Satish Kumar Jindal v. Income Tax Officer Ward 6(1) Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH CWP No.8621 of 2022Date of Decision : 27.04.2022 Satish Kumar Jindal ….Petitioner Versus Income Tax Officer Ward 6(1) Ludhiana …..Respondent CORAM : HON’BLE MR. JUSTICE TEJINDER SINGH DHINDSAHON’BLE MR. JUSTICE PANKAJ JAIN Present :Ms. Radhika Suri, Senior Advocate assisted by Mr. Manpreet S. Kanda, Advocatefor the petitioner. PANKAJ JAIN, J. By way of present writ petition the petitioner has laid challengeto notice dated 23[rd] March, 2022 issued under Clause (b) of Section 148-Aof the Income Tax Act, 1961 (for short, ‘the Act’) (Annexure P-1), noticedated 7[th] April, 2022 (Annexure P-4) issued under Section 148 and the orderdated 7[th] April, 2022 (Annexure P-3) passed under Clause (d) of Section148-A of the Act.2.Petitioner an assessee to Income Tax filed his Income TaxReturn for the Assessment Year 2018-19 which is stated to have beenaccepted by the respondent under Section 143(1) of the Act. Petitioner wasserved with notice under Section 148-A(b) of the Act on 23[rd] March, 2022.As per the said notice, information in the case of the assessee has beenflagged on the Insight Portal in accordance with Risk Management Strategy Formulated by the CBDT, New Delhi. As per which, duringsearch at the residence of one Sumit Jindal, some documents were seizedand it has come to the notice that RKS Builders have made payments ofRs.4,07,50,000/- for the purpose of purchase of property. Since the assesseewas partner of M/s RKS Builders at the relevant point of time to the extentof 20% share hence, it is stated that the information suggested that theincome chargeable to tax for the Assessment Year 2018-19 had escapedassessment. 3. As per the petitioner request was made to the authorities forproviding information vide Communication dated 28[th] March, 2022. It isclaimed by the Petitioner that on 7[th] of April, 2022, the respondent passedorder under Clause (d) of Section 148-A of the Act without providinginformation and issued notice under Section 148 for reassessing the incomeof the assessee. It is against these proceedings that the petitioner hasapproached this Court under Article 226 of the Constitution of India. 4.Ld. Counsel for the petitioner claims that there is no tangiblematerial linking the purchase of property by M/s RKS Builders to theassessee. Thus, there being absence of live-link between the statement ofincome of the RKS Builders and the assess, the assumption of jurisdictionat the hands of Assessing Officer is bad in law. It has been further assertedby Counsel for the petitioner that since the authorities failed to supply therequisite documents to the petitioner before passing of impugned orderdated 7th April, 2022, the action of the Authorities is in violation of law laid down by Supreme Court in the case of 'GKN Driveshafts (India) Ltd.vs. Income Tax Officer and others', (2003) 1 SCC 72, reiterated byBombay High Court in the case of Tata Capital Financial ServicesLimited vs. Assistant Commissioner of Income Tax Circle 1(3)(1) andothers - Writ Petition No.546 of 2022, decided on 15th February, 2022and law laid down by Delhi High Court in the case of 'SabhInfrastructure Ltd. vs. Asstt. Commissioner of Income Tax', 2017 SCCOnLine Del 10863. 5.Senior Counsel further asserts that the firm i.e. M/s RKSBuilders and the petitioner are different individuals and different assesseesfor the purpose of Income Tax Act thus, for any escapement of income atthe hands of firm he ought not have been saddled with the proceedings ofreassessment. 6.We have heard counsel for the petitioner and have carefullygone through the record of the case. 5.Senior Counsel further asserts that the firm i.e. M/s RKSBuilders and the petitioner are different individuals and different assesseesfor the purpose of Income Tax Act thus, for any escapement of income atthe hands of firm he ought not have been saddled with the proceedings ofreassessment. 6.We have heard counsel for the petitioner and have carefullygone through the record of the case. 7.Admittedly, in the present case the petitioner was providedwith reasons for issuing notice to which the petitioner failed to respond.Request was made for providing information qua certified copies of thedocuments w.r.t. notice under Section 148-A(b) of the Act even though theinformation already stands furnished as Annexure to notice under Section148-A(b) of the Act. Once, the petitioner has opted not to respond to thereasons accompanying notice under Section 148-A(b) of the Act, wefind that plea raised by the petitioner w.r.t. wrongful assumption of jurisdiction at the hands of the respondent, is without merit. Surprisinglythe petitioner has challenged the assessment on the ground that nodocuments have been provided to him before passing the impugned orderbut there is no prayer in the present petition seeking those documents.Faced with the situation, Senior Counsel submits that Communication dated28[th] March, 2022 though titled as request letter are indeed objections and betreated so. Bare perusal thereof shall reveal that the objections sought to beraised in present petition have not been raised in the said communication.In the facts of this case we need to observe that the petitioner has beenserved with notice under Section 148 of the Act. In case the presentproceedings culminate in the order of assessment under Section 147 of theAct, the same will be appealable. Statutory appeal is provided under theAct. All pleas raised herein can well be raised in the appeal. 