High Court Of Madras
Thiru V. Selladurai vs. CCIT & Anr.
Section 263, Art. 226
Asst. Year 2001-02
K. Mohan Ram, J.
Writ Petn. No. 4512 of 2006 & M.P. (MD) No. 1 of 2006
20th December, 2006
Counsel Appeared :
K. Soundararajan, for the Petitioner : J. Ravikumar, for the Respondents
ORDER
K. Mohan Ram, J. :
The brief facts that are necessary for the disposal of the above writ petition are set out below :
An order of assessment for the asst. yr. 2001-02 in respect of the petitioner’s income came to be passed by the second respondent on 31st March, 2004. While completing the assessment, the second respondent had obtained a valuation of the cost of construction of the marriage hall constructed by the petitioner from the Inspector and allowed a deduction of 10 per cent from the estimated cost of construction for personal supervision. The first respondent in the exercise of his power under s. 263 of the IT Act (hereinafter referred to as “the Act”) issued a show-cause notice dt. 8th March, 2006 proposing to revise the assessment, since the first respondent considered that the grant of deduction at 10 per cent for personal supervision is erroneous and prejudicial to the interest of the Revenue. The said notice was received by V. Selladurai, the son-in-law of the petitioner (assessee) on 11th March, 2006 and he by his letter dt. 20th March, 2006 informed the first respondent that since the assessee is in abroad the letter was received by him and contents of the letter were conveyed to his father-in-law (assessee) and as instructed by his father-in-law, he is seeking one month time to file his objections since they have to meet their auditor and obtain his advice. The said V. Selladurai by a communication dt. 27th March, 2006 addressed to the first respondent informed him that since the assessee’s power for authorising the auditor to appear in the case is not received, he has been instructed by his father-in-law to explain the position and seek time. In the said communication, objections have been raised for revising the assessment.
After considering the objections the first respondent set aside the assessment with a direction to the second respondent to obtain a technical estimation of the cost of construction from the DVO and thereafter to complete the assessment afresh after taking into account such expert advice and after affording reasonable opportunity of being heard to the assessee. Being aggrieved by that, the above writ petition has been filed. In the writ petition the impugned proceedings are challenged on several grounds including violation of principles of natural justice and want of jurisdiction on the part of the first respondent to revise the assessment order. Separate but identical counter-affidavits have been filed by the respondents herein. In the counter-affidavits, the following contentions have been raised : A show-cause notice proposing the revision of the assessment and indicating the lines of proposed revision was issued vide letter dt. 8th March, 2006 which was served on the son-in-law of the assessee who received the notice and later acted as the assessee’s authorised representative and in fact the submissions made on behalf of the assessee were signed by the son-in-law. The facts being so the service of notice on the assessee’s son-in-law is found to be proper and valid. Once the assessee’s son-in-law acted as authorised representative it will not be correct to content that he was not authorised to receive the notice. The assessee’s son- in-law also sought for adjournment and the request made in that regard was also signed by him. As the proceedings initiated for revision, were going to get barred by limitation on 31st March, 2006, the order was passed on 28th March, 2006. The assessee’s request for grant of time for a month could not be acceded to in view of the limitation involved. However, once the opportunity granted to the assessee was both fair and reasonable, the conclusion of the proceedings on 28th March, 2006 does not vitiate the order simply because an adjournment as sought was denied. Sec. 142A is not applicable in the assessee’s case. The assessment was reopened only to delete the deduction allowed at 10 per cent for personal supervision especially when the assessee was non-resident and could not have done any continuous personal supervision. While making the assessment the AO had failed to refer the building to the Valuation Officer and allowed 10 per cent deduction for personal supervision on the valuation arrived by the Departmental Inspector. The matter is still pending before the AO and the assessment has not been completed and no tax has been demanded from the assessee so far. Therefore, it would not cause any hardship to the assessee and the assessee has every right to produce any form of evidence and details before the AO. In case, the petitioner is aggrieved by the order, he could have preferred an appeal before the Tribunal, instead of invoking the writ jurisdiction of the High Court.
