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THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE M.S.RAMACHANDRA RAO WRIT PETITION No.4701 of 2013 ORDER(Per the Hon’ble Sri Justice Goda Raghuram): The petitioner is an instrumentality of the Union – the NationalMineral Development Corporation Limited. The order of the secondrespondent reopening the Assessment in purported exercise of powersunder Section 148 of the Income Tax Act, 1961 (for short ‘the Act’) videthe order dated 16.12.2011; the notice dated 29.12.2011 proposing topass a fresh Order of Assessment; the consequent Order ofAssessment dated 17.02.2012 by the second respondent and theappellate order of the first respondent dated 03.12.2012 confirming theOrder of Assessment and rejecting the petitioner’s appeal, areassailed in this writ petition. The Assessment Order by the second respondent dated17.02.2012 brought to tax specified income allegedly earned by thepetitioner on the ground that these were suppressed, on an inferencedrawn from the fact that there was a huge variation between thecomparative prices of iron ore exported by the petitioner to Japan andSouth Korea and similar exports by a private exporter in relation toexports to China. The Order of Assessment was passed afterreopening the assessment, in exercise of the powers under Section148 of the Act preceded by a due process under Section 147. Aggrieved, the petitioner preferred an appeal to the first respondentwhich was rejected by the order dated 16.12.2011 confirming thefinding that there was a suppression of income. The petitioner has afurther right of appeal to the Income Tax Appellate Tribunal underSection 253 of the Act and thereafter on any substantial error of law, tothis Court under Section 260-A of the Act. Sri K. Raghavacharyulu, the learned counsel for the petitioner would however strenuously contend that no reasons were eitherrecorded or existed for exercise of powers under Sections 147 and 148of the Act in reopening the Assessment; that the reopening of theAssessment was in transgression of established principles of lawdelineated in several binding precedents including Commissioner of Income Tax, Delhi vi. Kelvinator of India Limited[[1]]; that availabilityof an alternative remedy (by way of an appeal to the Tribunal underSection 253 of the Act) is per se not a ground for relegating thepetitioner to the alternative statutory appellate remedy and decliningexercise of jurisdiction under Article 226 of the Constitution; and thathaving regard to the onerous tax liability imposed on the petitioner andthe possibility of affirmation of the primary and appellate orders by thefurther Appellate Forum of the Tribunal, this Court should interveneexercising jurisdiction under Article 226. It is further contended by thelearned counsel for the petitioner that the orders of the primary andappellate authorities are vitiated by errors going to the root ofjurisdiction of these authorities since the Assessment was reopenedon the basis of no relevant facts legitimizing exercise of jurisdiction;that the Assessment proceeded on an assumption regarding a non-existent and presumptive income, not borne out by the record; anassumption that potential income was a factual income; and similarillegalities vitiate the order of the appellate authority – the firstrespondent, as well. In a classic judgment on jurisdiction in Addanki TiruvenkataThata Desika Charyulu (since deceased) and after him his legal representatives v. State of Andhra Pradesh[[2]],the Supreme Courtapproved the classic statement of principle set out in the judgment ofLord Esher in The Queen v. The Commissioner for Specialpurposes of the Income Tax ((1888) 21 QBD 313), as to when anerror going to the root of jurisdiction must be distinguished from errorwithin jurisdiction. The principle, to the extent relevant and material for the purposes of this case reads: In a classic judgment on jurisdiction in Addanki TiruvenkataThata Desika Charyulu (since deceased) and after him his legal representatives v. State of Andhra Pradesh[[2]],the Supreme Courtapproved the classic statement of principle set out in the judgment ofLord Esher in The Queen v. The Commissioner for Specialpurposes of the Income Tax ((1888) 21 QBD 313), as to when anerror going to the root of jurisdiction must be distinguished from errorwithin jurisdiction. The principle, to the extent relevant and material for the purposes of this case reads: “But there is another state of things which may exist.The legislature may intrust the tribunal or body with ajurisdiction, which includes the jurisdiction to determinewhether the preliminary state of facts exists as well as thejurisdiction, on finding that it does exist, to proceed further ordo something more. When the legislature are establishingsuch a tribunal or body with limited jurisdiction, they also haveto consider, whatever jurisdiction they give them, whetherthere shall be any appeal