High Court upholds Income Tax assessment, emphasizes statutory remedies & limited judicial interference

The High Court dismissed the Writ Petition challenging the best judgment assessment under the Income Tax Act, directing the appellant to appeal under Section 246 of the Act. The Court emphasized the availability of alternative statutory remedies and the limited scope of interference under Article 226 jurisdiction. Despite arguments on natural justice and jurisdiction, the Court reiterated the importance of judicial review under the Constitution, maintaining that the mere existence of alternative remedies does not preclude the High Court from exercising its writ jurisdiction. The appeal was dismissed, and the appellant was directed to pursue the statutory appellate remedy.

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Issues:
1. Proper procedure for assessment under the Income Tax Act.
2. Maintainability of a Writ Petition under Article 226 of the Constitution of India.
3. Jurisdiction of the High Court under Article 226 of the Constitution of India.

Analysis:

1. The appellant challenged the order of the Assessing Authority, which resulted in a best judgment assessment under Section 144 of the Income Tax Act. The appellant argued that a notice under Section 143(2) should have been issued before proceeding to assess the income. The Revenue contended that the remedy of appeal under Section 246 of the Act was available, making the Writ Petition not maintainable. The High Court noted that the appellant did not file a return of income or written submissions, and dismissed the Writ Petition, directing the appellant to avail the remedy of appeal under Section 246 of the Act.

2. The appellant relied on a judgment from the Kerala High Court and the Supreme Court to argue that the assessment order was in violation of natural justice and lacked jurisdiction. The High Court referred to the Whirlpool Corporation case, emphasizing that the existence of an alternative remedy does not bar the High Court from exercising its writ jurisdiction under Article 226 of the Constitution. The High Court reiterated that the power of judicial review under Article 226 is a part of the basic structure of the Constitution and cannot be negated by the mere existence of an alternative statutory remedy.

3. The High Court highlighted that while it can entertain a writ against the Assessing Authority's order, it exercises discretionary jurisdiction under Article 226. It refrains from interference when the aggrieved party has an alternative appellate remedy. The High Court emphasized that interference in an intra-court appeal is limited, and a Division Bench would only intervene if the order under appeal suffers from a patent illegality. In this case, the High Court found no necessity to interfere with the order under appeal and dismissed the appeal, directing the appellant to pursue the appellate remedy under Section 246 of the Income Tax Act.

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