Heard Mr. K. Soundararajan, learned counsel for the petitioner and Mr J. Ravikumar, learned standing counsel for the respondents.
The learned counsel for the petitioner submitted that the first respondent has passed the impugned order with a direction to value the property by the Valuation Officer and according to the learned counsel the same could not be done by the second respondent in view of the specific bar imposed under s. 142A of the Act. He further submitted that the order passed by the first respondent is opposed to the principles of natural justice as no opportunity of personal hearing has been given to the petitioner as contemplated under s. 263(1) of the Act. The learned counsel further submitted that it is not a case of reassessment under s. 153A of the Act and as such the provisions contained in s. 142A of the Act are not applicable in respect of the petitioner’s assessment which has been made before 30th Sept., 2004. The learned counsel further submitted that the request for adjournment sought for by the son-in-law of the petitioner who is an NRI has been unreasonably rejected.
Per contra, the learned standing counsel for the respondents submitted that against the impugned order of the first respondent an effective and alternative Statutory remedy is available by way of an appeal before the Tribunal and without availing the same, the writ petition has been filed and hence the same cannot be entertained. He further submitted that under s. 263(2) of the Act no order under s. 263(1) of the Act shall be made after the expiry of two years from the end of the financial year in which the order sought to be revised was passed and since the action under s. 263 of the Act has to be statutorily completed on or before 31st March, 2006 the adjournment sought for by the petitioner could not be granted. Knowing fully well that if the order under s. 263 of the Act is not passed before 31st March, 2006 the assessment order could not be revised, the petitioner had made an unjustified request for an adjournment. The learned standing counsel further submitted that the contention based on s. 142A of the Act is not sustainable, as according to him, since the assessment in the petitioner’s case had not become final and conclusive on 30th Sept., 2004, as the time provided for exercise of power under s. 263(1) of the Act was available upto 31st March, 2006 and only in respect of an assessment which has become final and conclusive on or before 30th Sept., 2004, s. 142A of the Act cannot be invoked. The learned standing counsel by referring to the various communications sent by the Department submitted that all the communications have been addressed to the petitioner’s Kalyana Mandapam address with a copy marked to his authorised Income-tax Practitioner and the same have been received and no objections have been raised regarding the sufficiency of service. He further submitted that in the communication dt. 27th March, 2006 addressed by the petitioner to the first respondent his son-inlaw has signed on his behalf and all available objections have been put forth to the show-cause notice issued by the first respondent and a personal hearing also has been provided to the petitioner through his son-in-law and therefore the contention of the petitioner that the principles of natural justice have been violated and no personal hearing was afforded as contemplated in s. 263 of the Act is untenable.
7. The learned standing counsel for the respondents further submitted that the first respondent has only set aside the assessment order and remanded the matter back to the second respondent and hence the petitioner can put forth his objections before the second respondent and claim deduction from the estimated cost of construction for the personal supervision or in the alternative, the petitioner if agreed (sic- agrieved) by the impugned proceedings, can prefer an appeal to the Tribunal and further submitted that no prejudice will be caused to him if the writ petition is not entertained. The learned standing counsel relied on a decision rendered in the case of Dr. K. Nedunchezhian vs. Dy. CIT & Anr. (2005) 199 CTR (Mad) 432 : (2005) 279 ITR 342 (Mad) and submitted that when there is an alternative remedy available, then ordinarily writ jurisdiction of the Court under Art. 226 of the Constitution of India should not be invoked and the principles apply with greater force regarding tax proceedings. He also relied upon a decision of the apex Court rendered in the case of Grindlays Bank Ltd. vs. ITO (1980) 15 CTR (SC) 157 : (1980) 122 ITR 55 (SC) wherein the apex Court has observed as follows : “The character of an assessment proceeding, of which the impugned notice and the assessment order formed part, being quasi-judicial, the ‘certiorari’ jurisdiction of the High Court under Art. 226 was attracted. Ordinarily, where