2025 (5) TMI 2135 - HC - Income Tax

Assessment u/s 143(3) r/w Section 144B - petitioner is assailing the impugned order inter alia on the ground that the request for a personal hearing through video conferencing was not considered by the AO hence an effective opportunity for a hearing was not granted. HELD THAT - Admittedly the order of the AO is appealable before the Commissioner of Income Tax and thereafter before the ITAT. The petitioner has not raised any complex question of law which can be decided by the High Court under Article 226 of the Constitution of India. The issue of violation of the principle of natural justice or any provisions of the Income Tax Act and Rules / order can be considered by the appellate authority as well as by the ITAT both. Hence we do not find any reason to entertain the writ petition bypassing the alternative remedy. WP stands dismissed with liberty to avail the remedy available under the law.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

• Whether the Assessing Officer's order dated 16.03.2025 under Section 143(3) read with Section 144B of the Income Tax Act for Assessment Year 2023-24 was passed without granting an effective opportunity of hearing, specifically whether the petitioner's request for a personal hearing through video conferencing was improperly denied.
• Whether the petitioner is entitled to challenge the order of the Assessing Officer directly by filing a writ petition under Article 226 of the Constitution of India, or whether the petitioner must first exhaust the alternative statutory remedies of appeal before the Commissioner of Income Tax and subsequently before the Income Tax Appellate Tribunal (ITAT).
• The scope of judicial intervention under Article 226 in tax assessment matters where alternative statutory remedies are available, particularly in light of the principle of natural justice and the jurisdiction of the Assessing Officer.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the Assessing Officer denied an effective opportunity of hearing by not considering the petitioner's request for video conferencing.

The petitioner contended that the Assessing Officer failed to consider the request for a personal hearing through video conferencing, thereby violating the principle of natural justice by not granting an effective opportunity of hearing. The legal framework relevant here includes the provisions of the Income Tax Act, 1961, particularly Sections 143(3) and 144B, which govern the assessment process and the procedure for assessment orders. The principle of natural justice mandates that a person affected by an order should be given a fair opportunity to present their case.

However, the Court noted that the issue of whether the petitioner was denied a fair hearing is not a complex question of law but rather a factual and procedural matter that can be adequately examined by the appellate authorities. The Assessing Officer's order is appealable before the Commissioner of Income Tax and thereafter before the ITAT, both of which have the jurisdiction to examine procedural compliance and natural justice concerns.

The Court emphasized that the petitioner's grievance about the denial of hearing through video conferencing does not amount to a total lack of jurisdiction or a fundamental illegality that would justify bypassing the statutory appellate remedy. Therefore, the Court refrained from delving into the merits of this issue at the writ petition stage.

Issue 2: Whether the petitioner can invoke writ jurisdiction under Article 226 without exhausting statutory remedies of appeal.

The Court relied heavily on the precedent set by the Supreme Court in the case of Union of India v. Rajhans Impex (P) Limited, which clarified the scope of writ jurisdiction in tax assessment matters. The apex court held that where an order is passed by an Assessing Officer having jurisdiction, and alternative statutory remedies in the form of appeals are available, the High Court should not entertain a writ petition challenging such an order without the petitioner first availing the statutory appeal remedy.

The Court noted that in Rajhans Impex, the Supreme Court quashed a High Court order that entertained a writ petition against an order-in-original without the petitioner having availed the statutory appeal. The Supreme Court allowed the petitioner therein to file a statutory appeal within a stipulated time and emphasized that all contentions available to the parties remain open during the appeal process.

Applying this principle, the Court observed that the petitioner in the present case has not raised any complex question of law or jurisdictional defect that would warrant interference under Article 226 at this stage. The petitioner has an efficacious remedy of appeal before the Commissioner of Income Tax and ITAT, which is the appropriate forum to consider both factual and legal issues, including alleged violations of natural justice.

The Court also addressed the respondent's argument that the issue of natural justice is not a complex legal question and can be effectively adjudicated by the appellate authorities. It agreed with this position and held that the High Court should not bypass the statutory appeal mechanism.

Issue 3: The scope of judicial review under Article 226 in tax assessment matters.

The Court reiterated the well-established principle that the writ jurisdiction under Article 226 is discretionary and should not be exercised to circumvent the statutory appeal process unless there is a total lack of jurisdiction, mala fide exercise of power, or a fundamental illegality. The Court found no such circumstances in the present case.

The Court's reasoning was grounded in the need to maintain the hierarchical structure of tax dispute resolution and to prevent piecemeal or premature interference in assessment orders. The availability of a comprehensive appellate mechanism ensures that grievances can be addressed effectively without burdening the High Court with matters that can be resolved at the appellate stage.

3. SIGNIFICANT HOLDINGS

The Court held:

"The petitioner has not raised any complex question of law which can be decided by the High Court under Article 226 of the Constitution of India. The issue of violation of the principle of natural justice or any provisions of the Income Tax Act and Rules / order can be considered by the appellate authority as well as by the ITAT both. Hence, we do not find any reason to entertain the writ petition, bypassing the alternative remedy."

Core principles established include:

• The writ jurisdiction under Article 226 is not a substitute for statutory appeals in tax matters where efficacious alternative remedies exist.
• Allegations of violation of natural justice in assessment proceedings are generally to be adjudicated by the appellate authorities unless there is a total lack of jurisdiction or fundamental illegality.
• The hierarchical appellate mechanism under the Income Tax Act must be respected to ensure orderly and effective resolution of tax disputes.
• High Courts should refrain from entertaining writ petitions challenging assessment orders without the petitioner first exhausting the statutory appeal remedies.

Final determinations on each issue were:

• The petitioner's challenge to the denial of a video conferencing hearing is not a ground for writ jurisdiction and should be addressed by the appellate authorities.
• The writ petition is dismissed on the ground of non-exhaustion of statutory remedies.
• The petitioner is granted liberty to pursue the statutory appeal remedies available under the Income Tax Act.