Wp/23474/2021 Of Praveen Kumar Pathi v. The Assistant Commissioner-Income Tax Dc/Ac Central Circle 1(2), Investigation Building

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 28.10.2021CORAMTHE HON'BLE MR.JUSTICE M.SUNDARW.P.Nos.23474, 23477 & 23480 of 2021andWMP.Nos.24716, 24718 & 24720 of 2021Praveen Kumar PathiPAN No: ANUPP7272LFlat No.G-1, Plot No.321 & 322,Sri Sai Krupa Nilayam,Sardar Patel Nagar,Kukatpally, Hyderabad-500 072Andhra Pradesh. ...Petitioner in all Wps. -Vs.- 1. The Assistant Commissioner-Income tax DC/AC Central Circle 1(2), Investigation Building, No.46 (Old No.108), Mahatma Gandhi Road, Chennai, Tamil Nadu-600 034. 2. The Principal Commissioner of Income Tax-1, IT Tower, AC Guards, Masab Tank, Hyderabad, Andhra Pradesh, 500 004.3. The Income Tax Officer-(Hqrs)-II Office of the Principal Commissioner of Income Tax-1, IT Tower, AC Guards, Masab Tank, Hyderabad, Andhra Pradesh, 500 004. ...Respondents in all Wps Writ Petitions filed under Article 226 of the Constitutionof India praying to issue a Writ of Certiorari, to call for therecords of the impugned Assessment Orders dated 29.09.2021passed by the first respondent in (i) ITBA/AST/S/153C/2021-22/1036030956(1) (ii)ITBA/AST/S/153C/2021-22/1036031052(1) and(iii)ITBA/AST/S/153C/2021-22/1036047111(1) for the A.Y. 2017-18,2018-19 and 2019-20 respectively from the files of the firstrespondent herein and quash the same. For Petitionerin all WPs : Ms.Aparna Nandakumar For Respondentsin all WPs : Mr.A.P.Srinivas, Senior Standing counsel C O M M O N O R D E R Captioned main writ petitions have been filed assailingthree separate Assessment Orders, all dated 29.09.2021pertaining to three different assessment years namely 2017-18,2018-19 and 2019-20 qua writ petitioner. To be noted, all thethree assessment orders have been made under Section 153C of'the Income-tax Act, 1961' [hereinafter 'IT Act' for the sake ofbrevity]. These three assessment orders shall hereinafter bereferred to as 'impugned orders' collectively. 2.Ms.Aparna Nandakumar, learned counsel for writ petitionerin all the captioned writ petitions, notwithstanding very manyaverments in the writ affidavit and several grounds that havebeen raised in the writ affidavit, in the hearing, in hercampaign against the impugned orders, projects two main pointsand they are as follows: a) Jurisdiction of first respondent i.e.,territorialityhas been questioned by way of writ petitions in Hon'bleTelangana High Court and the same are pending; b) There is a clear 'Natural Justice Principle' ('NJP')violation as the notice under Section 153C calling uponthe writ petitioner to submit returns in accordancewith Section 140 of IT Act within one day, but thevery next day i.e., 26.09.2021 notice under Section 142 (1) of IT Act has been issued calling upon the writpetitioner to respond by 11.00 a.m on 28.09.2021 writpetitioner, notwithstanding the short time responded byway of a trail mail, but impugned orders have been madeby saying that the writ petitioner has not responded tothe Section 142(1) notice. 3. Mr.A.P.Srinivas, learned Senior Standing counsel acceptednotice on behalf of respondents. 4. Owing to the short and narrow compass or in other wordsthe acute legal angle on which captioned writ petitions turn,main writ petitions are taken up with the consent of learnedcounsel on both sides. https://hcservices.ecourts.gov.in/hcservices/ 5. Learned Revenue counsel in response to the submissionsmade by counsel for writ petitioner, on instructions, respondedin the following manner: a) Proceedings in Hon'ble Telangana High Court areindependent separate proceedings and they cannot impactthe writ petitioner's challenge to the impugned ordersin this Court; b) Notices under Sections 153C and 142 (1) have beenissued in accordance with law and this is a case ofsearch under Section 132 and therefore it is well opento writ petitioner to file a statutory appeal to thestatutory Appellate Authority under Section 246A of ITAct. https://hcservices.ecourts.gov.in/hcservices/ 5. Learned Revenue counsel in response to the submissionsmade by counsel for writ petitioner, on instructions, respondedin the following manner: a) Proceedings in Hon'ble Telangana High Court areindependent separate proceedings and they cannot impactthe writ petitioner's challenge to the impugned ordersin this Court; b) Notices under Sections 153C and 142 (1) have beenissued in accordance with law and this is a case ofsearch under Section 132 and therefore it is well opento writ petitioner to file a statutory appeal to thestatutory Appellate Authority under Section 246A of ITAct. 