Karnataka H.C : The Tribunal, Bangalore, by its common order dt. 31st Dec., 1998, has allowed in part the Appeals No. 63 to 67/1997, 68 to 72/1997, 73 to 77/1997, 78 to 82/1997, 180 to 184/1997, 185 to 189/1997, 190 to 194/1997, 195 to 199/1997 and 84 to 87/1997 for the asst. yrs. 1989-90 to 1993-94, preferred by the assessee and the ITDepartment, against the orders framed by the CIT (A) dt. 27th Dec., 1996.

High Court Of Karnataka

L. Sohanraj & Ors. vs. DCIT & Anr.

Section 260A, Art. 226

Asst. Year 1989-90, 1990-91, 1991-92, 1992-93, 1993-94

H.L. Dattu, J.

Writ Petn. Nos. 40259 to 40262 of 1999

11th April, 2000

Counsel Appeared

Madhusudhan R. Naik, for the Petitioners : M.V. Seshachala, for the Respondents

ORDER

H.L. DATTU, J. :

Since common questions of facts and law are involved in all these petitions, they are clubbed, heard and disposed of by this common order .

2. The Tribunal, Bangalore, by its common order dt. 31st Dec., 1998, has allowed in part the Appeals No. 63 to 67/1997, 68 to 72/1997, 73 to 77/1997, 78 to 82/1997, 180 to 184/1997, 185 to 189/1997, 190 to 194/1997, 195 to 199/1997 and 84 to 87/1997 for the asst. yrs. 1989-90 to 1993-94, preferred by the assessee and the ITDepartment, against the orders framed by the CIT (A) dt. 27th Dec., 1996. Petitioners being of the view that there are certain mistakes, which are apparent on the face of the record/order made by the Tribunal, had filed common petitions under s. 254(2) of the IT Act, inter alia, seeking rectification of the mistake apparent on the face of the record and those miscellaneous petitions are rejected by the Tribunal by its common order, dt. 23rd July, 1999, on the sole ground that the petitioners are seeking a review of the order made by the Tribunal, which is impermissible under s. 254(2) of the Act. It is the correctness or otherwise of this common order made by the Tribunal, which is called in question by the petitioners before this Court in these petitions filed under Art. 226 of the Constitution of India. Sri Madhusudhan R. Naik, learned counsel for petitioners, in support of the reliefs sought in these petitions firstly points out nearly seven so-called mistakes committed by the Tribunal in its common order dt. 31st Dec., 1998, and submits that when it was brought to the notice of the Tribunal by filing an application/petition by the petitioners, the Tribunal could not have rejected the petitions solely on the ground that the petitioners are merely seeking a review of the order which is impermissible under s. 254(2) of the Act and, therefore, submits that since the order made is arbitrary and is in violation of principles of natural justice, the same requires to be set aside by this Court and the matter requires to be remitted back to the Tribunal to decide the miscellaneous petitions in accordance with law. In support of this contention, the learned counsel mainly relies upon the observations made by this Court in the case of J.K. Panthaki & Co. vs. Asstt. Registrar, ITAT (W.P. No. 23835/1990 disposed of on 6th April, 1992). Per contra, Sri Seshachala, learned standing counsel for the Revenue, apart from justifying the orders made by the Tribunal on the miscellaneous petitions filed by the petitioners on merits, submits that this Court should decline to exercise its extraordinary and discretionary jurisdiction to entertain these petitions, since petitioners have an equally effective, efficacious alternate remedy by way of an appeal under s. 260A of the Act. In support of this contention, the learned counsel draws my attention to certain observations made by apex Court in the case of C.A. Abraham vs. ITO & Anr. AIR 1961 SC 609 and Champalal Binani vs. CIT AIR 1970 SC 645.

