Wp/1807/2011 Of Parvez Nazir Hussein Jafri v. Commissioner Of Income-Tax And Ors

( 1 ) IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.1807 OF 2011 Parvez Nazir Hussein JafriPETITIONER VERSUS Commissioner of Income Tax and others RESPONDENTS Mr.R.R.Chandak with Mr.M.K.Kulkarni, Advocate for petitioner.Mr.Alok Sharma, Assistant Solicitor General for respondent Nos. 1 and 3. (CORAM : S.C.DHARMADHIKARI AND RAVINDRA V.GHUGE, JJ.) DATE : 29/01/2014 PER COURT: 1.This writ petition was initially heard by a Division Bench of this Court on 23/12/2011 and it was dismissed by an order passed on that date. 2.The Division Bench order, dismissing the writ petition, was challenged by the original petitioner in the Hon’ble Supreme Court of India and Civil Appeal No.6904/2011, challenging that judgment, was decided by the Hon’ble Supreme Court on 24/09/2012. 3.The Supreme Court set aside that judgment and remitted the matter back to this Court for de novo consideration in accordance with Law. 4.Upon being remitted, the matter was once again placed for admission and the learned Advocate appearing for the petitioner submitted that the writ petition, therefore, deserves admission or in any event, there being a short point involved, it should be disposed of on merits. 5.The short point involved, according to the petitioner, is that the petitioner before us had filed his Return of Income Tax for the Assessment Year 2006-07. It was filed before the due date prescribed for filing of the return namely 30/10/2006. A statutory and mandatory notice was issued by the Income Tax Officer, Ward 2(3), Aurangabad u/s 143(2) of The Income Tax Act and which is required to be served before proceeding for assessment. Since the Return of Income Tax was filed on 30/10/2006 u/s 139(1) of the Income Tax ( 3 )Writ Petition No.1807 of 2011 Act, it was obligatory on respondent No.2 to issue and serve a mandatory notice u/s 143(2) of the Act, within 12 (twelve) months from the end of the month, in which such return came to be filed. The petitioner had filed his return on 30/10/2006 and the mandatory and statutory notice period came to an end on 30/10/2007. The notice is dated 31/08/2010 and therefore, it is ex-facie, bad in law and without jurisdiction. 6.It is submitted that the petitioner responded to this notice by stating that the Return of income was already filed and that be taken as a response to the notice u/s 148 and demanded reasons recorded for re-opening of the assessment. 7.In response to the objections raised, respondent No.2 tried to pass a speaking order, but it could not be said to be so within the meaning of the provisions and therefore, the notice is challenged in this writ petition. It is also challenged on the ground that once a Return of income has been filed, it ought to have been scrutinized and verified in accordance with Law. Respondent No.2 proceeded to re-open the assessment without such scrutiny and therefore, ( 4 )Writ Petition No.1807 of 2011 recourse to the legal provisions was impermissible. He lacks that jurisdiction and once the jurisdiction was lacking, then, the notice is required to be quashed and set aside in exercise of jurisdiction of this Court under Article 226 of the Constitution of India. It is contended that if an action taken by issuance of notice u/s 148 of the Act is challenged on the ground that the condition precedent for issuance of notice is absent, or has not been fulfilled or satisfied, then, the notice can be challenged by filing a writ petition and it is not necessary to exhaust the statutory remedy or await the final orders in pursuance of such notice and then challenge such final orders. ( 4 )Writ Petition No.1807 of 2011 recourse to the legal provisions was impermissible. He lacks that jurisdiction and once the jurisdiction was lacking, then, the notice is required to be quashed and set aside in exercise of jurisdiction of this Court under Article 226 of the Constitution of India. It is contended that if an action taken by issuance of notice u/s 148 of the Act is challenged on the ground that the condition precedent for issuance of notice is absent, or has not been fulfilled or satisfied, then, the notice can be challenged by filing a writ petition and it is not necessary to exhaust the statutory remedy or await the final orders in pursuance of such notice and then challenge such final orders. 