2019 (6) TMI 1181 - HC - Income Tax

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 ... Existence of an alternative remedy - bar for this Court to exercise its writ jurisdiction under Article 226 of the Constitution - power of the judicial review, conferred upon the High Court under Article 226 of the Constitution of India - HELD THAT:- The High Court, while exercising jurisdiction under Article 226 of the Constitution of India, adheres to certain self-imposed limitations, and would, ordinarily, refrain from exercising its discretionary jurisdiction in cases where the aggrieved party has an efficacious alternative appellate remedy under a statute. While the jurisdiction of this Court can, undoubtedly, be invoked even against the order passed by the Assessing Authority, this Court, while exercising its discretionary jurisdiction under Article 226 of the Constitution, would ordinarily exercises self-restraint and refrain from interference where the contention urged in the Writ Petition can also be urged before the Appellate Authority under the Income Tax Act. It has not been disputed before us that the contentions urged in the Writ Petition can be urged before the Commissioner of Income Tax (Appeals) i.e. the Appellate Authority under Section 246 of the Income Tax Act. Yet another reason why we must refrain from interference is because the scope of interference in an intra-court appeal is extremely limited. Interference by a Division Bench, in an intra-court appeal, would be justified only if the order under appeal suffers from a patent illegality. The learned Single Judge is not a court subordinate. The Division Bench exercises the very same jurisdiction which the learned Single Judge exercises under Article 226 of the Constitution of India. Even in cases where two views are possible, and one of the possible views has found acceptance with the learned Single Judge, the Division Bench would refrain from interfering with the order under appeal, even if it is satisfied that a view, other than the view which found favour with the learned Single Judge, is more attractive. In the present case, the learned Single Judge has relegated the appellant-writ petitioner to avail his statutory remedy of an appeal under Section 246. It has not been contended before us that exercise of discretion by the learned Single Judge, to relegate the appellant writ petitioner to avail the appellate statutory remedy, is an order which could not have been passed, or that the Appellate Authority cannot examine the contentions now urged before us in these writ proceedings. The order under appeal does not necessitate interference. Suffice it to make it clear that neither has the learned Single Judge, nor this Division Bench, expressed any opinion on the merits of the rival contentions; and, in case the appellant-writ petitioner avails the appellate remedy under Section 246 of the Income Tax Act, the Appellate Authority [i.e. the Commissioner of Income Tax (Appeals)] shall examine the rival contentions on its merits uninfluenced by any observations made either in the order under appeal or in this order. 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.