2025 (10) TMI 1113 - HC - Income Tax

Writ dismissed as infructuous where Section 148 notice copy missing and final assessment dated 31.12.2009 unchallenged, mandamus denied

The HC dismissed the writ petition as infructuous, noting absence of the section 148 notice copy and that a final assessment order dated 31.12.2009 had ... Reopening of assessment - Reasons to believe - allegation of large-scale evasion of taxable income - Reliance on judgments in the case of Sabh Infrastructure Ltd. [2024 (2) TMI 168 - SC ORDER] and Sabh Infrastructure Ltd. [2017 (9) TMI 1589 - DELHI HIGH COURT] particularly to bolster his contention that the petitioner never suppressed anything during the assessment. The petitioner had candidly disclosed all material facts, but the Income Tax Department suspected evasion for the assessment year 2005-06, without any sufficient material facts and information as to how the petitioner had failed to disclose. Therefore, the Petitioner prays for setting aside the aforesaid notices. HELD THAT:- This court finds no copy of notice issued under section 148 of the said Act annexed with the petition. Therefore, it is very difficult to find out whether it was issued without following the guidelines of the Hon’ble Court mentioned in the aforesaid judgements referred by the Petitioner. Income Tax Department handed over a copy of the final assessment order dated 31.12.2009, whereby the concerned ITO assessed the taxable income, rounding off Rs. 38,46,690/- and asked to compute tax, surcharge, education cess and further interest etc.NIn the above backdrop, this court is of the opinion that the present writ petition ultimately becomes infructuous since the final assessment order has already been passed long back. The same has not been challenged as yet by the petitioner. There is no scope to issue a writ of mandamus commanding the authority concerned to set aside the notice issued long back and when final assessment order has already been passed. A copy of the assessment order has already been handed over to the Learned counsel for the petitioner in court on 10.09.2025. It is well settled that a writ Court cannot enter into the disputed question of fact involved in the matter. The writ petitioner has an alternative efficacious remedy under the provisions of the Income Tax Act, 1961 against the final assessment order. Therefore, no useful purpose would be served in keeping the writ petition pending for adjudication. ISSUES PRESENTED AND CONSIDERED 1. Whether a notice under Section 148 read with Section 147 of the Income Tax Act can be sustained in the absence of stated 'reasonable grounds' or specification of material forming the basis of the assessing officer's belief that income had escaped assessment. 2. Whether a writ petition challenging proceedings under Sections 147/148 is maintainable where the notice under Section 148 has not been annexed to the writ and there is significant delay between issuance of notice and filing of the petition. 3. Whether a writ petition directed against reopening of assessment becomes infructuous once a final assessment order has been passed, and if so, whether the writ court should entertain merits or direct the petitioner to avail statutory remedies. 4. Whether the High Court may adjudicate disputed questions of fact in a writ proceeding challenging assessment proceedings, or whether the availability of alternative efficacious statutory remedies precludes such interference. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Requirement of reasonable grounds for reopening under Sections 147/148 Legal framework: Reopening under Section 147/148 is permissible only where the assessing authority has a 'reason to believe' that income chargeable to tax has escaped assessment; such belief must be based on relevant and material reasons and cannot be arbitrary or merely speculative. Precedent Treatment: Reliance is placed by the petitioner on recent authoritative decisions (noted from the record) affirming that vague or unspecific assertions of evasion are insufficient and that reopening must specify the material on which the belief is founded. Interpretation and reasoning: The Court reiterated the principle that a mere ipse dixit or unsubstantiated suspicion by the assessing officer does not satisfy the statutory requirement. The belief must spring from tangible material; the Department must state reasonable grounds for reopening so that the court can examine whether the statutory threshold was crossed. Ratio vs. Obiter: Ratio - the statutory requirement that a reopening must rest on material leading to a reasonable belief and cannot be founded on vague allegations. Obiter - none beyond application to facts, since the Court did not proceed to decide whether the particular reopening met the standard due to procedural deficiencies in the petition. Conclusions: The Court affirmed the