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TMI Blog2014 (7) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... itions in W.P.Nos.27007 of 2012, 3413, 8252, 10568, 34420 of 2013 and 594 and 2772 of 2014 are filed challenging the speaking order, wherein the original assessment orders have been passed under Section 143(1) / under Section 144 and the reassessment notice has been issued within four or six years. 4. The writ petitions in W.P.Nos.201 to 203, 1924, 1925, 3005, 7137, 7138, 7643, 8171, 12357, 24770, 31937, 31938 of 2013 and 1941, 2771, 3275 to 3277 and 8495 of 2014 have been filed challenging the speaking order wherein the notice for reassessment has been issued within four years from the relevant assessment year wherein original orders have been passed under Section 143(3) / under Section 147. 5. The writ petitions in W.P.Nos.19871, 27609, 29467, 30610, 34985, 34986 of 2012, 1441, 6111, 6768, 7044, 7275, 12358, 12359, 33844 of 2013 and 3847 and 5744 of 2014 are filed challenging the speaking order wherein the notice for reassessment has been issued after four years and within six years from the relevant assessment year wherein orders have been passed under Section 143(3) / under Section 147. 6. The Writ Appeals in W.A.Nos.347 to 349 of 2014 are filed by the Revenue challenging th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible in law. Merely based upon audit objection, a reopening cannot be done. In most of the cases, where reopening was effected, the objections made have been rejected. Therefore, it is no ground to state that the assessment order would look into the case of the assessee objectively. The alternative remedy is not effective and efficacious. The assessing officer does not have the power to reopen the case which has already been concluded. When the petitioners are harassed by the proceedings initiated by the assessing officer, then the remedy sought for before this Court cannot be denied to them. In support of the submission, learned counsel have made reliance upon the following judgments: "1. Raza Textiles Ltd., v. Income-tax Officer, Rampur, ((1973) 1 SCC 633); 2. Shrisht Dhawan v. M/s.Shaw Brothers, ((1992) 1 SCC 534); 3. Arun Kumar and others v. Union of India and others, ((2007) 1 SCC 732); 4. Godrej Sara Lee Ltd. v. Assistant Commissioner (AA) and another, ((2009) 14 SCC 338); 5. Calcutta Discount Co.Ltd. v. ITO, [(1961) 41 ITR 191 (SC)]; 6. Commissioner of Income Tax and others v Chhabil Dass Agarwal, ( (2014) 1 SCC 603); 7. Chhabil Das Agarwal v UoI (1999 Taxman 326 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlal Harilal Mehta Vs. State of MP (AIR 1954 SC 403); 34. Tata Engineering and Locomotive Ltd. v. The Assistant Commissioner of Commercial Taxes and another, (AIR 1967 SC 1401); 35. Mukesh Modi vs DCIT (267 CTR 409); and 36. Ajanta Pharma Ltd. Vs. ACIT, (267 ITR 200 (Bombay). 10. Submissions made by the learned counsel for revenue: Per contra, Mr.T.Pramodkumar Chopra, learned counsel appearing for the revenue submitted that none of the writ petitioners made a challenge that there is no "reason to believe'', which is available in terms of Section 147 of the Act. An issue regarding a change of opinion is nothing but an adjudicatory fact. There is no challenge to the jurisdictional fact to assess/re-assess. After the judgment rendered in G.K.N.Driveshafts (India) Limited Vs. Income-tax Officer, ((2003) 1 SCC 72 - 259 ITR 19(SC)), the only option open to the assessee is to exhaust the statutory remedy under the Act. The reopening has been made only by exercising power that is available under the Act. The petitioners have not challenged the provisions of the Act. The petitioners have misconstrued a speaking order with the assessment order. Learned counsel also submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of India can very well be invoked. Therefore, to such a limited extent, we are inclined to hold that the jurisdiction of this Court under Article 226 of the Constitution of India can be exercised. 13. Considering the said principle, the Supreme Court in Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal, ((2014) 1 SCC 603), was pleased to hold as under: "15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, (AIR 1964 SC 1419), Titagarh Paper Mills case ((1983) 2 SCC 433) and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice or the procedure required for decision has not been adopted. (See: N.T. Veluswami Thevar vs. G. Raja Nainar, (AIR 1959 SC 422); Municipal Council, Khurai vs. Kamal Kumar, ((1965) 2 SCR 653); Siliguri Municipality vs. Amalendu Das, ((1984) 2 SCC 436); S.T. Muthusami vs. K. Natarajan, ((1988) 1 SCC 572); Rajasthan SRTC vs. Krishna Kant, (1995) 5 SCC 75; Kerala SEB vs. Kurien E. Kalathil, ((2000) 6 SCC 293); A. Venkatasubbiah Naidu vs. S. Chellappan, ((2000) 7 SCC 695); L.L. Sudhakar Reddy vs. State of A.P., ((2001) 6 SCC 634); Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha vs. State of Maharashtra, ((2001) 8 SCC 509); Pratap Singh vs. State of Haryana, ((2002) 7 SCC 484) and GKN Driveshafts (India) Ltd. vs. ITO, ((2003) 1 SCC 72)." 16. Statutory remedy:- When in a fiscal statute, hierarchy of remedy of appeals are provided, the party has to exhaust them instead of seeking relief by invoking the jurisdiction of this Court under Article 226 of the Constitution of India and as held in Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal, ((2014) 1 SCC 603), the Court will have to take into consideration of the legislative intent enun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspapers Ltd., 1919 AC 368 and has been reaffirmed by the Supreme Today With All High Courts Page 4 of 6 Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd., 1935 AC 532 (PC) and Secy. of State v. Mask and Co., AIR 1940 PC 105 It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine. 14. In Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 B.P.Jeevan Reddy, J. (speaking for the majority of the larger Bench) observed: (SCC p. 607, para 77) "77. So far as the jurisdiction of the High Court under Article 226 or for that matter, the jurisdiction of this Court under Article 32 is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. Similarly notice under Section 143(2) has been issued in connection with the return of income as further information was required by the Department. 