Nagar, West Bengal v. The Income Tax Officer

Arunachalam Nadar Muthuraj... Petitioner The Income Tax Officer,Non Corp, Ward 2(4),Office of the Income Tax Officer,Income Tax Department,No.2, V.P.Rathinasamy Nadar Road,C.R.Building, Bibikulam,Madurai – 625 002.... Respondent PRAYER: Petition filed under Article 226 of the Constitution ofIndia, for the issuance of a Writ of Certiorari, calling for therecords pertaining to the impugned order passed by the respondentherein in Order No.ITBA/AST/S/143(3)2019-20/1022866244(1), dated22.12.2019 and quash the same. In the captioned main writ petition an assessment order dated22.12.2019 being an assessment order made under Section 143(3) ofthe 'Income Tax Act 1961' ('IT Act' for the sake of brevity) hasbeen assailed and the same shall hereinafter be referred to as'impugned order' for the sake of convenience and clarity. 2. Learned counsel for writ petitioner submits that the writpetitioner is a vegetable vendor, he collects cash from wholesalemarket and deposits the same in the bank account. Be that as itmay, owing to the narrow compass on which captioned matter turnsshort facts will suffice to appreciate this order and those shortfacts are that a notice dated 21.09.2018 under Section 143(2) ofthe IT Act was issued followed by a notice under Section 142(1)dated 28.10.2019. The petitioner responded vide a reply dated02.11.2019. To be noted, this reply was sent after a reminder wassent to the writ petitioner. Thereafter, a show cause notice wasissued to the writ petitioner on 29.11.2019 and in response to thehttps://hcservices.ecourts.gov.in/hcservices/show cause notice, writ petitioner produced various documents such as balance sheet, P&L Account for financial years 2015-16 and2016-17, trial balance, details of bank accounts, details of cashdeposited month-wise, sales ledger account, purchase ledgeraccount, cash book etc., To be noted, impugned order pertains tothe 'Assessment Year 2017-18' (hereinafter 'said AY' for the sakeof convenience and clarity). 3. After verifying all the aforementioned documents and afterconsidering the response of the writ petitioner, the impugnedorder came to be made. To be noted, writ petitioner assessee hadexplained that he deals mainly with wholesale vegetable sale incash but vide the impugned order it is seen that the respondentnoticed that the assessee has deposited cash in regular intervalsand there has been a sudden spurt. After analysis of all thesematerial, the respondent made the impugned order. The assesseepointed out that the cash deposits were transferred to thesuppliers by way of any NEFT on the same day but this has beenoverlooked is learned petitioner counsel's say. All these turnheavily on facts. 4. Assailing the aforementioned impugned order, writpetitioner has come to this Court. 5. Learned counsel for writ petitioner very fairly submitsthat the writ petitioner does have an appeal remedy under Sections246/246(A) of the IT Act and the writ petitioner could not availof the same owing to COVID-19 situation. 6. Mr.N.Dilipkumar, learned Senior Standing Counsel for IncomeTax Department accepted notice on behalf of respondent and owingto the narrow compass on which the captioned writ petition turns(as already alluded to supra), main writ petition was taken upwith the consent of both sides. 7. As already delineated supra, the matter turns heavily onfacts. Learned Revenue Counsel highlighted that an appeal remedyis available and no convincing reason has been given for notavailing the appeal remedy. Learned Revenue Counsel also pointedout that there is a provision for condonation of delay qua appealremedy which is under Chapter XX of IT Act. 6. Mr.N.Dilipkumar, learned Senior Standing Counsel for IncomeTax Department accepted notice on behalf of respondent and owingto the narrow compass on which the captioned writ petition turns(as already alluded to supra), main writ petition was taken upwith the consent of both sides. 