6. By way of rejoinder, besides reiterating the submissionsmade in the opening submissions, learned counsel for writpetitioner emphasised that the impugned orders have given acomplete go-by to the writ petitioner's response, have been madeon the basis that the writ petitioner has not responded and thisis another facet of NJP violation, when an assessee hasresponded, if an order is made on the basis that the assesseehas not responded that would also be one facet of NJP violation. 7. This Court now embarks upon the exercise of discussion,setting out its dispositive reasoning and arriving at aconclusion. 8. The first point pertains to challenge to jurisdiction ofthe first respondent qua territoriality and the same is underchallenge before another Hon'ble High Court. In the timehonoured comity of Courts principle, this Court deems itappropriate to not to say anything about the writ petitioner'schallenge in another Hon'ble High Court. This Court has nodifficulty in accepting the submissions of learned Revenuecounsel that the challenge qua jurisdiction [territoriality]i.e., in effect is a challenge to transfer and transfer ofassessment proceedings from one circle to another and therefore,the same does not impact writ petitioner's challenge to theimpugned orders. This puts an end to the first point. 9. This takes us to the second point i.e., NJP violation andalternate remedy rule. This Court has repeatedly held thatalternate remedy rule is not an absolute rule or in other words,it is a rule of discretion. It is a self-imposed restraint quawrit jurisdiction. This Court has also repeatedly held thatwhen it comes to fiscal statutes, the alternate remedy ruleshould be applied with utmost rigour. However, what is ofsignificance is, a three member Bench of Hon'ble Supreme Court very recently i.e., 03.09.2021 speaking through Hon'ble JusticeDr.Dhananjaya Y Chandrachud in Commercial Steel Limited case[Civil Appeal No 5121 of 2021, The Assistant Commissioner ofState Tax and Others Vs. M/s Commercial Steel Limited], made anadumbration of exceptions to the alternate remedy rule and heldthat when these exceptions are attracted, it can become anexceptional circumstance and a writ Court at its discretion caninterfere depending on the facts and circumstances of the case.Relevant paragraphs in Commercial Steel case are paragraphs 11and 12, which read as follows: '11 The respondent had a statutory remedy undersection 107. Instead of availing of the remedy, therespondent instituted a petition under Article 226.The existence of an alternate remedy is not anabsolute bar to the maintainability of a writpetition under Article 226 of the Constitution. Buta writ petition can be entertained in exceptionalcircumstances where there is: (i) a breach offundamental rights; (ii) a violation of theprinciples of natural justice; (iii) an excess ofjurisdiction; or (iv) a challenge to the vires ofthe statute or delegated legislation. '11 The respondent had a statutory remedy undersection 107. Instead of availing of the remedy, therespondent instituted a petition under Article 226.The existence of an alternate remedy is not anabsolute bar to the maintainability of a writpetition under Article 226 of the Constitution. Buta writ petition can be entertained in exceptionalcircumstances where there is: (i) a breach offundamental rights; (ii) a violation of theprinciples of natural justice; (iii) an excess ofjurisdiction; or (iv) a challenge to the vires ofthe 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 sincea notice was served on the person in charge of theconveyance. In this backdrop, it was CA 5121/2021 7not appropriate for the High Court to entertain awrit petition. The assessment of facts would have tobe carried out by the appellate authority. As amatter of fact, the High Court has while doing thisexercise proceeded on the basis of surmises.However, since we are inclined to relegate therespondent to the pursuit of the alternate statutoryremedy under Section 107, this Court makes noobservation on the merits of the case of therespondent.' 10. A careful perusal of the aforementioned portion ofCommercial Steel case law makes it clear that NJP violation is acertain exception to the alternate remedy rule. To be noted, inthe case on hand, writ petitioner counsel's argument is positedand pivoted on NJP violation heavily. In fact that is the sheetanchor submission of learned counsel for writ petitioner. 