from their decision, for otherwisethere will be none. In the second of the two cases I havementioned it is an erroneous application of the formula to saythat the tribunal cannot give themselves jurisdiction bywrongly deciding certain facts to exist, because the legislaturegave them jurisdiction to determine all the facts, including theexistence of the preliminary facts on which the furtherexercise of their jurisdiction depends, and if they were givenjurisdiction so to decide, without any appeal being given, thereis no appeal from such exercise of their jurisdiction." The Assessing Authority; the first appellate forum, theCommissioner of Income Tax (Appeals) and the further appellateforum, the Tribunal which is the final authority on fact are all entrustedwith jurisdiction to determine the jurisdictional fact in the first instanceand determining the same in appeals therefrom. If the AssessingAuthority and the Commissioner of Income Tax (Appeals) hadrecorded a finding that the petitioner had suppressed income, a findingwhich is erroneous, even if on the basis of a fundamentallymisconceived inference from the record, such errors in our view areerrors within jurisdiction and eminently amenable to further appellatescrutiny and correction. These cannot be said to be errors that go tothe root of jurisdiction. A finding as to suppression of income is notfinding regarding a jurisdictional fact. It is an axiomatic principle that an authority invested with thepower to decide is accommodated the authority to come to anerroneous conclusion. It is in recognition of the fallibility of primary andappellate authorities that a further appellate jurisdiction is created under the Act. Every error within jurisdiction is not to be subjected tojudicial review, as that would cripple the hierarchical principle onwhich our system of adjudication is normatively founded. Theextraordinary jurisdiction of this Court under Article 226 of theConstitution must be preserved to oversightserious errors which arenot properly amenable to the hierarchic statutory remedies available. In the case before us, the petitioner has not chosen to challengeinitiation of proceedings for reopening of the Assessment by way ofprophylactic remedy, at that stage. It has chosen to subject itself to anorder of Assessment. What is more, the petitioner has also chosen topursue the further appellate remedy before the Commissioner ofIncome Tax (Appeals) and at this stage seeks to cavil that exercise ofthe original and appellate jurisdictions is faulty. The alleged errors ofthe primary and appellate authorities are eminently reviewable inappeal by the Tribunal. As the petitioner has an effective alternativestatutory remedy by way of an appeal under Section 253 of the Actbefore the Tribunal, we are disinclined to exercise jurisdiction underArticle 226 of the Constitution. In the case before us, the petitioner has not chosen to challengeinitiation of proceedings for reopening of the Assessment by way ofprophylactic remedy, at that stage. It has chosen to subject itself to anorder of Assessment. What is more, the petitioner has also chosen topursue the further appellate remedy before the Commissioner ofIncome Tax (Appeals) and at this stage seeks to cavil that exercise ofthe original and appellate jurisdictions is faulty. The alleged errors ofthe primary and appellate authorities are eminently reviewable inappeal by the Tribunal. As the petitioner has an effective alternativestatutory remedy by way of an appeal under Section 253 of the Actbefore the Tribunal, we are disinclined to exercise jurisdiction underArticle 226 of the Constitution. The learned counsel for the petitioner seeks liberty to urge allcontentions of fact and law before the Tribunal. No such liberty isrequired. The petitioner is always at liberty to urge all positions of factand law and interpretations of the material on record before theTribunal, which is a body invested with the jurisdiction to go intofactual and legal aspects. The petitioner is also at liberty to file amemorandum of written submissions, if it so desires, to sensitize theTribunal of the controversy in issue. On the aforesaid analysis, we find no merit in this writ petition and it is accordingly dismissed at the stage of admission, after hearing the learned counsel for the petitioner – Sri K. Raghavacharyulu and the learned Standing Counsel for Income Tax – Sri J.V. Prasad. We note that the respondentRevenue has filed its counter but in the view we are taking, we are notgoing into the merits of the competing contentions with regard to thealleged error and justification of the validity and vitality of orders of theprimary and appellate authorities as these are more appropriatelypursued before the Tribunal. No costs. JUSTICE GODA RAGHURAM Date: 25.02.2013 va JUSTICE M.S.RAMACHANDRA RAO [1](2010) 2 Supreme Court Cases 723(2010) 2 Supreme Court Cases 723 [2]AIR 1964 Supreme Court 807AIR 1964 Supreme Court 807