Court upholds tax assessment orders under Income Tax Act for 2015-16, emphasizes alternate remedy rule

The court dismissed the writ petitions challenging the draft and final assessment orders under Section 144C of the Income Tax Act for the assessment year 2015-16. The court held that the respondent had the authority to make the assessment orders despite no variation in income but a change in tax payable. The court also ruled that the limitation issue should be addressed by the appellate authority due to factual disputes. While acknowledging the availability of an alternative remedy under Section 246A, the court emphasized strict application of the rule of alternate remedy in fiscal matters and preserved the petitioner's right to pursue the case under Section 246A in appellate proceedings.

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Issues Involved:
1. Jurisdictional fact regarding the invocation of Section 144C of the Income Tax Act, 1961.
2. Limitation for passing the assessment order.
3. Alternative remedy available to the petitioner.

Issue-wise Detailed Analysis:

1. Jurisdictional Fact Regarding the Invocation of Section 144C of the Income Tax Act, 1961:

The petitioner, a foreign company incorporated in Cyprus, challenged the draft and final assessment orders for the assessment year 2015-16 under Section 144C of the Income Tax Act, 1961. The petitioner argued that the invocation of Section 144C was improper as there were no variations in the income returned by the petitioner, which is a prerequisite for invoking this section. The respondent countered that while the income remained unchanged, the tax payable was altered from 10% to 20%, thus justifying the invocation of Section 144C.

The court examined the Southern Petrochemical Industries Corporation Ltd. Vs. Income Tax Officer case cited by the petitioner. The court found this case distinguishable as it dealt with Section 144B, which is different from Section 144C, and the facts were not analogous. The court concluded that the respondent was not denuded of powers to make draft and final assessment orders under Section 144C based on the tax rate issue.

2. Limitation for Passing the Assessment Order:

The petitioner argued that the limitation to pass an assessment order under Section 143(3) had expired, and the respondent used Section 144C to circumvent this limitation. The court noted that the limitation period for the assessment year 2015-16 was two years, and the petitioner had raised a mixed question of fact and law regarding the limitation, which was disputed by the revenue.

The court held that since the limitation plea involved factual disputes, it was inappropriate to decide this in a writ petition. The appellate authority should address these factual issues.

3. Alternative Remedy Available to the Petitioner:

The court acknowledged that an alternative remedy was available to the petitioner under Section 246A of the Income Tax Act. The petitioner cited the Martech Peripherals (P.) Ltd. case to argue that the existence of an alternative remedy does not exclude the court's jurisdiction. However, the court noted that the absence of jurisdiction argument had been negated, and there was no violation of principles of natural justice in this case.

The court emphasized the principle from the Dunlop and Satyawati Tondon cases that the rule of alternate remedy should be applied with utmost rigour in fiscal matters. The court concluded that there were no grounds to interfere with the impugned orders in writ jurisdiction and dismissed the writ petitions, preserving the petitioner's right to pursue the case under Section 246A of the Income Tax Act.

Conclusion:

The writ petitions were dismissed, and the petitioner was advised to pursue the alternative remedy available under Section 246A of the Income Tax Act. The court preserved the petitioner's right to raise all questions in the appellate proceedings.

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