TMI Blog1975 (10) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... I(9), New Delhi. He submitted his income-tax returns for the assessment years 1967-68 1968-69 and 1969-70 to the Income-tax Officer, District VIII(9), New Delhi, under section 139(1) of the Income-tax Act (hereinafter referred to as " the Act "). The said Income-tax Officer did not take any steps to complete the assessments for the said years till February, 1971. The Commissioner of Income-tax, Delhi-I, New Delhi, in exercise of his powers under section 127 of the Act then transferred the assessment jurisdiction over the petitioner's cases from the Income-tax Officer, District VIII(9), New Delhi, to the Income-tax Officer, Special Circle IX, New Delhi. This transfer was effected without notice to the petitioner. The petitioner filed Writ Petition No. 95 of 1972 on January 28, 1972, in the High Court of Delhi challenging the validity of the transfer as being violative of the provisions of section 127 of the Act. The Delhi High Court admitted the writ petition and granted interim stay of the assessment proceedings before the Income-tax Officer, Special Circle IX, New Delhi. The writ petition was ultimately allowed by the Delhi High Court on May 5, 1972, and the order of transfer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng several legal objections to the jurisdiction of the Income-tax Officer, Khammam, to assess the petitioner. He further complained that the time given to the petitioner was totally inadequate and it was impossible for him to furnish the particulars called for. Before sending the said letter he spoke to the Income-tax Officer on the telephone and the Income-tax Officer told him that he was only acting under the instructions of the superiors and was helpless. This allegation is, however, denied by the Income-tax Officer in the counter-affidavit. The letter was delivered to the Income-tax Officer, Khammam, on April 30, 1973, on which date the matters stood posted for hearing before the Income-tax Officer, Khammam. On April 30, 1973, the Income-tax Officer, Khammam, sent another letter to the petitioner stating that a fresh opportunity was given to the petitioner by adjourning the cases for hearing to May 4, 1973. The Income-tax Officer sent formal notices under sections 142(1) and 143(2) of the Act and this letter was received by the petitioner's secretary at Ramavaram when the petitioner was away and the letter and the notices were placed before the petitioner only on May 5, 1973, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer, Khammam, during the telephone conversation with the petitioner is denied. It is the case of the revenue that, in view of the short time available for the completion of assessment proceedings within the time prescribed by the statute, and the inordinate delay caused by the petitioner's dilatory tactics, the assessments were completed expeditiously. It is further stated that the petitioner has an effective alternative remedy by way of appeal against the order of assessments and by way of an application to reopen the ex parte assessments under section 146 of the Act. The central argument, if not the exclusive argument, in the case that effectively engaged our attention was that the assessment orders passed under section 144 of the Act largely lacerated, as they were, by the violent breach of the principles of natural justice, cannot survive. The learned counsel also submits that the petitioner has not filed any application under section 146 of the Act to reopen the assessments and an appeal is not an effective remedy as the validity of the assessment itself cannot be gone into in an appeal under section 251 of the Act. On the other hand, it is the contention of the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have recourse to that machinery and to approach the High Court directly against the action ...... Where the party feeling aggrieved by an order of an authority under the Income-tax Act has an adequate alternative remedy which he may resort to against the improper action of the authority and he does not avail himself of that remedy the High Court will require a strong case to be made out for entertaining a petition for a writ." The Calcutta High Court in Dhaniram Gupta v. Union of India [1973] 89 ITR 281, held that where the assessee was actively pursuing an alternative remedy, the assessee was not entitled to invoke the jurisdiction of article 226 of the Constitution. The learned counsel also relied upon an unreported decision of this court in W.P. Nos. 1636 and 1818 of 1970 dated November 18, 1971, wherein it was held : " Although it is true that the failure to resort to the appropriate remedies may be a bar to seek redress under article 226 of the Constitution, however, where the High Court did not reject the petition on that ground at the stage of admission, it will not be proper to rely upon that circumstance when the hearing of the petition clearly discloses that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed,--but he cannot appeal on the ground that the best judgment assessment is invalid or should be cancelled since he was prevented by sufficient cause from complying with the notice, non-compliance with which has resulted in the best judgment assessment. If the assessee wants to have the assessment cancelled on the ground of sufficient cause for noncompliance with the notice, he must apply under this section. In other words, section 246 gives the assessee a right of appeal limited to the quan. turn