7. As already delineated supra, the matter turns heavily onfacts. Learned Revenue Counsel highlighted that an appeal remedyis available and no convincing reason has been given for notavailing the appeal remedy. Learned Revenue Counsel also pointedout that there is a provision for condonation of delay qua appealremedy which is under Chapter XX of IT Act. 8. I therefore consider the alternate remedy rule. Alternateremedy rule no doubt is not an absolute rule. In other words, itis a rule of discretion. To put it with greater clarity andspecificity, it is not only a rule of discretion it is a selfimposed restraint qua writ jurisdiction. On the teeth of thisjurisprudential principle Hon'ble Supreme Court starting fromhttps://hcservices.ecourts.gov.in/hcservices/Dunlop India case [Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd., and others reported in(1985) 1 SCC 260] in a long line of case laws has repeatedly heldthat the alternate remedy rule has to be very strictly enforcedwith utmost rigour when it comes to fiscal Statutes. The otherauthorities are Satyawati Tandon [United Bank of India Vs.Satyawati Tondon and others reported in (2010) 8 SCC 110] andK.C.Mathew [Authorized Officer, State Bank of Travancore andanother Vs. Mathew K.C. reported in (2018) 3 SCC 85]. Relevantparagraph in Dunlop case law is paragraph No.3 and relevantportion of the same reads as follows:'3. ....... Article 226 is not meant to short-circuit or circumvent statutory procedures. It is onlywhere statutory remedies are entirely ill-suited tomeet the demands of extraordinary situations, as forinstance where the very vires of the statute is inquestion or where private or public wrongs are soinextricably mixed up and the prevention of publicinjury and the vindication of public justice require itthat recourse may be had to Article 226 of theConstitution. But then the Court must have good andsufficient reason to bypass the alternative remedyprovided by statute. Surely matters involving therevenue where statutory remedies are available are notsuch matters. We can also take judicial notice of thefact that the vast majority of the petitions underArticle 226 of the Constitution are filed solely forthe purpose of obtaining interim orders and thereafterprolong the proceedings by one device or the other. Thepractice certainly needs to be strongly discouraged.'(Underlining made by this Court to supplyemphasis and highlight) 9. Satyawati Tandon principle was reiterated by Hon'bleSupreme Court in K.C.Mathew case.Relevant paragraph in K.C.Mathewcase law is paragraph 10 and the same reads as follows:'10. In Satyawati Tondon the High Court hadrestrained further proceedings under Section 13(4) of theAct. Upon a detailed consideration of the statutoryscheme under the SARFAESI Act, the availability of remedyto the aggrieved under Section 17 before the Tribunal andthe appellate remedy under Section 18 before theAppellate Tribunal, the object and purpose of thelegislation, it was observed that a writ petition oughtnot to be entertained in view of the alternate statutoryremedy available holding: (SCC pp.123 & 128, Paras 43 &55) “43. Unfortunately, the High Court overlookedhttps://hcservices.ecourts.gov.in/hcservices/ “43. Unfortunately, the High Court overlookedhttps://hcservices.ecourts.gov.in/hcservices/ the settled law that theHigh Court will ordinarilynot entertain a petition under Article 226 of theConstitution if an effective remedy is available tothe aggrieved person and that this Rule applies withgreater rigour in matters involving recovery oftaxes, cess, fees, other types of public money andthe dues of banks and other financial institutions.In our view, while dealing with the petitionsinvolving challenge to the action taken for recoveryof the public dues, etc., the High Court must keepin mind that the legislations enacted by Parliamentand State Legislatures for recovery of such dues area code unto themselves inasmuch as they not onlycontain comprehensive procedure for recovery of thedues but also envisage constitution of quasi-judicial bodies for redressal of the grievance ofany aggrieved person. Therefore, in all such cases,the High Court must insist that before availingremedy under Article 226 of the Constitution, aperson must exhaust the remedies available under therelevant statute. 