8.Mr.Sharma, appearing on behalf of the Revenue, on the other hand, submitted that the matter has proceeded much ahead than mere service of a notice. It is apparent from the order passed on 26/11/2010, disposing of the objections to the notice u/s 148 that in pursuance thereof, the assessment order has been passed. That assessment order has been challenged by the petitioner by filing an appeal before the Commissioner of Income Tax (Appeals). That appeal is pending. 9.A copy of the memo of that appeal is produced before us and it is urged that in the memo of appeal also, the very grounds, which are raised in this writ petition, have been raised and about the lack of jurisdiction in respondent No.2. Once, such is the position and the petitioner can, in the pending appeal, raise all the contentions including relying on the grounds raised in this writ petition, then this Court should not interfere in writ jurisdiction, particularly, because the alternate remedy already availed of, is equally efficacious. 10.Reliance is placed by Mr.Alok Sharma on a recent judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal in Civil Appeal No.6704/2013 decided on 08/08/2013. He has submitted that in this case, the argument raised before this Court was not raised during the course of the proceedings before the Assessment officer. Even in the writ petition, such a specific ground or plea has not been raised. Therefore, this is a case covered by the Hon'ble Supreme Court judgment delivered in the year 2013 and which binds us. For these reasons, he submits that the petition be dismissed. ( 6 )Writ Petition No.1807 of 2011 11.We have, with the assistance of the learned Advocates appearing for the parties, perused the writ petition and all annexures thereto, including the impugned order. We have also perused the legal provisions and the decisions of the Hon'ble Supreme Court and this Court, brought to our notice by the learned Advocates. 12.In the present case, the petitioner before us has admittedly filed an appeal before the Commissioner of Income Tax (Appeals) and challenging the order dated 23/12/2011. That order came to be passed in furtherance of the notice, which has been referred in this petition, namely the notice dated 26/07/2010. 13.It is common ground that the petitioner in the writ petition, initially filed, prayed for a writ of Certiorari to declare that the proceedings are ab-initio void and without jurisdiction. The writ petition was amended on 29/07/2011 and thereafter, the notice dated 26/07/2010 has been impugned. A copy of the said notice is at Annexure “B”. The reply to the same is dated 31/08/2010. The notice is from the Income Tax Officer (Respondent No.2) and he alleged that he has reasons to believe that the petitioner / Assessee’s ( 7 )Writ Petition No.1807 of 2011 13.It is common ground that the petitioner in the writ petition, initially filed, prayed for a writ of Certiorari to declare that the proceedings are ab-initio void and without jurisdiction. The writ petition was amended on 29/07/2011 and thereafter, the notice dated 26/07/2010 has been impugned. A copy of the said notice is at Annexure “B”. The reply to the same is dated 31/08/2010. The notice is from the Income Tax Officer (Respondent No.2) and he alleged that he has reasons to believe that the petitioner / Assessee’s ( 7 )Writ Petition No.1807 of 2011 income is chargeable to tax for the assessment year 2006-07. In reply thereto, the petitioner sought the grounds, based on which, this notice came to be issued. The objections in that behalf were raised by the petitioner / Assessee by a letter dated 20/08/2010. Respondent No.2 pointed out to the petitioner / Assessee that in terms of the judgment of the Hon'ble Supreme Court in the case of GKN Drive Shafts (India) Ltd., Vs. I.T.O. (2003) 259 ITR 19 (SC), that the reasons can be provided only after filing of the Return in response to the notice u/s 148. The petitioner / Assessee, by a letter dated 18/09/2010, communicated that the original Return of income filed on 30/10/2006 may be treated as a Return in response to the notice u/s. 148. The reasons were communicated to the petitioner / Assessee as per his written request. The petitioner / Assessee, by a letter dated 09/11/2010, filed his objections to the issuance of notice u/s. 148 and dealing with that the Income Tax Officer / respondent No.2 passed an order on 26/11/2010 holding that he is satisfied with the proceedings initiated u/s. 147 and issuance of notice u/s. 148 is after recording the reasons. There is a clear assumption of jurisdiction u/s. 147 of the Act and the objections came to be disposed of with a speaking order. The Income Tax Officer ( 8 )Writ Petition No.1807 of 2011 maintained that the petitioner had not offered Rs.19,87,326/- i.e. 20% of the amount of Rs.99,36,631/-, which constitutes expenditure during the financial year 2005-06 pertaining to the assessment year 2006-07. This is an amount or an expenditure for purchase of raw material, in respect of which payments are made to various persons by account payee cheques. The case was, therefore, re-opened after recording the reasons and that is how the notice dated 26/07/2010 was sought to be upheld. 