of the income or loss assessed or the tax or status determined. It does not give him the right to object to the validity of the best judgment assessment on any of the grounds mentioned in this section ; such objection can be raised only in au application under this section (section 146) to have the assessment cancelled ". The learned counsel for the petitioner admits that the petitioner had not filed any application under section 146 of the Act for the cancellation of the assessment on the ground that he had no reasonable opportunity to comply, or was prevented by sufficient cause from complying, with the terms of the notice issued under sections 142(1) and 143(2) of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall, hereupon, proceed to make fresh assessment on such material and determine, where necessary, the amount of tax payable on the basis of such fresh assessment. The words " where necessary " are crucial and indicate that the Income-tax Officer may determine that the assessee is not liable to pay any tax at all. The " Explanation " to the section further makes it clear that the Appellate Assistant Commissioner may consider and decide any matter arising out of the proceedings in which the order appealed against was passed. If the Appellate Assistant Commissioner is satisfied from the assessment proceedings that the assessment is unconscionable and lustful or that the principles of fairness and justice are eroded and the proceedings are purely the creature of animosity, he may direct the Incometax Officer to give a fresh notice under section 143(2) of the Act before the fresh assessment is completed. Such a notice would not amount to reopening of the assessment but only a continuation of the original assessment proceedings. In this view, we are fortified by a ruling of the Jammu and Kashmir High Court. In Rattan Lal Tiku v. Commissioner of Income-tax [1974] 97 ITR 553 a Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by an application under section 27, and thereafter by an appeal under section30. But the Amendment Act has made a provision, in section 30, permitting an appeal by an assessee against an order of the Income-tax Officer making an assessment under section 23(4), thereby enlarging the right of the assessee to question the assessment itself, i.e., question the quantum or even the validity of the assessment by reason of the notices issued under section 22 being invalid. We are in entire agreement with the opinion expressed by the learned, judges of this court. We hold that it would not be improper for the Appellate Assistant Commissioner even in cases of best judgment assessment under section 144 of the Act to look into the accounts which the assessee failed to produce when asked for under section 142(1) and to satisfy himself that the judgment of the assessing officer was not arbitrary or capricious and rectify it properly if found defective. The contention that the alternative remedy is not adequate must, therefore, fail. Then that leads to the question whether the existence of an adequate alternative remedy is always a bar to the maintainability of a writ petition. It is now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Supreme Court held : " The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it ". One more decision that requires to be referred to is Ponkunnam Traders v. Additional Income-tax Officer [1972] 83 ITR 508 (Ker), wherein Mathew J. (as he then was) observed at page 521 : " The breach of natural justice is itself the miscarriage of justice which enables the applicant to succeed, and never before has it been held that the court is entitled to refuse him relief. " It is true and there can be no dispute that if the petitioner succeeds in establishing breach of natural justice certainly he is entitled to the relief. But, has the petitioner, in this case, established any such breach ? It is the case of the petitioner that he submitted the returns to the Incometax Officer, Delhi, District VIII(9), under section 139(1) of the Act on June 28, 1967, June 24, 1968, and July 4, 1969, for the assessment years 1967-68, 1968-69 and 1969-70, respectively. His cases were subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to compile the information because the last adjournment before the Income-tax Officer, Special Circle (9), New Delhi, was on January 10, 1972. In spite of it he prayed for further time for furnishing information and the Income-tax Officer, Khammam, gave him time till May 4, 1973, and the notice was served on May 4, 1973. That apart, under sub-section (2) of section 127 the transfer of a case from one Income-tax Officer to another shall not render it necessary to re-issue any notice already issued by the Income-tax Officer from whom the case was transferred. Issue of any fresh notice by the Income-tax Officer, Khammam, was not necessary under the law, since notices had already been issued by the Income-tax Officer, Delhi, from whom the case was transferred. The assessment orders were passed on May 7, 1973. The petitioner also did not appear before the Income-tax Officer subsequently and file any application under section 146 of the Act to reopen the assessments. These circumstances clearly establish that the petitioner was given reasonable opportunity to furnish full information before the orders of assessment were passed under section 144 of the Act but the petitioner did not av ..... X X X X Extracts X X X X X X X X Extracts X X X X
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