so set up.” 13.In Titaghur Paper Mills Co. Ltd. v. State of Orissa%(1983) 2SCC 433 this Court observed: (SCC pp. 440-41, para 11) “Il. ... It 1s now well recognised that where a right hability 1s created by a statute which gives a special remedyfor enforcing it, the remedy provided by that statute onlymust be availed of. This rule was stated with great clarity byWilles, J. in Wolverhampton New Waterworks Co. v.Hawkesford, 141 ER 486 in the following passage: (ER p.495) *... There are three classes of cases 1n whicha liabilitmay be established founded upona statute. ... But there is third class viz. where a liability not existing at common lawis created by a statute which at the same time gives a specialand particular remedy for enforcing it. ... The remedprovided by the statute must be followed, and it is notcompetent to the party to pursue the course applicable tocases of the second class. The form given by the statute mustbe adopted and adhered to.’ The rule laid down in thispassage was approved by the House of Lords in Neville v.London Express Newspapers Ltd., 1919 AC 368 and hasbeen reaffirmed by the Privy Council in Attorney General ofTrinidad and Tobago v. Gordon Grant and Co. Ltd., 1935 AC43)3PC) and Secy. of State v. Mask and Co., AIR 1940 PC105 It has also been held to be equally applicable toenforcement of rights, and has been followed by this Courtthroughout. The High Court was therefore justified indismissing the writ petitions in limine.” 14.In Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC536 B.P. Jeevan Reddy, J. (speaking for the majority of thelarger Bench) observed: (SCC p. 607, para 77) “77. ... SO far as the jurisdiction of the High Court undArticle 226—or for that matter, the jurisdiction of this CourtunderArticle 32—is concerned, it 1s obvious that theprovisions of the Act cannot bar and curtail these remedies. It1s, however, equally obvious that while exercising the power underArticle 226;Article 32, the Court would certainly takenote of the legislative intent manifested in the provisions ofthe Act and would exercise their jurisdiction consistent withthe provisions of the enactment.’”’(SeeG. Veerappa Pillai v,Raman & Raman Ltd., AIR 1952 SC 192;CCE v. DunlopIndia Ltd.. (1985) 1 SCC 260;Ramendra Kishore Biswas v.State of Tripura, (1999) 1 SCC 472;Shivgonda Anna Patil v.State of Maharashtra, (1999) 3 SCC 5;C.A. Abraham v. ITO%(1961) 2 SCR 765;Titaghur Paper Mills Co. Ltd. v. State ofOrissa%(1983) 2 SCC 433; H.B. Gandhi v. Gopi Nath andsons, 1992 Supp (2) SCC 312;Whirlpool Corpn. v. Registrarotf Trade Mark, (1998) 8 SCC 1; Tin Plate Co. of India Ltd.v. State of Bihar%(1998) 8 SCC 272;Sheela Devi v. Jaspalsingh%(1999) 1 SCC 209 and|Punjab National Bank v. O.C.Krishnan%(2001) 6 SCC 569) 1S.In Union of India vs. Guwahati Carbon Ltd., (2012) 11 SCC651, this Court has reiterated the aforesaid principle andobserved: ‘*8. Before we discuss the correctness of the impugned orderwe intend to remind ourselves the observations made by thisCourt 1nMunshi Ram v. Municipal Committee, Chheharta%(1979) 3 SCC 83. In the said decision, this Court was pleasedto observe that: (SCC p. 88, para 23). 1S.In Union of India vs. Guwahati Carbon Ltd., (2012) 11 SCC651, this Court has reiterated the aforesaid principle andobserved: ‘*8. Before we discuss the correctness of the impugned orderwe intend to remind ourselves the observations made by thisCourt 1nMunshi Ram v. Municipal Committee, Chheharta%(1979) 3 SCC 83. In the said decision, this Court was pleasedto observe that: (SCC p. 88, para 23). “23. ... When a revenue statute provides for a persoagerieved by an assessment thereunder, a particular remedyto be sought 1n a particular forum, in a particular way, it mustbe sought in that forum and in that manner, and all the otherforums and modes of seeking [remedy] are excluded.’” 19. Thus, while it can be said that this Court has recognizedsome exceptions to the rule of alternative remedy, 1.e., where thestatutory authority has not acted in accordance with theprovisions of the enactment in question, or in defiance of thefundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order hasbeen passed 1n total violation of the principles of natural justice,the proposition laid down in Thansingh Nathmal case, TitagarhPaper Mulls case and other similar judgments that the HighCourt will not entertain a petition under Article 226of theConstitution 1f an effective alternative remedy is available to theagerieved person or the statute under which the actioncomplained of has been taken itself contains a mechanism forredressal of grievance still holds the field. Therefore, when astatutory forum 1s created by law for redressal of grievances, awrit petition should not be entertained ignoring the statutorydispensation. 20. In the instant case, the Act provides complete machinery forthe assessment/re-assessment of tax, imposition of penalty andfor obtaining relief 1n respect of any improper orders passed bythe Revenue Authorities, and the assessee could not bepermitted to abandon that machinery and to invoke theJurisdiction of the High Court under|Article 227oft theConstitution when he had adequate remedy open to him by anappeal to the Commissioner of Income Tax (Appeals). Theremedy under the statute, however, must be effective and not amere formality with no substantial relief.In Ram and ShyamCo. vs. State of Haryana%(1985) 3 SCC 267 this Court hasnoticed that if an appeal is from “Caesar to Caesar’s wife” theexistence of alternative remedy would be a mirage and anexercise 1n futility. In the instant case, neither has the assessee-writ petitioner described the available alternate remedy underthe Act as ineffectual and non-efficacious while invoking thewrit jurisdiction of the High Court nor has the High Courtascribed cogent and satisfactory reasons to have exercised itsJurisdiction in the facts of instant case.” |Learned counsel for the petitioner sought support frompronouncements 1n_Calcutta Discount Co. Limited vs. ITO, (1961) 41 ITR 19 (SC),Whirlpool Corporation vs. Registrar of Trade Marks, AIR 1999SC 22, |Bongaigaon Kefinery and Petrochemicals Limited vs. Union ofIndia,(2006) 287 ITR 120 (Gau.),B&A Plantation & Industries Limitedvs. CIT,(2007) 290 ITR 395 (Gau.),CHD Developers vs. State ofHaryana%(2015) 57 Taxmann.com 315 (P&H) and.Subhash Bansal vs. [TO, Ward 6, Patiala,(2008) 217 CTR 8&3 (P&H) to countenance that inspite ofalternative remedy, writ petition was maintainable. In view of the factualmatrix and availability of alternative efficacious remedy to the petitioner, noadvantage can be derived by the petitioner therefrom. The propositions oflaw enunciated in these pronouncements are unexceptionable. 8 In view of the above, relegating the petitioner to availalternative remedy under the Act, we are not inclined to entertain thispetition in writ jurisdiction under Article 226 of the Constitution of India.Consequently, the petition stands dismissed. Needless to say, anythingobserved herein before shall not be taken to be an expression of opinion onthe merits of the controversy, (Ajay Kumar Mittal)sudge February 24, 2016A9"A (Raj Rahul Garg)sudge