19. The Division Bench of the Delhi High Court dismissed the writ petition by holding that the petitioner therein was not justified in invoking the extraordinary jurisdiction of the Court at that stage as it was pre-mature. A challenge was made to the Supreme Court, wherein, by a brief order, the appeals were dismissed with certain observations. The following paragraph is apposite: "5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etionary power under Article 226 of the Constitution of India, which in the process, takes away the right of the assessing officer to proceed further. Therefore, the Order passed, as directed by the Supreme Court, cannot be termed as a substitute to the assessment order. To put it differently, it does not take away the power of the assessing officer to decide the issue on the plea of the assessee or on a consideration of the records. It is to be remembered that the assessing officer was directed to pass orders only on the objections given by the assessee. The further fact that such an order is required to be passed before proceeding with the assessment would make the said position clear. Furthermore, if the order on the objections can be entertained, then the Supreme Court would not have directed the appeals to be disposed of by the appellate authority instead of setting them aside. This also indicates that the assessee could raise all the pleas including those considered against him by the assessing officer while passing orders on his objections. Hence, such a preliminary order, which does not have a statutory flavour not deciding the dispute between the parties, cannot be challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction in the facts of instant case. In light of the same, we are of the considered opinion that the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the re-assessment orders passed and the consequential demand notices issued thereon. 18. In view of the above, we allow this appeal and set aside the judgment and order passed by the High Court in Writ Petition (Civil) No.44 of 2009. We grant liberty to the respondent, if he so desires, to file an appropriate petition/appeal against the orders of re-assessment passed under Section 148 of the Act within four weeks' time from today. If the petition is filed before the appellate authority within the time granted by this Court, the appellate authority shall consider the petition only on merits without any reference to the period of limitation. However, it is clarified that the appellate authority shall not be influenced by any observation made by the High Court while disposing of the Writ Petition (Civil) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity justifies his jurisdiction. First, he assumes jurisdiction and on completion of assessment confirms it. In the first category, there is no adjudication of any fact that is required. In the second category, a fact has to be necessarily adjudicated, which will have a bearing on the jurisdiction of the authority concerned. Such a jurisdictional issue is ancillary or prelude to an adjudicating fact. As we discussed earlier, regarding the first part of the jurisdictional fact, there is no difficulty in invoking the discretionary jurisdiction of this Court. However, where element of adjudication is required, then the said exercise will have to be done by the assessing officer or by the appellate authority before approaching the Court of law. Therefore, what is required is the mere existence of a jurisdictional fact apparent on the face of it. Once this is done, then the process of adjudication would start. 25. The Supreme Court in CARONA LTD. V. PARVATHY SWAMINATHAN & SONS (2007) 8 Supreme Court Cases 559) held as follows:- "JURISDICTIONAL FACT AND ADJUDICATORY FACT 29. But there is distinction between 'jurisdictional fact' and 'adjudicatory fact' which cannot be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Income-tax Act, 1961:- We would like to go through the provisions governing the case only for the purpose of deciding the issues framed. Section 148 of the Act deals with the issuance of notice when an income has escaped assessment. Section 148(2) of the Act mandates that the assessing officer has to record his reasons for doing so before issuing any notice under the said Section. Section 148(1) prescribes a procedure, which is required to be done before making the assessment, reassessment or recomputation, as the case may be. Accordingly, the assessing officer is required to ask the assessee to furnish a return of his income as required to be furnished under Section 139. 29. Under Section 147 of the Act, the assessing officer has the power to assess or re-assess the income. Such a power has to be exercised by the assessing officer alone. The pre-requisite of has reason to believe must be in existence for exercising the power under Section 147. The power can be exercised over any income which is chargeable to tax that has escaped assessment. While doing so, the assessing officer is required to follow the provisions contained in Sections 148 to 153, which are more pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lack of jurisdiction, when a fact in issue requires an adjudication. It has to be exercised in terms of Sections 139, 143(2) and 143(3). Therefore, considering the scheme of the enactment, particularly, with reference to Sections 147 to 153 of the Act, we are of the view that an order passed on the objections of the assessee over adjudicating facts is not open to challenge by way of filing a writ petition. 32. Learned counsels appearing for the petitioners submitted that the objections raised have not been considered properly by the assessing officer. It is also submitted that when a speaking order is required to be passed, the same is amenable to challenge. We are not able to countenance the said argument. We have already held that the order passed on a consideration of the objections raised cannot be termed as the order having civil consequences. The assessing officer is not required to consider the objections in detail. On the contrary, he is required to indicate the basis for his re-opening the assessment. When under Section 147 the assessing officer can even assess any other income chargeable to tax, which has escaped assessment, which comes to his notice subsequently during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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