2025 (4) TMI 925 - HC - Income Tax

Petitioner should avail the alternate remedies available - Petitioner has adequately pleaded the non-availability or inefficacy of alternate remedies as required for entertaining such a petition - HELD THAT - The limitation issue presents a mixed question of law and fact which this Court exercising its extraordinary jurisdiction would prefer not to adjudicate. The additions are based on incriminating material and this Court cannot examine such material to settle the disputes regarding the extent of the additions. These are routine grounds addressed by the appellate authorities and no extraordinary circumstances exist to deviate from the standard practice of exhaustion of statutory alternate remedies. Almost all the grounds that were tried to be urged before us concern the merits or demerits of the assessment order. It is not as if these grounds cannot be urged before the appellate authority. This is an instance where the party has tried to take chances with the court procedures and consumed disproportionate Court time. In the case of Oberoi Constructions Limited Vs Union of India Ors 2024 (11) TMI 588 - BOMBAY HIGH COURT this Court has considered several precedents on the issue of exhaustion of alternate remedies. By adopting the reasoning in the said decision we decline to entertain this Petition. The Petitioner is free to Appeal the impugned assessment order if the Petitioner so desires. The observations made in this order are not intended to prejudice the Petitioner s Appeal when instituted. The observations are only prima facie for deciding whether any case is made out to bypass the salutary practice of exhaustion of alternate remedies. Therefore if an Appeal is instituted the appellate authority need not be influenced by any observations.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter were:

• Whether the Petitioner can bypass the statutorily provided alternate remedy and seek relief by way of a writ petition challenging the assessment order.
• Whether the Petitioner has adequately pleaded the non-availability or inefficacy of alternate remedies as required for entertaining such a petition.
• Whether the limitation period for filing an appeal or petition affects the jurisdiction of the Court to entertain the present petition.
• Whether there has been any violation of principles of natural justice in the assessment proceedings that would justify bypassing alternate remedies.
• Whether the Court should exercise its extraordinary jurisdiction to examine the merits of the assessment order or the quantum of additions made.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Availability and Exhaustion of Alternate Remedies

The legal framework mandates that where alternate statutory remedies exist, a writ petition challenging an assessment order should not be entertained unless the petitioner demonstrates the non-availability or inefficacy of such remedies. The Court referred to established precedents emphasizing the salutary principle of exhaustion of alternate remedies before invoking extraordinary jurisdiction.

The Court observed that the Petitioner failed to plead or explain why the alternate remedy was not availed. The impugned demand notice itself informed the Petitioner of the availability of alternate remedies. The Petition contained only an omnibus statement denying the existence of any other petition on the subject matter, which was found insufficient.

The Petitioner's counsel argued that filing within the limitation period for appeal justified entertaining the petition. The Court rejected this submission, clarifying that limitation compliance is not a ground to bypass alternate remedies. The Court underscored that the Petitioner must specifically plead the absence or inefficacy of alternate remedies to justify such bypass.

Thus, the Court applied the law strictly, holding that the failure to plead or demonstrate the inadequacy of alternate remedies barred the writ petition's admission.

Issue 2: Limitation and Jurisdiction

The Petitioner contended that the addition exceeding Rs. 2,49,88,500/- invoked a larger limitation period, which is a jurisdictional issue warranting judicial intervention. The Respondents agreed on the quantum of addition.

The Court treated limitation as a mixed question of law and fact, which ordinarily should be adjudicated by the appellate authorities rather than in writ jurisdiction. The Court expressed reluctance to examine incriminating material or facts underlying the additions at this stage, as these are routine grounds for appeal.

Consequently, the Court declined to entertain the petition on limitation grounds, emphasizing that no extraordinary circumstances existed to warrant deviation from the standard appellate process.

Issue 3: Alleged Violation of Natural Justice

The Petitioner alleged breach of natural justice, contending inadequate notice or opportunity in the assessment proceedings. The Court noted that this was not a case of complete denial of notice or hearing but at most alleged inadequacy of notice/opportunity.

The Court held that such factual disputes require detailed investigation and are best addressed through statutory remedies. Without cogent reasons to bypass alternate remedies, the Court declined to entertain the petition on this ground.

Issue 4: Merits of the Assessment Order and Quantum of Additions

The Petitioner raised multiple grounds challenging the merits of the assessment order and the quantum of additions. The Court observed that these grounds are precisely the issues appellate authorities are empowered to decide.

The Court emphasized that entertaining such challenges at the writ stage would amount to circumventing the appellate process and lead to disproportionate consumption of Court time.

Accordingly, the Court declined to delve into the merits or demerits of the assessment order in the present writ petition.

3. SIGNIFICANT HOLDINGS

The Court's crucial legal reasoning can be encapsulated in the following verbatim excerpts:

"The Petitioner must plead correctly on the issue of alternate remedy. In this case, the impugned demand notice pursuant to the impugned assessment order advises the Petitioner-assessee of the availability of the alternate remedy. There is no whisper in the Petition about such an alternate remedy or the reasons why the Petitioner has chosen not to avail of such an alternate remedy."

"Because a Petition is filed within the limitation period prescribed for instituting an Appeal, that cannot be ground to entertain the Petition bypassing the statutorily provided alternate remedy."

"Even the issue of a violation of natural justice would involve the evaluation of factual aspects. This is not a case in which we can conclude without detailed investigation that principles of natural justice have been breached."

"The additions are based on incriminating material, and this Court cannot examine such material to settle the disputes regarding the extent of the additions. These are routine grounds addressed by the appellate authorities, and no extraordinary circumstances exist to deviate from the standard practice of exhaustion of statutory alternate remedies."

"Almost all the grounds that were tried to be urged before us concern the merits or demerits of the assessment order. It is not as if these grounds cannot be urged before the appellate authority."

Core principles established include:

• The mandatory requirement of pleading and demonstrating the absence or inefficacy of alternate statutory remedies before invoking writ jurisdiction against assessment orders.
• Filing within the limitation period for appeal does not justify bypassing alternate remedies.
• Issues involving factual determination, such as natural justice violations or quantum of additions, are to be resolved by appellate authorities, not at the writ stage.
• The Court's extraordinary jurisdiction is to be exercised sparingly and only in exceptional circumstances, which were absent here.

Final determinations on each issue were:

• The writ petition was dismissed for failure to plead or demonstrate the non-availability or inefficacy of alternate remedies.
• The Court declined to entertain limitation or jurisdictional challenges at this stage, leaving them to appellate authorities.
• No prima facie violation of natural justice was found to warrant bypassing alternate remedies.
• The merits of the assessment order and quantum of additions were held to be matters for the appellate process.