8.Question as to whether High Court should exercise its writjurisdiction under Article 226 of the Constitution of India if an effective andefficacious alternate remedy is available, has been subject matter ofcontinuous debate over the years. The Apex Court in the case of C.A.Abraham vs. Income Tax Officer, Kottayam and another, AIR 1961 SC609observed that – “3. In our view the petition filed by the appellant should nothave been entertained. The Income Tax Act provides acomplete machinery for assessment of tax and imposition ofpenalty and for obtaining relief in respect of any improperorders passed by the Income Tax authorities, and the appellant could not be permitted to abandon resort to thatmachinery and to invoke the jurisdiction of the High Courtunder Article 226 of the Constitution when he had adequateremedy open to him by an appeal to the Tribunal.” Similarly, in the case of 'Commissioner of Income Tax, Gujarat vs. VijayBhai N. Chandrani', (2013) 14 SCC 661, it was heldthat - “12. In our considered view, at the said stage of issuance ofthe notices under Section 153C, the assessee could haveaddressed his grievances and explained his stand to theAssessing Authority by filing an appropriate reply to the saidnotices instead of filing the Writ Petition impugning the saidnotices. It is settled law that when an alternate remedy isavailable to the aggrieved party, it must exhaust the samebefore approaching the Writ Court. In Bellary Steels & AlloysLtd. v. CCT, (2009) 17 SCC 547, this Court had allowed theassessee therein to withdraw the original Writ Petition filedbefore the High Court as the said proceedings came to befiled against the show-cause notice and observed that theHigh Court should not have interfered in the matter as theWrit Petition was filed without even reply to the show causenotice. This Court further observed as follows: “3.…In the circumstances, we could have dismissedthese civil appeals only on the ground of failure toexhaust statutory remedy, but for the fact that hugeinvestments involving the large number of industries isin issue.” “3.…In the circumstances, we could have dismissedthese civil appeals only on the ground of failure toexhaust statutory remedy, but for the fact that hugeinvestments involving the large number of industries isin issue.” 13. We are fortified by the decision of this Court in Indo AsahiGlass Co. Ltd. v. ITO, (2002) 10 SCC 444, wherein theassessee had approached this Court against the judgment and order of the High Court which had dismissed the Writ Petitionfiled by the assessee wherein challenge was made to the showcause notice issued by the Assessing Authority on the groundthat alternative remedy was available to the assessee. ThisCourt concurred with the findings and conclusions reached bythe High Court and dismissed the said appeal with thefollowing observations: “5. This and the other facts cannot be taken up forconsideration by this Court for the first time. In ouropinion, the High Court was right in coming to theconclusion that it is appropriate for the appellants tofile a reply to the show-cause notice and take whateverdefence is open to them.” 14. In the present case, the assessee has invoked the Writjurisdiction of the High Court at the first instance without firstexhausting the alternate remedies provided under the Act. Inour considered opinion, at the said stage of proceedings, theHigh Court ought not have entertained the Writ Petition andinstead should have directed the assessee to file reply to thesaid notices and upon receipt of a decision from the AssessingAuthority, if for any reason it is aggrieved by the saiddecision, to question the same before the forum providedunder the Act.” 9. The Apex Court has further dealt with question of exercise of jurisdiction in the presence of statutory remedy in the case of 'NiveditaSharma vs. Cellular Operators Assn. of India', (2011) 14 SCC 337, that where hierarchy of appeals is provided by the statute, the parties mustexhaust the statutory remedy before resorting to writ jurisdiction for reliefand held that – “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 if 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 courtof appeal against the decision of a court or tribunal, tocorrect errors of fact, and does not by assumingjurisdiction under Article 226 trench upon analternative remedy provided by statute for obtainingrelief. Where it is open to the aggrieved petitioner tomove another tribunal, or even itself in anotherjurisdiction for obtaining redress in the mannerprovided by a statute, the High Court normally will notpermit by entertaining a petition under Article 226 ofthe Constitution the machinery created under thestatute to be bypassed, and will leave the partyapplying to it to seek resort to the machinery 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) “11. … It is now well recognised that where a right orliability is created by a statute which gives a specialremedy for enforcing it, the remedy provided by thatstatute only must be availed of. This rule was statedwith great clarity by Willes, J. in Wolverhampton NewWaterworks Co. v. Hawkesford 1859 6 CBNS 336 in thefollowing passage: (ER p. 495) ‘… There are three classes of cases in which a liabilitymay be established founded upon a statute. … Butthere is a third class viz. where a liability not existingat common law is created by a statute which at thesame time gives a special and particular remedy for enforcing it. … The remedy provided by the statutemust be followed, and it is not competent to the party topursue the course applicable to cases of the secondclass. The form given by the statute must be adoptedand adhered to.’ ‘… There are three classes of cases in which a liabilitymay be established founded upon a statute. … Butthere is a third class viz. where a liability not existingat common law is created by a statute which at thesame time gives a special and particular remedy for enforcing it. … The remedy provided by the statutemust be followed, and it is not competent to the party topursue the course applicable to cases of the secondclass. The form given by the statute must be adoptedand adhered to.’ The rule laid down in this passage was approved by theHouse of Lords in Neville v. London Express Newspapers Ltd.1919 AC 368 and has been reaffirmed by the Privy Council inAttorney General of Trinidad and Tobago v. Gordon Grantand Co. Ltd. 1935 AC 532 PC and Secy. of State v. Mask andCo. 1939-40 67 IA 222 It has also been held to be equallyapplicable to enforcement of rights, and has been followed bythis Court throughout. The High Court was therefore justifiedin dismissing 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 Courtunder Article 226—or for that matter, the jurisdictionof this Court under Article 32—is concerned, it isobvious that the provisions of the Act cannot bar andcurtail these remedies. It is, however, equally obviousthat while exercising the power under Article226.Article 32, the Court would certainly take note ofthe legislative intent manifested in the provisions of theAct and would exercise their jurisdiction consistentwith the provisions of the enactment'.”under Article 226—or for that matter, the jurisdictionof this Court under Article 32—is concerned, it isobvious that the provisions of the Act cannot bar andcurtail these remedies. It is, however, equally obviousthat while exercising the power under Article226.Article 32, the Court would certainly take note ofthe legislative intent manifested in the provisions of theAct and would exercise their jurisdiction consistentwith the provisions of the enactment'.” 10.Recently, Apex Court summarized the principles governingexercise of writ jurisdiction by the High Court in the presence of alternateremedy in case of 'Radha Krishan Industries vs. State of Himachal 'Pradesh, 2021 SCC OnLine SC 334, holding that - “28. The principles of law which emerge are that : (i) The power under Article 226 of the Constitution to issuewrits can be exercised not only for the enforcement offundamental rights, but for any other purpose as well; (ii) The High Court has the discretion not to entertain a writpetition. One of the restrictions placed on the power of theHigh Court is where an effective alternate remedy is availableto the aggrieved person; (iii) Exceptions to the rule of alternate remedy arise where (a)the writ petition has been filed for the enforcement of afundamental right protected by Part III of the Constitution;(b) there has been a violation of the principles of naturaljustice; (c) the order or proceedings are wholly withoutjurisdiction; or (d) the vires of a legislation is challenged; (iv) An alternate remedy by itself does not divest the HighCourt of its powers under Article 226 of the Constitution in anappropriate case though ordinarily, a writ petition should notbe entertained when an efficacious alternate remedy isprovided by law; (v) When a right is created by a statute, which itselfprescribes the remedy or procedure for enforcing the rightor liability, resort must be had to that particular statutoryremedy before invoking the discretionary remedy underArticle 226 of the Constitution. This rule of exhaustion ofstatutory remedies is a rule of policy, convenience anddiscretion; and (iv) An alternate remedy by itself does not divest the HighCourt of its powers under Article 226 of the Constitution in anappropriate case though ordinarily, a writ petition should notbe entertained when an efficacious alternate remedy isprovided by law; (v) When a right is created by a statute, which itselfprescribes the remedy or procedure for enforcing the rightor liability, resort must be had to that particular statutoryremedy before invoking the discretionary remedy underArticle 226 of the Constitution. This rule of exhaustion ofstatutory remedies is a rule of policy, convenience anddiscretion; and (vi) In cases where there are disputed questions of fact, theHigh Court may decide to decline jurisdiction in a writpetition. However, if the High Court is objectively of the viewthat the nature of the controversy requires the exercise of itswrit jurisdiction, such a view would not readily be interfered with.” 11. Facts of the present case, when viewed in the backdrop of theafore-discussed law, we do not find that this is a case wherein writjurisdiction under Article 226 of the Constitution of India should beexercised even though statutory remedy shall be available to the appellantagainst the final order of assessment. 12.Needless to say that the petitioner shall be at liberty to raise allpleas available to him including those raised in the present petition beforethe statutory authority in appeal. (TEJINDER SINGH DHINDSA)JUDGE (PANKAJ JAIN) JUDGE April 27, 2022 Dpr