55.It is a matter of serious concern thatdespite repeated pronouncement of this Court, theHigh Courts continue to ignore the availability ofstatutory remedies under the DRT Act and theSARFAESI Act and exercise jurisdiction underArticle 226 for passing orders which have seriousadverse impact on the right of banks and otherfinancial institutions to recover their dues. Wehope and trust that in future the High Courts willexercise their discretion in such matters withgreater caution, care and circumspection.' (underlining made by this Court to supply emphasis and highlight) 10. One other case law of significance is a recent judgment ofa three member Bench of Hon'ble Supreme Court in Commercial SteelLimited case [Civil Appeal No 5121 of 2021, The AssistantCommissioner of State Tax and Others Vs. M/s Commercial SteelLimited]. A three member Bench of the Honble Supreme Courtspeaking through Hon'ble Justice Dr.Dhananjaya Y Chandrachud, setout the exceptions to the rule of alternate remedy and made itclear that only in exceptional cases (where the exceptions areattracted), there would be interference in writ jurisdiction.Relevant paragraphs in Commercial Steel Limited case law areparagraph Nos.11 and 12, which read as follows: '11 The respondent had a statutory remedy undersection 107. Instead of availing of the remedy, thehttps://hcservices.ecourts.gov.in/hcservices/ respondent instituted a petition under Article 226. Theexistence of an alternate remedy is not an absolute barto the maintainability of a writ petition under Article226 of the Constitution. But a writ petition can beentertained in exceptional circumstances where thereis: (i) a breach of fundamental rights; (ii) aviolation of the principles of natural justice; (iii)an excess of jurisdiction; or (iv) a challenge to thevires of the statute or delegated legislation. 12 In the present case, none of the aboveexceptions was established. There was, in fact, noviolation of the principles of natural justice since anotice was served on the person in charge of theconveyance. In this backdrop, it was CA 5121/2021 7 notappropriate for the High Court to entertain a writpetition. The assessment of facts would have to becarried out by the appellate authority. As a matter offact, the High Court has while doing this exerciseproceeded on the basis of surmises. However, since weare inclined to relegate the respondent to the pursuitof the alternate statutory remedy under Section 107,this Court makes no observation on the merits of thecase of the respondent.' 12 In the present case, none of the aboveexceptions was established. There was, in fact, noviolation of the principles of natural justice since anotice was served on the person in charge of theconveyance. In this backdrop, it was CA 5121/2021 7 notappropriate for the High Court to entertain a writpetition. The assessment of facts would have to becarried out by the appellate authority. As a matter offact, the High Court has while doing this exerciseproceeded on the basis of surmises. However, since weare inclined to relegate the respondent to the pursuitof the alternate statutory remedy under Section 107,this Court makes no observation on the merits of thecase of the respondent.' 11. A careful perusal of the aforementioned exceptions read injuxtaposition with narrative qua case on hand supra make it clearthat none of the exceptions are attracted in the instant case andif at all and if that be so, on extreme demurer, a point whichcomes close to one of the exceptions is ground (b) in the writaffidavit which says that the impugned order has been passedwithout considering the reply of the writ petitioner. A bareperusal of the impugned order leaves me with the impression thatthis ground falls flat on its face as the impugned order hasextensively dealt with the reply of the writ petitioner. This isarticulated in paragraphs 2 to 5 of the impugned order which readas follows: '2.Notice u/s 143(2) under IT Act 1961 was issuedon 21.09.2018 and delivered through e-mail as well ashard copy through post was served on 28.09.2018.Notice u/s 142(1) of the IT Act, 1961, requestingdetails was issued on 09.10.2019 and served on10.10.2019. Since there was no response, reminder wassent on 28.10.2019. In response, the assessee hasfiled through ITBA on 02.11.2019 with remarks that theassesse is a vegetable vendor and he collects cashfrom wholesale market and deposits in bank account.Further the assessee has not furnished any otherdetails