14.Now it is reported that an assessment order has been passed in furtherance thereof and which is dated 23/12/2011. Against the same, an appeal has been preferred to the Commissioner of Income Tax (Appeals) and in so far as the grounds are concerned, what has been alleged is that on the facts and circumstances of the case, so also in Law, no reasons for initiation of action u/s. 147 were recorded prior to issuance of notice u/s. 148 of the Act, as mandated by sub-section 2 of that section. The assessment is, therefore, illegal and without jurisdiction. Apart from limitation, jurisdiction and other grounds have also been raised, to which we need not advert to. 14.Now it is reported that an assessment order has been passed in furtherance thereof and which is dated 23/12/2011. Against the same, an appeal has been preferred to the Commissioner of Income Tax (Appeals) and in so far as the grounds are concerned, what has been alleged is that on the facts and circumstances of the case, so also in Law, no reasons for initiation of action u/s. 147 were recorded prior to issuance of notice u/s. 148 of the Act, as mandated by sub-section 2 of that section. The assessment is, therefore, illegal and without jurisdiction. Apart from limitation, jurisdiction and other grounds have also been raised, to which we need not advert to. ( 9 )Writ Petition No.1807 of 201115.We are of the opinion that in the peculiar facts of this case, even after the matter has been remitted back to us by the Hon’ble Supreme Court, we cannot ignore the Law laid down by the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Chhabil Dass (supra). There is no absolute bar for entertaining a writ petition u/s. 226 of the Constitution of India and mere existence of an alternate remedy cannot, therefore, prevent this Court from exercising its powers. The rule of caution and prudence, which has been re-emphasized and re-iterated by the Hon’ble Supreme Court, needs to be invoked in this case and for the simple reason that the remedy of appeal, which is available to the petitioner and which is indeed availed of, cannot be said to be inefficacious in any manner. The petitioner, knowing fully well the ambit and scope of the appellate powers, has included the ground of jurisdiction and absence of authority to challenge the order of the Assessing Officer dated 23/12/2011. The very notice dated 26/07/2010 and the reasons or the speaking order to support the same, have thus been put in issue in the pending appeal. If that is so, then the petitioner cannot invoke this Court’s jurisdiction under Article 226 of the ( 10 )Writ Petition No.1807 of 2011Constitution of India. No useful purpose will be served by keeping this petition pending because the matter has proceeded beyond the notice dated 26/07/2010 and the order passed by respondent No.2 on the objections of the petitioner / Assessee dated 26/11/2010. In the light of the fact that in the pending appeal, all the pleas, which the petitioner has raised before us and in the petition including the grounds of the petition can be raised and argued, then this writ petition need not be entertained. It is disposed on the ground of availability of alternate, efficacious remedy of appeal and to the Commissioner of Income Tax (Appeals). That appeal is already filed and is pending. We permit the petitioner to raise all contentions and grounds, which are raised in the present petition, for due consideration of the Appellate Authority. The Appellate Authority should consider the same and unmindful of the petitioner’s attempt to invoke this Court’s jurisdiction under Article 226 of The Constitution of India and the order passed by us. We clarify that, we have not expressed any opinion on the rival contentions. 