the High Court exercises such jurisdiction it merely quashes the offending order and the consequential legal effect is that but for the offending order, the remaining part of the proceeding stands automatically revived before the inferior Court or Tribunal with the need for fresh consideration and disposal by a fresh order. Ordinarily, the High Court does not substitute its own order for the order quashed by it. It is, of course, a different case where the adjudication by the High Court establishes a complete want of jurisdiction in the inferior Court or Tribunal to entertain or to take the proceedings at all. In that event, on the quashing of the proceeding by the High Court, there is no revival at all. But although in the former kind of case the High Court, after quashing the offending order, does not substitute its own order, it has power nonetheless to pass such further orders as the justice of the case requires. When passing such orders the High Court draws on its inherent power to make all such orders as are necessary for doing complete justice between the parties. The interests of justice require that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the Court, by the mere circumstance that it has initiated a proceeding in the Court, must be neutralised. The simple fact of the institution of litigation by itself should not be permitted to confer an advantage on the party responsible for it. The present case goes further. The appellant would not have enjoyed the advantage of the bar of limitation if, notwithstanding his immediate grievance against the notice under s. 142(1) of the IT Act, he had permitted the assessment proceeding to go on after registering his protest before the ITO, and allowed an assessment order to be made in the normal course. In an application under s. 146 against the assessment order, it would have been open to him to urge that the notice was unreasonable and invalid and he was prevented by sufficient cause from complying with it and, therefore, the assessment order should be cancelled. In that event, the fresh assessment made under s. 146 would not be fettered by the bar of limitation. Sec. 153(3)(i) removes the bar. But the appellant preferred the constitutional jurisdiction of the High Court under Art. 226. If no order was made by the High Court directing a fresh assessment, he could contend, as is the contention now before us, that a fresh assessment proceeding is barred by limitation. That is an advantage which the appellant seeks to derive by the mere circumstance of his filing a writ petition. It will be noted that the defect complained of by the appellant in the notice was a procedural lapse at best and one that could be readily corrected by serving an appropriate notice. It was not a defect affecting the fundamental jurisdiction of the ITO to make the assessment. In our opinion, the High Court was plainly right in making the direction which it did.”
8. On the basis of the abovesaid observations, the learned standing counsel for the respondents submitted that if the request of the petitioner seeking adjournment had been accepted by the first respondent and the matter had been adjourned beyond 31st March, 2006, the action to be taken under s. 263 of the Act would have been barred by limitation and the petitioner would have got an undeserved or unfair advantage and as such the rejection of the request made to the petitioner by the first respondent is justified and even otherwise fair opportunity of hearing has been given to the petitioner, therefore he submitted that there is absolutely no violation of principles of natural justice.
I have carefully considered the materials available on record and the submissions made on either side. Though arguments were advanced by the learned counsel for the petitioner touching the merits of the case, this Court is not inclined to consider the same since an alternative remedy by way of an appeal to the Tribunal is available to the petitioner. The only question to be considered in this writ petition is as to whether there is any violation of principles of natural justice and whether the first respondent has got authority to invoke s. 263 of the Act in the light of the provisions contained in s. 142A of the Act.
As rightly contended by the learned standing counsel for the respondents the assessment in the case of the petitioner has not become conclusive and final on or before 30th Sept., 2004, since as provided for under s. 263(2) of the Act, the first respondent had time till 31st March, 2006 to revise the assessment order and before the expiry of two years provided for in s. 263(2) of the Act, the revisional power has been exercised by the first respondent. Therefore, when the assessment has not become conclusive and final the contention of the petitioner based on s. 142A of the Act has to be rejected.