as requested in the 142(1) notice. https://hcservices.ecourts.gov.in/hcservices/3. Meanwhile, copies of bank accounts pertaining to assessee was requested u/s 133(6) of the IT Act1961 and obtained. It is seen from the Bank accounts,the assessee has deposited Rs.28,65,000/- in southIndian Bank A/c.No.0625073000000060 and Rs.2,00,000/-in Tamil Nadu Mercantile bank A/c. no.093100050128844.4. Since there was no further response from theassessee show cause notice was issued on 29.11.2019.In response the assessee has furnished the followingdetails: 1.Balance Sheet, Profit & Loss Account for the FY2015-16 and FY 2016-17 2.Trail balance for the FY 2015-16 and 2016-17 3.Details of Bank accounts 4.Details of cash deposited month-wise 5.Sales Ledger Account 6.Purchase Ledger Account 7.Cash Book 5.The above details are verified. The assesseeexplained that the cash deposit during demonetizationperiod is out of cash in hand as on 08.11.2016. Thedetails are verified. Further the assessee explainedthat he deals with mainly wholesale vegetablses salesin cash. Also it is seen from the Bank accounts thatthe assessee deposits cash in regular intervals andthe same day transfers the amount through NEFT tosuppliers.' 12. In the light of the aforementioned contents of theimpugned order, I have no hesitation in coming to the conclusionthat none of the exceptions warranting interference in writjurisdiction in assessment order under IT Act i.e., impugned orderhas been made out. 5.Sales Ledger Account 6.Purchase Ledger Account 7.Cash Book 5.The above details are verified. The assesseeexplained that the cash deposit during demonetizationperiod is out of cash in hand as on 08.11.2016. Thedetails are verified. Further the assessee explainedthat he deals with mainly wholesale vegetablses salesin cash. Also it is seen from the Bank accounts thatthe assessee deposits cash in regular intervals andthe same day transfers the amount through NEFT tosuppliers.' 12. In the light of the aforementioned contents of theimpugned order, I have no hesitation in coming to the conclusionthat none of the exceptions warranting interference in writjurisdiction in assessment order under IT Act i.e., impugned orderhas been made out. 13. The sequitur to the discussion and dispositive reasoningthus far is the campaign of the writ petitioner against theimpugned order in the captioned main writ petition fails. It iswell open to the writ petitioner to avail alternate remedy interalia under Section 246 / 246A of IT Act. It is also open to thewrit petitioner to seek 'condonation of delay' and if thewrit petitioner chooses to take this legal route, the COD prayerof the writ petitioner (if made) will be considered on its ownmerits and in accordance with law by the appellate authorityconcerned depending on the provision that is invoked. 14. Ergo, captioned writ petition is dismissed making theaforementioned observations regarding the writ petitioner takingthe alternate remedy route and COD therein. Though obvious, it ismade clear that this Court has not expressed any view or opinionhttps://hcservices.ecourts.gov.in/hcservices/on the merits of the matter as it would be for the appellate authority to consider the same uninfluenced and untrammelled byany views that may have the trappings of expression of opinion onmerits contained in this order. If the writ petitioner chooses toavail alternate remedy. Consequently, connected captioned writmiscellaneous petition is also dismissed. There shall be noorder as to costs. // True Copy // Sd/- Assistant Registrar (CS II) vsm / /2021Sub Assistant Registrar(CS) Note : In view of the present lock down owing to COVID-19 pandemic, aweb copy of the order may be utilized for official purposes, but,ensuring that the copy of the order that is presented is thecorrect copy, shall be the responsibility of the advocate /litigant concerned. To The Income Tax Officer,Non Corp, Ward 2(4),Office of the Income Tax Officer,Income Tax Department,No.2, V.P.Rathinasamy Nadar Road,C.R.Building, Bibikulam,Madurai – 625 002. +1 CC to M/s.N. DILIP KUMAR, Advocate (SR-36150[F] dated26/11/2021) KMK(CO)SB(15.12.2021) 7P 3C W.P(MD)No.20928 of 2021and W.M.P.(MD)No.17533 of 202125.11.2021 https://hcservices.ecourts.gov.in/hcservices/