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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Dated of decision : 10.12.2012
+ W.P.(C) 793/2007
RAJAN NANDA ..... Petitioner
Through: Mr. R M Mehta and Mr. Simran Mehta,
Advs.
versus
ASSTT. COMMISSIONER OF INCOME ... Respondent
Through: Mr. Sanjeev Rajpal, sr. standing counsel
with Mr. Puneet Gupta, jr. standing counsel
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
MR. JUSTICE R.V. EASWAR
S. RAVINDRA BHAT,J: (OPEN COURT)
The writ petitioner challenges the notice dated 31.3.2006 whereby the
revenue sought to reopen the assessment in respect of the assessment year
1999-2000. The grievance in this proceeding under Article 226 is that (a) the
assessing officer did not furnish "reasons to believe" under Section 148 of the
Income Tax Act, 1961 (,,Act for short) within reasonable time and did so only
on 5.12.2006 and (b) the assessing officer did not afford any opportunity to the
writ petitioner while framing the reassessment through the order dated
26.12.2006 on the same day on which he passed the order disposing of the
objections. Ld. counsel for the writ petitioner at the outset mentioned that even
though the reassessment order has not been challenged in appeal, this Court is
not deprived of its jurisdiction under Article 226 to set aside the impugned
order including the notice dated 31.3.2006 as well as the order disposing of the
WP(C) 793/2007 Page 1 of 6
objections (26.12.2006); and the reassessment order dated 29.12.2006. It is
submitted that this is because the present writ petition was filed earlier and the
appeal was preferred during the pendency a fact brought to the notice of this
Court. The appeal was filed without prejudice to the writ petitioners rights.
Ld. counsel for the parties relied upon the basic ruling of the Supreme Court in
G.K.N. Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors., (2003) 259
ITR 19(SC) where the Supreme Court held as under :
"However, we clarify that when a notice under Section 148 of the
Income Tax Act is issued, the proper course of action for the
noticee is to file return and if he so desires, to seek reasons for
issuing notices. The assessing officer is bound to furnish reasons
within a reasonable time. On receipt of reasons, the noticee is
entitled to file objections to issuance of notice and the assessing
officer is bound to dispose of the same by passing a speaking
order. In the instant case, as the reasons have been disclosed in
these proceedings, the assessing officer has to dispose of the
objections, if filed, by passing a speaking order, before
proceeding with the assessment in respect of the abovesaid five
assessment years."
2. It was contended that the procedure mandated by GKN Driveshafts
(supra) was a clue as to what prevailed with the assessing officer while
recording his "reasons to believe under Section 148" and also by way of
granting a fair opportunity to the assessee to indicate to the tax authorities and
explain, if necessary, the real facts. So viewed, it is imperative for the assessing
officer to deal with the objections expeditiously and thereafter proceed to pass
orders in the reassessment proceedings, if maintainable, after giving a fair
opportunity to the assessee. Ld. counsel relied upon certain decisions such as
WP(C) 793/2007 Page 2 of 6
Techspan India (P) Ltd & Anr Vs. ITO (2006) 283 ITR 212 (Del.) as well as
the judgment of the Supreme Court in Whirlphool Corporation Vs. Registrar
of Trademarks & Ors. (1998) 8 SCC 1 to state that the amplitude of this
Courts powers under Article 226 cannot be cut down to drive the assessee to
statutory appellate remedy. A Division Bench in Techspan India (P) ltd. (supra)
held as under :
"Having considered the arguments of the counsel and the
aforesaid decisions, I am of the opinion that the Supreme Court in
the case of Calcutta Discount Co. Ltd. (1961 41 ITR 191 had
clearly indicated that a Writ petition would be maintainable to
challenge invocation of proceedings for re-assessment even
though it was also open to the assessed to challenge the same
before the Assessing Officer during assessment as also challenge
the same before the appellate authorities after the re-assessment
proceedings were completed. This well settled position of law has
held the field since 1961 and, as indicated by the Supreme Court
itself in the case of Whirlpool Corporation (1998) 8 SCC 1,
although much water has flown under the bridge, there has been
no corrosive effect on this position of law. The decision in GKN
Driveshafts (India) Ltd (2003) 259 ITR 19 (SC) also gives an
indication that the requirement of passing the speaking order
would provide an opportunity to the assessed to challenge the
same by way of a writ petition under Article 226. This
interpretation finds favor with Division Benches of other High
Courts including the Gujarat High Court and the Allahabad High
Court, as indicated above, and, in my view, is the correct position
in law. As indicated in Whirlpool's case (1998) 8 SCC 1, the
jurisdiction of the High Court in entertaining a writ petition
under Article 226 of the Constitution would not be effected
although there exist alternative statutory remedies particularly in
cases where the authority against whom the writ has been filed is
shown to have had no jurisdiction or had purported to usurp
jurisdiction without any legal foundation. It, however, remains a
matter of discretion with the Court as to whether in a particular
WP(C) 793/2007 Page 3 of 6
case, it ought to interfere or not. But, a writ petition such as the
one with which we are dealing, cannot be thrown out at the
threshold on the ground that it is not maintainable."