The Hon’ble apex Court in the decision rendered in the case of State of Himachal Pradesh & Ors. vs. Gujarat Ambuja Cement Ltd. & Anr. (2005) 142 STC 1 in paras 19 and 24 has observed as follows : “19. Constitution Benches of this Court in K.S. Rashid & Son vs. IT Investigation Commission (1954) 25 ITR 167 (SC), Sangram Singh vs. Election Tribunal Kotah AIR 1955 SC 45, Union of India vs. T.R. Varma AIR 1957 SC 882, State of U.P. vs. Mohammad Nooh AIR 1958 SC 86 and K.S. Venkataraman & Co. (P) Ltd. vs. State of Madras (1966) 17 STC 418 : (1966) 60 ITR 112 : AIR 1966 SC 1089, held that Art. 226 of the Constitution confers on all the High Courts a very wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted.
24. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are down to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute.”
In the same decision after referring to and considering several earlier decisions of the apex Court, the legal principles to be followed in exercising jurisdiction under Art. 226 of the Constitution of India have been elaborately stated and the same could be summarised as follows :
“The rule relating to the existence of an alternative remedy as barring the writ jurisdiction under Art. 226 of the Constitution of India is only a rule of self- imposed limitation : it is essentially a rule of policy, convenience and discretion. Despite the existence of an alternative remedy, it is within the discretion of the High Court to grant relief under Art. 226. At the same time, though the matter relating to an alternative remedy has nothing to do with the jurisdiction, normally the High Court should not interfere if there is an efficacious alternative remedy. When a party approaches the High Court under Art. 226 without availing of the alternative remedy provided, the High Court should ensure that he has made out a strong case or that there exist good grounds to invoke the extraordinary jurisdiction. After considering the pros and cons of the case the High Court may interfere : (a) if it comes to the conclusion that the petitioner seeks the enforcement of a fundamental right; (b) if there is failure of the principles of natural justice; or (c) the orders or proceedings are wholly without jurisdiction; or (d) the vires of an Act is challenged”. If the instant case on hand is considered in the light of the abovesaid principles laid down by the apex Court in (2005) 142 STC 1 (referred to supra) and (1980) 15 CTR (SC) 157 : (1980) 122 ITR 55 (SC) (referred to supra), it has to be held that this Court can entertain a writ petition if there is failure of the principles of natural justice or the orders or proceedings are wholly without jurisdiction. I have already held that the first respondent has got authority to exercise his revisional jurisdiction under s. 263(1) of the Act and invoke the provisions contained in s. 142A of the Act and therefore this writ petition cannot be entertained on the ground of want of authority on the part of the first respondent. As far as the question of violation of principles of natural justice is concerned, it has to be pointed out that the petitioner’s son-in-law has in his communication dt. 27th March, 2006 raised all necessary objections and has sought for adjournment, on the ground that the petitioner is not available in India, to a date beyond 31st March, 2006 and if that request had been acceded to by the first respondent, then the bar of limitation as provided for in s. 263(2) of the Act will come into operation, which would have resulted in causing loss to the Revenue and the petitioner would have gained an undue advantage. Only after taking into consideration of the fact that loss will be caused to the Revenue and undue advantage will be gained by the petitioner the first respondent has rejected the request for adjournment but at the same time an opportunity of being heard had been afforded to the petitioner through his son-in-law. In fact, all objections have been putforth by the petitioner through his son-in-law and it cannot be said that any prejudice has been caused to the petitioner.
Further, it is pertinent to point out that the first respondent while setting aside the assessment order has only remanded the matter back to the AO and the petitioner can effectively participate in the proceedings before the second respondent AO and put forth all his objections and hence no prejudice whatsoever will be caused to him. Therefore, this Court is of the considered view that there is absolutely no violation of principles of natural justice and the first respondent was well within his authority in invoking the power under s. 263(1) of the Act and therefore this Court sees no reason to interfere with the order passed by the first respondent. If the petitioner is aggrieved by the order of remand passed by the first respondent, he can very well challenge the same before the Tribunal. Further, the remedy available to the petitioner by way of an appeal to the Tribunal cannot be said to be ineffective or not efficacious.
Therefore, for the reasons stated above, the writ petition fails and the same is dismissed. No costs. Consequently the connected miscellaneous petition is closed.
[Citation : 295 ITR 293]