11. The chronology i.e., notice under Section 153C of IT Actone day time to send in the return in accordance with Section140 of IT Act and on the heels of this notice or in other words, https://hcservices.ecourts.gov.in/hcservices/ biting on the heels on this notice issued under 142(1) noticethe very next day i.e., 26.09.2021, giving barely two full daystime and calling upon the writ petitioner to respond and makingthe impugned order by saying the writ petitioner has notresponded, when the writ petitioner has actually responded byway of a trail mail is a certain NJP violation cumulativelymaking it one of the aforementioned exceptional circumstances.This is more so as Section 142(1) and response to the same is sointegral a part of assessment that it cannot be given a go-by.If it cannot be given a go-by, if this mechanism is statutorilyimperative, violation of the same certainly qualifies as NJP. 12. What is of greater significance is though writpetitioner has responded (notwithstanding the short time givenfor responding) the impugned order proceeds with the assessmentsaying writ petitioner has not responded. 12. What is of greater significance is though writpetitioner has responded (notwithstanding the short time givenfor responding) the impugned order proceeds with the assessmentsaying writ petitioner has not responded. 13. This Court having come to the conclusion that there isNJP violation deems it appropriate to examine the matter furtherin the light of the argument of learned Revenue counsel thatwrit petitioner should be relegated to a statutory appeal underSection 246A. Let me test this argument on a demurrer.Assuming the writ petitioner is relegated to alternate remedyand if the writ petitioner files statutory appeal under Section246A, aforementioned argument regarding reply being sent and thesame not being considered by the Assessing Officer and impugnedorders being made on the basis that writ petitioner has notresponded could be advanced as a grounds of appeal before thestatutory Appellate Authority also. If that is done, statutoryAppellate Authority will have no option other than sending thematter back to the Assessing Officer to consider the responsealready sent by writ petitioner. This means further delay forthe Revenue and uncertainty for the assessee. This would servenobody's cause. Therefore, on the facts and circumstances ofthis case, considering that this proceedings is based on a pendrive allegedly recovered in search proceedings under Section132 of IT Act from the premises of a third party, it isimperative that the response of the writ petitioner isconsidered before assessment orders are made. In other words,this Court is interfering in writ jurisdiction, owing to thepeculiar facts and circumstances of this case which puts it inone of the exceptional circumstances basket culled out inCommercial Steel principle alluded to supra. 14. Captioned writ petitions are disposed of by making thefollowing order:a) Three impugned assessment orders beingassessmentordersbearingreferenceNos.(i)ITBA/AST/S/153C/2021-22/1036030956(1)(ii)ITBA/AST/S/153C/2021-22/1036031052(1)and(iii) https://hcservices.ecourts.gov.in/hcservices/ ITBA/AST/S/153C/2021-22/1036047111(1) all dated29.09.2021 are set aside solely on the ground that thewrit petitioner's response to Section 142(1) has notbeen considered;b) As a corollary to the previous limb, thoughobvious, it is made clear that this Court has notexpressed any view or opinion on the merits of thematter;c) First respondent shall now redo theproceedings from the Section 142(1) (of IT Act) noticestage i.e., notice under Section 142(1) and completethe assessment proceedings as expeditiously as hisbusiness would permit; d) In the interregnum, if the Hon'ble TelanganaHigh Court passes any order, obviously the same willgovern inter alia the territoriality qua assessmentproceedings as this Court is interfering in writjurisdiction only on NJP violation principle quaimpugned assessment orders. 15. Captioned writ petitions are disposed of withaforementioned directives. Consequently, captioned WMPs arealso disposed of as closed. There shall be no order as to costs. Assistant Registrar(CS VII) //True Copy// kmi Sub Assistant Registrar To 1. The Assistant Commissioner-Income tax DC/AC Central Circle 1(2), Investigation Building, No.46 (Old No.108), Mahatma Gandhi Road, Chennai, Tamil Nadu-600 034.2. The Principal Commissioner of Income Tax-1, IT Tower, AC Guards, Masab Tank, Hyderabad, Andhra Pradesh, 500 004. 3. The Income Tax Officer-(Hqrs)-II Office of the Principal Commissioner of Income Tax-1, IT Tower, AC Guards, Masab Tank, Hyderabad, Andhra Pradesh, 500 004. +1cc to Mr.Aparna Nandakumar, Advocate, S.R.No.55897 +3cc to Mr.A.P.Srinivas, Advocate, S.R.No.56119 W.P.Nos.23474, 23477 & 23480 of 2021andWMP.Nos.24716, 24718 & 24720 of 2021 AK-II(CO)RGA(29/11/2021)