Mr. Smarajit Roy Chowdhury v. State Of Himachal Pradesh & Ors

Item No.17. IN THE HIGH COURT OF JUDICATURE AT CALCUTTACIVIL APPELLATE JURISDICTIONAPPELLATE SIDE HEARD ON: 16.11.2022 DELIVERED ON:16.11.2022 CORAM: THE HON’BLE MR. JUSTICE T. S. SIVAGNANAM AND THE HON’BLE MR. JUSTICE HIRANMAY BHATTACHARYYA M.A.T No.1737 of 2022I.A. No.CAN 1 of 2022 Magadh Sugar & Energy Limited & Anr.Vs. Assessment Unit, Income Tax Department, National Faceless Assessment Centre & anr. Appearance:-Mr. Asim Chaudhury, Mr. Soham Sen ….. for the appellants. Mr. Smarajit Roy Chowdhury …… for the respondent no.1. JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, J.) 1.This intra Court appeal by the writ petitioners is directedagainst the order dated 28[th] September, 2022 passed in W.P.A.No.21656 of 2022. The said writ petition was filed challengingan assessment order passed under Section 143(3) read withSection 144B of the Income Tax Act, 1961 (for short, “the Act”)dated 8[th] September, 2022. The challenge to the assessment orderwas primarily on the ground of violation principles of naturaljustice inasmuch as the assessing officer has failed to issuenotice as required to be issued under Section 144B (1)(xii) (b)of the Act. The learned Single Bench was of the view that asagainst the assessment order, an effective alternate remedy byway of an appeal is provided for and therefore, was not inclinedto interfere with the assessment order. 2.The moot question would be as to whether existence of analternate remedy under the relevant statute will be a total barfor the exercise of jurisdiction under Article 226 of theConstitution of India. This issue had been elaborately dealtwith in several decisions of the Hon’ble Supreme Court and theoft quoted decisions is in the case of Whirlpool Corporation Vs.Registrar of Trade Marks, Mumbai & Ors. reported at (1998) 8 SCC1. In a recent decision of the Hon’ble Supreme Court in M/s.Radha Krishan Industries Vs. State of Himachal Pradesh & Ors. ( Civil Appeal No.1155 of 2021), the Hon’ble Supreme Court hasculled out all the decisions on the issue pertaining to whetherexistence of an alternate remedy will always pushed ajurisdiction of the writ Court under Article 226 of theConstitution and culled out the legal principles in paragraph 27of the judgment, which reads as follows:- “27.- The principles of law which emerge are that : (i)The power under Article 226 of the Constitution to issue writs can beexercised not only for the enforcement of fundamental rights, but forany other purpose as well;exercised not only for the enforcement of fundamental rights, but forany other purpose as well; (ii)The High Court has the discretion not to entertain a writ petition. Oneof the restrictions placed on the power of the High Court is where aneffective alternate remedy is available to the aggrieved person;of the restrictions placed on the power of the High Court is where aneffective alternate remedy is available to the aggrieved person; (iii)Exceptions to the rule of alternate remedy arise where (a) the writpetition has been filed for the enforcement of a fundamental rightprotected by Part III of the Constitution; (b) there has been a violationof the principles of natural justice; (c) the order or proceedings arewholly without jurisdiction; or (d) the vires of a legislation ischallenged;petition has been filed for the enforcement of a fundamental rightprotected by Part III of the Constitution; (b) there has been a violationof the principles of natural justice; (c) the order or proceedings arewholly without jurisdiction; or (d) the vires of a legislation ischallenged; (iii)Exceptions to the rule of alternate remedy arise where (a) the writpetition has been filed for the enforcement of a fundamental rightprotected by Part III of the Constitution; (b) there has been a violationof the principles of natural justice; (c) the order or proceedings arewholly without jurisdiction; or (d) the vires of a legislation ischallenged;petition has been filed for the enforcement of a fundamental rightprotected by Part III of the Constitution; (b) there has been a violationof the principles of natural justice; (c) the order or proceedings arewholly without jurisdiction; or (d) the vires of a legislation ischallenged; (iv)An alternate remedy by itself does not divest the High Court of itspowers under Article 226 of the Constitution in an appropriate casethough ordinarily, a writ petition should not be entertained when anefficacious alternate remedy is provided by law;powers under Article 226 of the Constitution in an appropriate casethough ordinarily, a writ petition should not be entertained when anefficacious alternate remedy is provided by law; (v)When a right is created by a statute, which itself prescribes theremedy or procedure for enforcing the right or liability, resort must behad to that particular statutory remedy before invoking theremedy or procedure for enforcing the right or liability, resort must behad to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This ruleof exhaustion of statutory remedies is a rule of policy, convenienceand discretion; and (vi)In cases where there are disputed questions of fact, the High Courtmay decide to decline jurisdiction in a writ petition. However, if theHigh Court is objectively of the view that the nature of the controversyrequires the exercise of its writ jurisdiction, such a view would notreadily be interfered with.” 3.In terms of the above decision, this Court has discretionto entertain or not to entertain a writ petition and one of theexceptions to the rule of alternate remedy is in cases wherethere has been violation of principles of natural justice.4.Thus, we are required to see as to whether there has beenviolation of principles of natural justice in this case on hand.The assessing officer had issued a notice to the assessee dated10[th] March, 2022 under Section 142(1) of the Act. In theannexure to the said notice, the assessee was called upon tofurnish certain information, which is to the following effect:“It is seen that your have claimed agriculture income fordeduction in this regard please submit details of receipts andexpenditure in respect of agricultural activities”. Theappellants had promptly complied with the information called forin the said notice and a reply dated 10[th] March, 2022 was submitted furnishing all the details relevant to the informationsought for. Thereafter, this was received by the assessingofficer on 15[th] March, 2022. 