3. Ld. counsel for the petitioner also relied upon other decisions such as
Sita World Travels Vs. Deputy Commissioner of Income Tax (2005) 274 ITR
186 Del, Janki Export International Vs. UOI (2005) 278 ITR 296 (Del.), S.
Ujjal Singh Vs. ITO WP(C) 549/1986, Kamlesh Sharma Vs. ITO (2006) 287
ITR 337 (Del.).
4. It was lastly contended that the recent decision of this Court in
Commissioner of Income Tax Vs. Rajan Nanda in ITA No.400/2008 and
connected cases delivered on 16th December, 2011 in any event favours the
assessee on the merits of the reassessment proceedings and that the court would
be engaged in the futile exercise of driving him to the appellate remedy. This
Court has considered the contention. As far as the decision in Techspan India
(P) Ltd. (supra) is concerned this Court notices that the extract relied upon by
the assessee in this case is in no way exclusive because it is a separate order. In
his separate order, even while concurring with the decision, Justice Thakur
sounded a note of caution and relied upon several other decisions. He
observed:-
"The power of the High Court to issue prerogative writs under
Article 226, is untrammeled by any ordinary piece of legislation,
whether enacted by the Parliament or a State Legislature. Income
Tax Act, 1961, is one such piece of legislation which does not and
cannot in the constitutional scheme of things affect the power of
the superior courts in the country to issue appropriate writs in
appropriate cases. Having said that, we need to remember that
the writ jurisdiction is not only discretionary but equitable in
nature. A court need not interfere, just because it is lawful to do
WP(C) 793/2007 Page 4 of 6
so. The courts have, therefore, evolved certain self-imposed
restrictions for the exercise of their power under Article 226. A
writ court would not interfere where the petitioner is not acting
bona fide or where he has not come with clean hands. So also a
court would not interfere where the grant of relief would involve
investigation into disputed questions of fact. Availability of an
equally efficacious alternative remedy is yet another situation
where the court may refuse to step in, unless, the case involves
violation of the principles of natural justice or a palpable lack of
jurisdiction on the part of the authority passing the order, or a
challenge to the provisions of the statute under which the
impugned order has been passed. Suffice it to say that while the
jurisdiction of the court is discretionary, the exercise of discretion
is not uncanalised or arbitrary. The discretion has to be exercised
along judicial lines. Whether or not a case for interference has
been made out, would, therefore, depend upon the facts and
circumstances of each case. And since facts of a case are rarely if
ever similar to that of another case, the court will have to
examine the matter each time its jurisdiction is invoked by a
litigant. This is particularly so in cases where the assessees
challenge, notices issued under Section 148 of the Income-tax Act,
proposing to reopen concluded assessments, on the ground that
income that was taxable has escaped assessment for a given year
or years. Just because the court has interfered in one case may
not in such cases, be a reason enough to interfere in every case;
nor can the colour of facts be matched between two cases to show
that interference in one must necessarily justify interference in the
other."
5. This Court is conscious of the fact that the Supreme Courts ruling in
GKN Driveshafts (supra) was designed with the view to afford the assessee an
opportunity to put before the tax authorities his point of view, before the
reassessment proceedings are completed. However, it would be too wide a
proposition to contend that the objections per se would be reviewable in every
other case and afford another opportunity for questioning the "reasons to
WP(C) 793/2007 Page 5 of 6
believe" with which the assessee can be aggrieved. The basic requirement of
the statute is the recording of the "reasons to believe" under Section 147. That
done, all the Supreme Court opined was about the necessity of providing
reasons for issuance of notice under Section 147, if the same are sought; to
afford a reasonable and fair opportunity to the assessee to file his objections;
and dispose of the same by a speaking order. The rest has been left to the
Courts concern to be dealt within individual cases. It would be sufficient to
notice that the Court did not lay down a blanket proposition that even the order
of the assessing officer dealing with the objections has to be reviewed in every
case where Section 147 notice is sought to be impugned. Having regard to the
facts and circumstances, this Court is of the opinion that even the question
whether the petitioner was afforded a reasonable opportunity could be gone into
by the CIT(Appeals) before whom the appeal is pending. It is open to the
assessee to urge the question of denial of opportunity along with the other
issues on merits. All rights and contentions are expressly reserved.
Writ petition is disposed of in the above terms.
S. RAVINDRA BHAT, J
R.V.EASWAR, J
DECEMBER 10, 2012
vld
WP(C) 793/2007 Page 6 of 6
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