16.Before parting, we must take a note of the argument of the learned Advocate appearing for the petitioner that this writ petition ( 11 )Writ Petition No.1807 of 2011 was decided by this Court on 23/12/2011 and that order was challenged in the Hon’ble Supreme Court and it came to be set aside on 24/09/2012. Therefore, this petition is held to be maintainable and should be, therefore, decided on merits and cannot be dismissed on the ground of availability of an alternate remedy. 16.Before parting, we must take a note of the argument of the learned Advocate appearing for the petitioner that this writ petition ( 11 )Writ Petition No.1807 of 2011 was decided by this Court on 23/12/2011 and that order was challenged in the Hon’ble Supreme Court and it came to be set aside on 24/09/2012. Therefore, this petition is held to be maintainable and should be, therefore, decided on merits and cannot be dismissed on the ground of availability of an alternate remedy. 17.We have found that this Court’s order dated 23/12/2011 is the very date, on which the Assessing Officer passed his order and which is now challenged before the Commissioner of Income Tax (Appeals). Secondly, Hon’ble Supreme Court’s order in this case, directs this Court to proceed in accordance with Law. Thirdly, the Hon’ble Supreme Court’s decision in the case of Commissioner of Income Tax and others Vs. Chhabil Dass (supra) has been delivered on 08/08/2013. Therefore, we are equally bound by the later judgment of the Hon’ble Supreme Court. Hence this writ petition need not be kept pending. 18.Other argument that the facts in this case are distinct from the case of Commissioner of Income Tax and others Vs. Chhabil Dass ( 12 )Writ Petition No.1807 of 2011(supra) and rather are covered by the two Division Bench judgments of this Court, firstly in the case of Ajanta Pharma Ltd.,Vs. ACIT (2004) 267 ITR 200 (Bom.) and in the case of Nargis M.Baldiwala Vs.M.N.Sawant (1990) 185 ITR 143 (Bom.). The judgment of the Hon’ble Supreme Court in the case of Whirlpool Corporation Vs. Registrar of Trade Marks, AIR 1999 SC 22 has also been referred. We are of the view that in the case of Ajanta Pharma (supra), the writ petition was filed in this Court and relying on the judgment in the case of GKN Drive Shafts (India) Ltd. The Division Bench rejected the objection on the point of maintainability of the writ petition. The objection that was raised there, was of a different nature and namely that the petition is pre-mature and the petitioners in that petition, had an efficacious alternate remedy in the form of reply to the notice and even in relation to the point pertaining to lack of jurisdiction and absence of powers to issue notices and that can be raised in the reply. Therefore, the order passed thereon cannot be questioned in writ jurisdiction. That objection was overruled and it was held the Notice Simplicitor can be challenged and without raising the objections thereto before the same Authority. ( 13 )Writ Petition No.1807 of 2011 19.In the present case, such an objection has been raised and it was rejected. That rejection is questioned in the pending appeal and on the grounds therein. Once the very controversy has been raised in the pending appeal, then the judgment in the case of Ajanta Pharma (supra), on facts, therefore, is clearly distinguishable. Equally, the judgment of the learned Single Judge of this Court in the case of Nargis Baldiwala (supra), is of no assistance to the petitioner. In that case, the controversy was that, an Officer, who had initiated the proceedings, by issuance of the notice, did not file any affidavit in reply, but there was an affidavit in reply filed by a distinct officer. It is in that regard and on merits that the notice was found to be unsustainable. That is how the same came to be set aside. The Hon’ble Supreme Court’s judgment in Whirlpool Corporation’s case (supra) and the principles laid down therein, ultimately will have application in individual facts and circumstances. It is, therefore, a discretion which the Court must exercise in entertaining a writ petition at the initial stage and to challenge the show cause notice. ( 14 )Writ Petition No.1807 of 2011 ( 14 )Writ Petition No.1807 of 2011 petition cannot be entertained on the ground of availability of equally efficacious remedy of appeal, wherein all the grounds and contentions can be raised. We keep them open for being so raised and dispose of the present writ petition. No order as to costs. ( RAVINDRA V.GHUGE, J.)( S.C.DHARMADHIKARI, J. )