legal principle requiring specification of reasonable grounds for reopening, but did not finally adjudicate whether the notice in question complied because the notice was not before the Court. Issue 2 - Maintainability where Section 148 notice is not annexed and delay in challenging Legal framework: Writ jurisdiction under Article 226 is discretionary; challenge to tax notices ordinarily requires the document under challenge to be placed before the Court so compliance with procedural and pleading requirements is essential. Timeliness and completeness of pleadings are material to maintainability. Precedent Treatment: The Court applied settled procedural expectations without purporting to overrule any precedent-emphasising that a petition must disclose and annex the precise instrument impugned to enable judicial scrutiny. Interpretation and reasoning: The Court found no copy of the Section 148 notice annexed to the petition and noted an inordinate delay (notice issued much earlier than petition). Absent the notice, the Court could not examine compliance with the precedents relied upon by the petitioner nor determine whether reasonable grounds were stated. The omission materially impaired the Court's ability to adjudicate the challenge. Ratio vs. Obiter: Ratio - a writ challenging an assessment notice must ordinarily annex the notice; failure to do so and unexplained delay can render the writ unsuitable for adjudication. Obiter - observations as to counsel's explanations were accepted as factual narrative but did not alter the legal conclusion on maintainability. Conclusions: The petition was procedurally deficient because it did not include the Section 148 notice and was filed after a long delay; this impeded judicial review of the asserted statutory compliance. Issue 3 - Effect of final assessment order on the writ challenge to reopening Legal framework: A writ challenging reopening may become academic or infructuous if a final assessment order has been passed and the statutory appellate remedies against that order are available and unexhausted. Precedent Treatment: The Court applied the established principle that writ relief is inappropriate where an efficacious alternative remedy exists under the statute and where the contested action has been overtaken by a final order. Interpretation and reasoning: The Court noted that a final assessment order (dated 31.12.2009) had been passed and produced in court; the petitioner had not challenged that order. In these circumstances, issuing relief directed at the earlier notice would be futile. The availability of statutory remedies against the final assessment order militated against entertaining the writ on merits. Ratio vs. Obiter: Ratio - a writ becomes infructuous when a final assessment order has been passed and the petitioner has alternative efficacious statutory remedies; the writ court should decline to grant substantive relief and leave the petitioner to challenge the final order before the appropriate forum. Obiter - procedural directions given to appellate authority to decide independently if and when a challenge is filed. Conclusions: The writ petition was dismissed as infructuous because the final assessment order had been passed and the petitioner retains statutory avenues of challenge against that order. Issue 4 - Jurisdiction to probe disputed questions of fact in writ challenge to tax proceedings and direction as to alternative remedy Legal framework: Writ jurisdiction does not ordinarily extend to re-appreciation of disputed questions of fact where a statute provides a remedy; courts exercising writ jurisdiction avoid venturing into factual controversies better suited to the statutory machinery of assessment and appeal. Precedent Treatment: The Court applied the settled principle that writ courts refrain from entering into factual issues that are triable under the statutory scheme, particularly in tax matters where elaborate procedures and appellate forums are provided. Interpretation and reasoning: The Court observed that adjudication of the petitioner's factual contentions (e.g., legitimacy of purchases, compliance with Section 40A(3), results of survey) would involve disputed fact-finding which is not appropriate in writ jurisdiction, particularly where a final assessment order exists and statutory remedies are available. Ratio vs. Obiter: Ratio - writ courts should not adjudicate contested factual issues in tax assessment matters when alternative efficacious statutory remedies exist. Obiter - specific guidance that the appellate authority must decide any statutory appeal independently and not be influenced by court observations. Conclusions: The Court declined to examine disputed factual contentions and directed the petitioner to pursue statutory remedies against the final assessment order; the writ was dismissed without costs and interim relief vacated.