In Chapter XX of the IT Act, the legislature has thought fit to introduce ss. 260A and 260B to provide for an appeal to the High Court against the orders made by the Tribunal, if the High Court is satisfied that the case involves substantial question of law. The objects and reasons for introducing these new provisions is found in the Bill. The same is as under: “Direct appeal to High Courts—According to the existing provisions, appeals arising out of the order of the Tribunal lie to the High Court where substantial question of law is involved therein. The assessee or the CIT can request the Tribunal for reference of question of law to the High Court. If the Tribunal decides against such reference, High Court can be moved to direct the Tribunal to make such reference and state the case. This process consumes a lot of time before the decision on merits of the case is finalised. The limited scope of s. 256(2) does not allow rendering of a final decision on the issue even where the relevant facts are available to give such a decision. Hon’ble Kerala High Court in the case of CIT vs. Wandoor Jupiter Chits (P) Ltd. (1995) 123 CTR (Ker) 410 : (1995) 213 ITR 73 (Ker) has pointed out that such provisions are archaic. Similarly, after the High Court or the Supreme Court have decided on the question of law, copy of the judgment is sent to the Registrar of the Tribunal for passing such order as necessary to dispose of the case. The above provision again contributes to delay in passing the consequential order by the AO. The Bill proposes to provide that an appeal shall lie against the orders of the Tribunal directly to the High Court if the High Court is satisfied that the case involves a substantial question of law. The memorandum of appeal shall precisely state the substantial question of law involving the appeal and where the appeal is made by the assessee, such appeal shall be accompanied by a fee of Rs. 10,000 (Rs. 5,000 in the case of wealth-tax). Where the High Court is satisfied that a substantial question of law is involved in any case, it may itself formulate that question. The appeals shall be heard on the question so formulated. However, nothing would take away or abridge the power of the Court to hear for reasons to be recorded to hear the appeal on any other substantial questions of law if it is satisfied that the case involves such questions. The High Court may determine any issue necessary for disposal of appeal which has not been determined by the Tribunal.”

6. Sec. 260A of the Act provides for an appeal against every order passed in appeal by the Tribunal provided that the High Court is satisfied that the case involves substantial questions of law. The said provision is as under: “260A: Appeal to High Court—(1) An appeal shall lie to the High Court from every order passed in appeal by the Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Chief CIT or the CIT or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be— (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Chief CIT or CIT; (b) *** (c) In the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that the substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which— (a) has not been determined by the Tribunal; or (b) has been wrongly determined by the Tribunal, by reason of a decision on such question of law as is referred to in sub-s. (1). (7) save as otherwise provided in this Act, the provisions of the CPC 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the cases of appeals under this section.”

7. An analysis of the provision would clearly demonstrate that an appeal shall lie to the High Court from every order passed in the appeal by the Tribunal. The High Court would entertain the appeal, if it is satisfied that the case involves a substantial question of law. The appeal can be preferred both by the assessee and the Department. If the High Court is satisfied that a substantial question of law is involved, it shall formulate that question and decide the same. The High Court is further empowered under the proviso to sub-s. (4) of the Act to hear the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. Sub-s. (6) of the Act gives wide scope and power to the High Court to determine any issue which is notdetermined or has been wrongly determined by the Tribunal. Sub-s. (7) of the Act envisages that the provisions of the CPC relating to appeals to the High Court shall as far as possible is made applicable in the case of appeals filed under s. 260A of the Act.

8. When a right or liability is created by a statute which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy, before seeking the discretionary remedy under Art. 226 of the Constitution. In the instant case, petitioners’ learned counsel points out several mistakes, which according to him are mistakes apparent from the face of the record. The mistakes quoted are, that for the asst. years. 1992-93 and 1993-94, assessments made not with reference to any notice under s. 148 of the Act but are regular assessments but Tribunal has taken a contrary view. Secondly, it is stated that reopening of the assessments was only for the asst. yrs. 1989-90, 1990-91 and 1991-92 and the assessments for the years 1992-93 and 1993-94 was regular assessments. It is said for the asst. yr. 1989-90, Tribunal in its order comments that there was no justification for reopening of the assessments on the basis of 5 balance sheets, pointing out that it would only be a suspicion and there are no seized records and when it comes to the assessments for the years 1992-93 and 1993-94, which was not even a case of reopening holds that there was some material linking the figures in the balance sheets for the period ending 31st March, 1992 and 31st March, 1993, and has upheld the validity of reopening erroneously, assuming reopening was for all periods from 1989-90 to 1993-94. The third mistake that was pointed out was that the Tribunal has overlooked mandatory provisions of s. 144 of the Act and, therefore, it would constitute a mistake apparent on the face of the record. Fourthly, it is stated that decisions of this Court as well as Supreme Court though it was brought to their notice, was ignored by the Tribunal while upholding It ex parte assessments and levy of interest, etc. In my opinion, some of the mistakes pointed out by the learned counsel for the petitioner would definitely constitute a question of law which petitioners can raise before this Court in an appeal filed under s. 260A of the Act. Under such circumstances, it may not be proper for this Court to interfere with the impugned orders until all statutory remedies are exhausted. At this stage it will be useful to refer to the dictum laid down by the apex Court in Titaghur Paper Mills Co. Ltd. vs. State of Orissa 53 STC 315, which is as under: “Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained off.

