Https://Hcservices.ecourts.gov.in/Hcservices v. Dy Commissioner Of Income Tax

In the High Court of Judicature at Madras Dated : 11.4.2018 The Honourable Mr.Justice T.S.SIVAGNANAM Writ Petition No.8579 of 2018 & WMP.No.10515 of 2018 M/s.Orient Green Power CompanyLtd., Chennai-8 rep.by its DeputyGeneral Manager...PetitionerVsThe Deputy Commissioner of Income Tax, Corporate Circle 5(1),Aayakar Bhavan, NO.121,Nungambakkam High Road, Chennai-34....Respondent PETITION under Article 226 of The Constitution of Indiapraying for the issuance of a Writ of Certiorari to call for therecords of the respondent in his proceedings leading to passingof the assessment order dated 29.1.2018 and quash the portion ofthe order relating to disallowance under Section 14A in the saidassessment order. Mrs.Hema Muralikrishnan, learned Senior Standing Counselaccepts notice for the respondent. Heard both. 2. The petitioner has filed this writ petition challengingthe impugned assessment order passed by the respondent underSection 143(3) read with Section 92CA read with Section 144C(1)of the Income Tax Act, 1961. 3. As against the impugned assessment order, the petitionerhas an effective alternate remedy of appeal before theCommissioner of Income Tax (Appeals). Thus, the first hurdlethat the petitioner has to cross is to convince this Court thatdespite existence of alternate remedy, the petitioner isjustified in approaching this Court under Article 226 of TheConstitution of India. https://hcservices.ecourts.gov.in/hcservices/ 4. The learned counsel for the petitioner submits that thedraft assessment order was issued by the respondent on26.12.2017. The petitioner filed their objections dated11.1.2018. It is pointed out that in the said objections, thepetitioner placed reliance on the decision of the Hon'bleDivision Bench of this Court in the case of Redington (India)Limited Vs. ACIT [reported in 2017 (77) Taxmann.Com 257] andstated that principle of judicial discipline deems that as anAuthority exercising quasi judicial function, the AssessingOfficer has to follow the decision in Redington (India) Limited.It is also pointed out that the facts in the said decision aresimilar to that of the petitioner's case that no disallowanceunder Section 14A of the said Act can be made. 5. In the said objections, the petitioner also pointed outthat there is a miscalculation in the 14A workings in the draftassessment order, that at the time of filing income tax returnsthemselves, they had calculated a detailed working fordisallowance under Section 14A of the said Act as Rs.8 lakhs andthat this has not been considered in the draft assessment order.In the said objections, the petitioner also disputed the findingrecorded by the respondent in the draft assessment order as iftheir representative agreed to the addition as stated in thedraft assessment order. However, the respondent, by the impugnedorder, completed the assessment. 6. It is pointed out by the learned counsel for thepetitioner that so far as the disallowance under Section 14A ofthe said Act is concerned, the respondent has not considered thepetitioner's objections and that the findings recorded by therespondent are based on surmises and conjectures and not basedon any materials. The learned counsel further submits that withregard to other aspects, which have been dealt with in theimpugned assessment order, the petitioner proposes to file anappeal before the Commissioner of Income Tax (Appeals). However,so far as the issue relating to disallowance under Section 14Aof the said Act and other subsidiary issues are concerned, theimpugned assessment order has to be set aside and that thematter may be remanded to the respondent for a freshconsideration. 7. The learned counsel for the petitioner further submitsthat the decision in the case of Redington (India) Limited hasbeen quoted with approval by another Hon'ble Division Bench ofthis Court in the case of CIT Vs. Chettinad Logistics (P) Ltd.[reported in (2017) 248 Taxmann.com 55]. Further, by placingreliance on the decision of the Hon'ble Division Bench of theDelhi High Court in the case of Principal Commissioner of IncomeTax Vs. U.K.Paints India (P) Ltd. [reported in (2017) 392 ITR552], it is submitted that the question of applying the statutorily prescribed method would arise only if the AssessingOfficer expresses his opinion rejecting the assessee'smethodology and the figure offered at the time of assessment andthat this is material because the jurisdiction to go into themethod prescribed in the Rules arises only if the amounts theassessee offers do not have any realistic correlation with thetax exempt income. Therefore, if this procedure is not followed,Section 14A of the said Act would be reduced to a mereformality. 