TMI Blog2019 (9) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... nt a particular fact, the authority should be completely denuded of its powers to make impugned proceedings. This court reminds itself that unlike Southern Petrochemical case which is a regular tax case appeal, this is a case under writ jurisdiction wherein there is no disputation that writ petitioner has an alternate remedy. Therefore, jurisdictional fact should be so striking that it strikes at the very root of the exercise of the power by the authority making the impugned order. There is further discussion regarding alternate remedy in the latter part of this order infra. Be that as it may, suffice to say that this court is unable to convince itself that (from a reading of the language in which section 144C of IT Act is couched) respondent is completely denuded of powers to make draft and final assessment orders in cases where the rate at which tax is to be paid by the assessee is put in issue Period of limitation - A perusal of the manner in which limitation plea has been projected or in other words, challenge to the impugned draft and final assessment orders insofar as it is predicated on limitation plea is concerned, it comes out clearly that it is a mixed question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petitions. 4 For said AY, writ petitioner company filed returns on 10.02.2016 showing gross total income of ₹ 22,89,76,090.00, admitted that it is liable to pay income tax at 10% of gross total income, but vide the return, claimed a refund of ₹ 4,57,95,220.00 on the ground that writ petitioner company is a deductee qua Tax Deducted at Source ( TDS for brevity) to the tune of ₹ 6,86,92,827.00. 5 The case of writ petitioner Assessee was selected for scrutiny and a notice under section 143(2) of IT Act being notice dated 28.7.2016 was issued to writ petitioner assessee. Thereafter, on 26.11.2018, a notice under section 142(1) of IT Act calling for details was also sent. Writ petitioner assessee submitted details called for. Personal hearings were also held on 3.8.2016, 3.12.2018 and 19.12.2018. After considering the returns, replies and the submissions made in the personal hearings, the respondent passed an order dated 24.12.2018 being order No.ITBA/AST/F/144C/2018- 19/1014525544(1) (this order shall hereinafter be referred to as impugned draft assessment order for the sake of convenience and clarity). 6 P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that an alternate remedy is available to the writ petitioner assessee by way of an appeal under section 246A of IT Act and writ petitioner could have taken dispute resolution route and gone to the DRP. 12 This court now first embarks upon the exercise of examining whether there is any jurisdictional fact qua Section 144C being invoked by the respondent. Learned counsel for writ petitioner pressed into service Southern Petrochemical Industries Corporation Ltd. Vs. Income tax Officer reported in [2009] 224 CTR 90 (Madras) judgment and submitted that respondent cannot resort to section 144C when there is no variation in income returned by writ petitioner assessee. 13 Per contra, learned Revenue counsel emphatically submitted that Southern Petrochemical case is clearly distinguishable. It was submitted by learned Revenue counsel that Southern Petrochemical case was in a regular tax case appeal under section 260A of IT Act and a perusal of the substantial question of law on which the appeal was decided will reveal that the issue before the Court was whether the Tribunal was right in holding that provisions of section 144B of IT Act ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on any assessee is contained in paragraph 5 and relevant portion of paragraph 5 is as follows : 5.Mrs.Pushya Sitaraman, learned senior standing counsel appearing for the Revenue, while conceding that depreciation cannot be thrust on any assessee would submit that at the time when the assessment order was passed and the proposal was made which is dated 29th Aug, 1982, the law had not been settled and therefore, there is nothing wrong in the reference made under section 144B and it was always subject to the IAC accepting the explanation given by the assessee. .... 17 This court after a careful analyse of rival submissions and the case law is convinced that the submission of learned Revenue counsel that Southern Petrochemical case is distinguishable deserves to be accepted for more than one reason, as Southern Petrochemical case turns on section 144B which is different from section 144C which we are now concerned with, more importantly the facts scenario is completely different and the substantial question of law itself makes it clear that answer to substantial question of law is on the facts and circumstances of the case. In this regard, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redicated on limitation. It was submitted by learned counsel for writ petitioner that proper course for the respondent would have been to pass an assessment order under section 143(3) of IT Act, limitation for the same had elapsed and therefore, section 144C route has been taken to circumnavigate limitation. Responding to this, learned Revenue counsel pointed out that said AY being 2015-16, it is prior to 01.06.2016 when limitation was two years. Thereafter, in the clarificatory hearing on 14.08.2019, by placing reliance on section 153(1) of IT Act, it was argued by learned counsel for writ petitioner that it is 21 months. This makes it important to look into the manner in which writ petitioner has projected / articulated limitation ground in the affidavit filed in support of the writ petition. Relevant paragraph is paragraph 20(M) and the same reads as follows : M .That no further action shall be taken in the case of the Petitioner since the limitation to pass an order under subsection (3) of Section 143 of the Act has already expired. Since Section 144C of the Act is not applicable in the Petitioner's case, the limitation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court has no hesitation in holding that on the facts and circumstances of the instant case, as the plea of limitation turns on facts and as it is clearly not a pristine question of law and as it at best qualifies as mixed question of law and facts, it would be appropriate to not to decide facts in a writ petition and leave it to appellate authority to decide on facts. 22 This takes us to another limb of the same argument. Learned Revenue counsel pointed out that with regard to previous assessment year, namely 2014-15, the same procedure of passing a draft assessment under section 144C was adopted with regard to writ petitioner assessee, writ petitioner asseessee did not assail the said procedure much less raise the jurisdictional fact issue, on the contrary, filed a regular statutory appeal to appellate authority and the appellate authority also passed a detailed order on 25.6.2018 dismissing the writ petitioner assessee s appeal. 23 It was pointed out by learned Revenue counsel before the first appellate court that writ petitioner Assessee did not appear and though writ petitioner assessee did not appear in its capacity as appellant, appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding structure of the writ petitioner company is such that the Indian company in which investment was made is only a company which acted as a conduit or an intermediary for the purpose of obtaining tax benefits which according to the Revenue is unjustified benefits. 26 It may not be necessary to delve into these aspects of the matter any further. Suffice to say that the basis on which Revenue is taking the stand that writ petitioner assessee is liable to pay tax at the rate of 20% and not at beneficial rate of 10% based on Indian Cyprus DTAA is after enquiry into the holding structure of writ petitioner assessee company and after enquiry into the benefiticial owner aspect qua writ petitioner company. 27 Having answered the jurisdiction fact plea, the trajectory of discussion now should necessarily move towards alternate remedy. There is no disputation or disagreement that alternate remedy is available to writ petitioner Assessee under section 246A of IT Act. In this regard, a judgment of this Hon ble Court made in Martech Peripherals (P.) Ltd. Vs. Deputy Commissioner of Income-tax, Company Circle IV(1), Chennai reported in [2017] 81 taxmann.c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Vs. Dunlop India Ltd. reported in (1985) 1 SCC 260 . Relevant paragraph is paragraph 3 and the same reads as follows : 3. In Titaghur Paper Mills Co. Ltd. v. State of Orissa [(1983) 2 SCC 433 : 1983 SCC (Tax) 131 : 1983 Tax LR 2905 : (1983) 142 ITR 663 : (1983) 53 STC 315] A.P. Sen, E.S. Venkataramiah and R.B. Misra, JJ. held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the tribunal and thereafter to have the case stated to the High Court, it was not for the High Court to exercise its extraordinary jurisdiction under Article 226 of the Constitution ignoring as it were, the complete statutory machinery. That it has become necessary, even now, for us to repeat this admonition is indeed a matter of tragic concern to us. Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. *** 55 . It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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