The petitioners have the right to prefer an appeal before the prescribed authority under sub-s. (1) of s. 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-s. (3) of s. 23 of the Act and then ask for a case to be stated upon a question of law for the opinion of the High Court under s. 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Art. 226 of the Constitution. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of.” [Emphasis, italicised in print, supplied by me]

9. In Champalal Binani vs. CIT (supra), the Supreme Court, has observed as under: “The income-tax provides a complete and self-contained machinery for obtaining relief against improper action taken by the Departmental authorities and normally the party feeling himself aggrieved by such action cannot be permitted to refuse 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 IT Act has an adequate alternative remedy which he may resort to as 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. Where the aggrieved party has an alternative remedy the High Court would be slow to entertain a petition challenging an order of taxing authority which is ex facie with jurisdiction.”

10. In C.A. Abraham vs. ITO (supra), the apex Court was pleased to observe as under: “The IT Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of any improper orders passed by the IT authorities, and a person, who is aggrieved by an order of the AAC imposing a penalty, cannot be permitted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under Art. 226 when he had adequate remedy open to him by way of appeal to the Tribunal.”

11. Secondly, sub-s. (7) of s. 260A envisages that the provisions of s. l03(b) of CPC relating to appeals to the High Court will apply as far as possible in the case of appeals under s. 260A of the Act. The apex Court while explaining the powers of the High Court in second appeals in the case of Sri Bhagawan Sharma vs. Smt. Bani Ghosh AIR 1993 SC 398, was pleased to observe as under: “The High Court is certainly entitled to go into the question as to whether the findings of fact recorded by the first appellate Court which was the final Court of fact were vitiated in the eye of law on account of non-consideration of admissible evidence of vital nature. But, after setting aside the findings of fact on that ground the Court had either to remand the matter to the first appellate Court for a rehearing of the first appeal and decision in accordance with law after taking into consideration the entire relevant evidence on the records, or in the alternative to decide the case finally in accordance with the provisions of s. l03(b). If in an appropriate case, the High Court decides to follow the second course, it must hear the parties fully with reference to the entire evidence on the records relevant to the issue in question and this is possible if only a proper paper book is prepared for hearing of facts and notice is given to the parties. The grounds which may be available in support of a plea that the finding of fact by the Court below is vitiated in law does not by itself lead to the further conclusion that a contrary finding has to be finally arrived at on the disputed issue. On a reappraisal of the entire evidence the ultimate conclusion may go in favour of either party and it cannot be prejudged.”

12. The bar relating to alternative remedy has been a rule of self-imposed limitation rather than a rule of law. The existence of alternative remedy had always been regarded as one of the factors which this Court is required to bear in mind while exercising its discretionary jurisdiction. Ordinarily, the Court will not entertain a petition for a writ under Art. 226 of the Constitution, where the petitioner has an alternative remedy, which without being unduly onerous provides an equally efficacious remedy. The law on this point is now well settled. The Supreme Court in Thansingh Natumal vs. Superintendent of Taxes AIR 1964 SC 1419 brings out the various aspects of this matter. The Court has observed as under: “7. Against the order of the Commr. an order for reference could have been claimed if the appellants satisfied the Commr. or the High Court that, a question of law arose out of the order. But the procedure provided by the Act to invoke the jurisdiction of the High Court was bypassed, the appellants moved the High Court challenging the competence of the provincial legislature to extend the concept of sale, and invoked the extraordinary jurisdiction of the High Court under Art. 226 and sought to reopen the decision of the taxing authorities on question of fact. The jurisdiction of the High Court under Art. 226 of the Constitution is couched in wide terms and the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly provided in the Articles. But the exercise of the jurisdiction is discretionary: it is not exercised merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations. Resort to that jurisdiction is not intended as an alternative remedy for relief which may be obtained in a suit or other mode prescribed by statute. Ordinarily the Court will not entertain a petition for a writ under Art. 226, where the petitioner has an alternative remedy, which without being unduly onerous, provides an equally efficacious remedy. Again the High Court does not generally enter upon a determination of question which demand an elaborate examination of evidence to establish the right to enforce which the writ is claimed. The High Court does not, therefore, act as a Court of appeal against the decision of a Court or Tribunal, to correct errors of fact, and does not by assuming jurisdiction under Art. 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another Tribunal , or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Art. 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up.” In my opinion, since petitioners have alternative, effective and efficacious remedy provided under the statute itself, they are not entitled to invoke discretionary jurisdiction of this Court seeking a writ to cancel the orders made by the Tribunal in the appeals filed by them against the orders of CIT(A) Bangalore, dt. 27th Dec., 1996. Accordingly, petitions deserve to be rejected. In the result, petitions fail. They are dismissed. Rule discharged. Liberty is reserved to the petitioners to question the correctness or otherwise of the orders made by the Tribunal before an appropriate forum for redressal of all their grievances. In the facts and circumstances of the case, parties are directed to bear their own costs. Ordered accordingly.

[Citation : 260 ITR 147]

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