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Writ Court need not intervene against an order passed by AO where assessee has alternate remedy of filing appeal before the CIT(A): HC

2019-TIOL-1873-HC-MUM-IT

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 1405 Of 2019

GRASIM INDUSTRIES LTD

Vs

DEPUTY COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE 1(4), MUMBAI & OTHERS

M S Sanklecha & Nitin Jamdar, JJ

Dated: August 14, 2019

Appellant Rep by: Mr J D Mistri, Sr. Adv. with Mr Madhu Agrawal i/b Atul K Jasani
Respondent Rep by: 
Mr Anil Singh, Addl. Solicitor General with Mr N C Mohanty

Income Tax – Writ – Sections 115O & 115Q

Keywords – Statutory option of appeal

THE assessee company had filed its return for the relevant AY. Subsequently, the AO while concluding the assessment raised the tax demand and also direct the assessee to pay up such amount forthwith. Hence, the assessee has preferred the present appeal challenging the action of the AO that the AO had not given any time to the assessee for either challenging it before the appropriate authority or in any other manner allowing the assessee to pursue its remedies.

On appeal, the High Court held that,

Whether when assessee has an alternate remedy of approaching the CIT(A) against the order of the AO, then it is appropriate to raise all pleas before the CIT(A) rather than seeking writ remedy – YES: HC

++ it is only for the CIT(A) to decide his jurisdiction in accordance with law. Therefore it would be appropriate the assessee files an appeal to the CIT(A) within a period of three weeks from today. On assessee’s filing an appeal, the CIT(A) shall, within a further period of three weeks from the date of filing, decide the issue of maintainability of the appeal before him in the context of section 246A. In case the CIT(A) holds that the appeal from the order dated 14 March 2019 passed u/s 115O is available and the appeal as filed is maintainable, then this petition will be withdrawn by the assessee. This as an effective alternate remedy is available. However, it is made clear that withdrawal of this petition would not, in any manner, fetter the assessee from challenging any other orders passed by the Authorities under the Act in these proceedings. This, as such orders would give rise to separate cause of action for the petitioner to challenge, if otherwise entitled to do so.

Case Remanded

JUDGEMENT

On 22 March 2019, this Court passed the following order:

“1. The Petitioner has challenged the action of the Assessing Officer in raising a tax demand of a sum of Rs.5,872.13 Crores (rounded of) and further directing the Petitioner to pay up such amount forthwith, without allowing the Petitioner any time for either challenging it before the appropriate authority or in any other manner allowing the Petitioner to pursue its remedies. Learned Counsel for the Petitioner submitted that the order passed by the Assessing Officer which gives rise to the tax demand, is wholly unsustainable in law. In any case, the Assessing Officer could not have insisted on the Petitioner depositing the entire tax amount even without allowing the Petitioner to approach the Appellate Authority.

2. Learned Counsel Mr. Mohanty prays for time to file reply. Such time is granted.

3. The facts of the case are peculiar. The huge tax demand is sought to be enforced forthwith without permitting time for filing Appeal or alternative appropriate proceedings. The question of prima-facie case of the Petitioner would also be relevant. Under the circumstances, while granting time to the Respondents for filing reply, there shall be stay against the recovery of the tax.

4. Stand over to 12/04/2019.”

2. The Petitioner has invoked extra ordinary jurisdiction of this Court challenging the impugned order dated 14 March 2019 passed by Respondent No.1 under section 115Q read with 1150 of the Income Tax Act, 1961 (Act). The Petitioner has averred that there is no efficacious alternate remedy of statutory appeal available under the Act. This as the impugned order dated 14 March 2019 as well as notice of demand under section 156 of the Act have specifically stated that there would only be a Revision under section 264 of the Act available to the Petitioner.

3. Today, the learned Additional Solicitor General invites our attention to the affidavit-in-reply dated 11 April 2019 wherein it is stated that the appellate remedy under section 246A of the Act to the Commissioner (Appeals) from the impugned order dated 14 March 2019 would be available to the Petitioner. The learned Additional Solicitor General reiterated the position and states that efficacious alternate remedy against the impugned order under section 246A of the Act would be available before the Commissioner of Income Tax (Appeals).

4. However, looking to the peculiar facts of the case, it is only for the Commissioner of Income Tax (Appeals) to decide his jurisdiction in accordance with law. Therefore it would be appropriate that the petitioner files an appeal to the Commissioner of Income Tax (Appeals) within a period of three weeks from today. On petitioners’ filing an appeal, the Commissioner of Income Tax (Appeals) shall, within a further period of three weeks from the date of filing, decide the issue of maintainability of the appeal before him in the context of section 246A of the Act. In case the Commissioner of Income Tax (Appeals) holds that the appeal from the impugned order dated 14 March 2019 passed under section 115O of the Act is available and the appeal as filed is maintainable, then this petition will be withdrawn by the Petitioner. This as an effective alternate remedy is available. However, it is made clear that withdrawal of this petition would not, in any manner, fetter the Petitioner from challenging any other orders passed by the Authorities under the Act in these proceedings. This, as such orders would give rise to separate cause of action for the petitioner to challenge, if otherwise entitled to do so.

5. Petition be placed under the caption of direction on 1 October 2019.

6. Ad-interim stay granted earlier to continue till the next date.

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