8. On the above grounds, the learned counsel for thepetitioner submits that a portion of the order passed by therespondent may be set aside and that the matter be remanded tothe respondent for a fresh consideration. 9. The learned Senior Standing Counsel appearing for theRevenue, on the other hand, submits that the Rules have beenamended and that the decision of the Hon'ble Division Bench inthe case of Redington (India) Limited has to be held to be nolonger good law. Apart from that, all the issues raised by thepetitioner are factual and therefore, the petitioner should berelegated to avail the alternate remedy. According to her, thepetitioner cannot have a piecemeal challenge of the impugnedorder by filing a writ petition against some of the issues andby filing an appeal before the Commissioner of Income Tax(Appeals) against the other issues. She further submits that thewrit petition has to be held to be not maintainable. 10. This Court has carefully considered the contentions oneither side. 11. Admittedly, as against the impugned assessment order,the petitioner has an effective alternate remedy of appealbefore the Commissioner of Income Tax (Appeals). On the groundsraised by the petitioner, should they be permitted to by-passthe remedy. In the recent decision in the case of AuthorizedOfficer, State Bank of Travancore Vs. Mathew K.C. [Civil AppealNo.1281 of 2018 dated 30.1.2018], the Hon'ble Supreme Courtconsidered the issue as to under what circumstances, thediscretionary jurisdiction under Article 226 of The Constitutionof India could be exercised when there are alternate statutoryremedies. It was pointed out that the discretionary jurisdictionunder Article 226 of The Constitution of India is not absolute,but has to be exercised judiciously in the given facts of thecase and in accordance with law and the normal rule is that awrit petition under Article 226 of The Constitution of Indiaought not to be entertained if alternate statutory remedies areavailable except in cases falling within the well definedexceptions. Some of the exceptions, which were pointed out, are (i) violation of the principles of natural justice (ii) the statutory authority has not acted in accordancewith the provisions of the enactment and (iii) in defiance of the fundamental principles of judicialprocedure. (i) violation of the principles of natural justice (ii) the statutory authority has not acted in accordancewith the provisions of the enactment and (iii) in defiance of the fundamental principles of judicialprocedure. 12. By applying the above principles, if this Court looksinto the facts of the present case, there appears to be noallegation of the violation of principles of natural justice, asthe petitioner has been given an opportunity to file theirobjections to the draft assessment order. What is now agitatedbefore this Court is with regard to the manner, in which, theobjections were considered and it is alleged that the findingrendered by the respondent in the impugned assessment order ispurely based on surmises and conjectures. However, thischallenge is only in respect of two issues, which have beenmentioned in the impugned assessment order, as, in respect ofother issues, the petitioner itself is in the process of filingan appeal before the Commissioner of Income Tax (Appeals). 13. Thus, in my considered view, a piecemeal challenge tothe impugned order should not be encouraged, more particularlywhen factual issues are involved and it is but proper for thepetitioner to avail the statutory appeal remedy and not to by-pass the same. This Court finds that this is not a fit casewhere the discretionary jurisdiction under Article 226 of TheConstitution of India should be exercised. In the result, thewrit petition is held to be not maintainable and the petitioneris granted liberty to avail the alternate remedy of appealbefore the Appellate Authority, if so advised. 14. Accordingly, the writ petition is dismissed. No costs.Consequently, the connected WMP is also dismissed. 15. It is made clear that it is open to the petitioner toraise all contentions in the appeal and any observations made inthis order, shall, in no manner, prejudice the rights of thepetitioner in the appeal. Sd/- Assistant Registrar(CS IV) //True Copy// Sub Assistant Registrar rs https://hcservices.ecourts.gov.in/hcservices/ To The Deputy Commissioner of Income Tax, Corporate Circle 5(1),Aayakar Bhavan, No.121, Nungambakkam High Road, Chennai-34. +1cc to Mr.S.Sathiyanarayanan, Advocate, S.R.No.26688 WP.No.8579 of 2018 &WMP.No.10515 of 2018 SSI(CO) RRK(14/05/2018)