5.It appears that subsequently no further notice was issuedto the assessee, nor assessee was afforded an opportunity ofpersonal hearing, nor any further information was called forfrom the assessee but the assessing officer straightwayproceeded to complete the assessment and passed the assessmentorder dated 8[th] September, 2022. 6.Curiously enough, in the assessment order in paragraph 3,the assessing officer stated that in response to the statutorynotices issued under Section 143(2) and 143(1), the assessee hasfurnished the requisite details along with supportingdocumentary evidences regarding the issue of selection, whichhave been duly verified. However, in paragraph 5, the assessingofficer states that the assessee did not furnish any evidence asto when the land was tilted, when the crop was sown, when thecrop was ready for harvest, etc. We find that no suchinformation was called for from the assessee at any earlierpoint of time after the assessee submitted their reply dated 10[th]March, 2022 received by the assessing officer on 15[th] March,2022. 7.To examine the correctness of the order passed by theassessing officer, we need to look into as to what are thestatutory requirements. At this juncture, it will be relevantto take note of the statutory provision, namely, Section 144B,which deals with faceless assessment. For the purpose of thecase on hand, Section 144B (1)(xii) would be relevant, which isquoted below:- “144B(1)(xii) – the assessment unit shall, after takinginto account all the relevant material available on therecord, prepare, in writing, -into account all the relevant material available on therecord, prepare, in writing, - (a)an income or loss determination proposal, where novariation prejudicial to assessee is proposed andsend a copy of such income or loss determinationproposal to the National Faceless AssessmentCentre; orvariation prejudicial to assessee is proposed andsend a copy of such income or loss determinationproposal to the National Faceless AssessmentCentre; or (b)in any other case, a show cause notice stating thevariations prejudicial to the interest of assesseeproposed to be made to the income of the assesseeand calling upon him to submit as to why theproposed variation should not be made and servesuch show cause notice, on the assessee, throughthe National Faceless Assessment Centre;”variations prejudicial to the interest of assesseeproposed to be made to the income of the assesseeand calling upon him to submit as to why theproposed variation should not be made and servesuch show cause notice, on the assessee, throughthe National Faceless Assessment Centre;” 8.In terms of the above provision, the assessment unit shall,after taking into account all the relevant material available onrecord, has two options, namely, (a) to prepare in writing an income or loss determination proposal, where no variationprejudicial to the assessee is proposed and send a copy of suchincome or loss determination proposal to the National FacelessAssessment Centre (for short, “NFAC”). The second alternativeis as mentioned in clause (b) is to issue a show cause noticestating variations prejudicial to the interest of the assesseeproposed to be made to the income of the assessee and callingupon him to submit as to why the proposed variation should notbe made and serve such show cause notice on the assessee throughNFAC. Admittedly, clause (b) of Section 144B (1)(xii) has notbeen followed in the case on hand. 9.InSardarCo-op.CreditSocietyLtd.Vs. income or loss determination proposal, where no variationprejudicial to the assessee is proposed and send a copy of suchincome or loss determination proposal to the National FacelessAssessment Centre (for short, “NFAC”). The second alternativeis as mentioned in clause (b) is to issue a show cause noticestating variations prejudicial to the interest of the assesseeproposed to be made to the income of the assessee and callingupon him to submit as to why the proposed variation should notbe made and serve such show cause notice on the assessee throughNFAC. Admittedly, clause (b) of Section 144B (1)(xii) has notbeen followed in the case on hand. 9.InSardarCo-op.CreditSocietyLtd.Vs. Additional/Joint/Deputy/Assistant Commissioner of Income-taxreported at [2022] 139 taxmann.com 414 (Gujarat), it was heldthat the obligation is on the assessing officer to serve a showcause notice calling upon him to show cause as to why theproposed variation should not be made failing which theassessement would be non-est. Similar view was taken in the caseof Gandhi Realty (ndia) (P) Ltd. Vs. Asstt./Jt./Dy./Asstt. CITreported at [2021] 133 taxmann.com 83. The decision in the caseNovelty Merchants (P.) Ltd. Vs. National Faceless AssessmentCentre Delhi reported at [2021] 131 taxmann.com 289 (Delhi) is also to the same effect wherein it was held that where no priorshow cause notice as well as draft assessment order have beenissued before passing final assessment order there was violationof principles of natural justice as well as mandatory procedureprescribed under the Faceless Assessment Scheme and therefore,the matter was remanded to the assessing officer. The decisionin Novelty Merchants (P.) Ltd. (supra) was prior to theamendment and after the amendment, the provision mandates that ashow cause notice stating variations prejudicial to the interestof the assessee, has to be served.10.In the absence of such a show cause notice, the assessmentorder has to be held in violation of principles of naturaljustice and in violation of the statutory provision andtherefore, non-est. 11.In the result, the appeal is allowed along with theconnected application and the order passed in the writ petitionis set aside. Consequently, the writ petition is allowed and theassessment order dated 8[th] September, 2022 is set aside and thematter is remanded to the assessing officer for a freshdecision. The assessing officer is directed to issue a showcause notice under Section 144B(1)(xii)(b) clearly setting outthe proposed variations and the assessee should be granted reasonable time to file objections along with the documents and after receipt of the same, fresh proceedings be initiated in accordance with law. 12.In the light of the above, the penalty proceedings, which have been initiated as a consequence of the assessment order also stands set aside with liberty to proceed in accordance withlaw after the assessment is complete. 13.There shall be no order as to costs. 14.Urgent photostat certified copy of this order, if applied14.Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon complianceof all legal formalities.of all legal formalities. (T.S. SIVAGNANAM, J) I agree, (HIRANMAY BHATTACHARYYA, J.) NAREN/PALLAB(AR.C)