Karnataka High Court
Karnataka Industrial Areas ... vs Commissioner Of Income-Tax And Anr. on 18 March, 1987
Equivalent citations: [1987]168ITR96(KAR), [1987]168ITR96(KARN)
JUDGMENT S.R. Rajasekhara Murthy, J.
1. In these four writ petitions, the Karnataka Industrial Areas Development Board (hereinafter referred to as "the Board"), is the petitioner constituted under the Mysore Act No. 18 of 1966. As is seen from the preamble to the Act the object of constituting the Board is to promote the establishment and orderly development of industries in the State of Mysore and for this purpose, establish industrial estates.
2. The petitioner has challenged the notice issued under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the assessment year 1982-83, in the first of the writ petitions and in the next three writ petitions the petitioner has challenged the notice issued under section 143(2) read with section 142(1) of the Act for the assessment years 1983-84, 1984-85 and 1985-86 calling upon the petitioner to produce books of account, etc., for completing the assessments.
3. The first prayer made in the first writ petition is for quashing the communication dated October 1, 1986, issued by the Commissioner to the petitioner-Board and the common prayer made in all the writ petitions is for issue of a writ of prohibition or direction to the respondent not to proceed with the assessment proceedings against the petitioner-Board for the four assessment years.
4. It is also set out in the writ petition that the petitioner filed returns disclosing its income for the years 1976-77, to 1985-86 and that they are pending consideration with the Department.
5. The main contention of the petitioner is that it is entitled to exemption, in view of section 10(20A) of the Income-tax Act, having regard to the purpose and the object of constituting the Board as envisaged in the Karnataka Act No. 18 of 1966.
6. Sri Sarangan, learned counsel for the petitioner, in support of his contention, has referred to the preamble to the Act No. 18 of 1966, falls under statutory bodies described in section 10(20A) of the Act, and that, therefore, the income of the Board is eligible for exemption under section 10(20A) of the Act.
7. There has been some correspondence between the Government and the Board with the Commissioner of Income-tax. One such letter is found at annexure D dated January 31, 1986, in which it was claimed that the Board should be granted exemption in respect of its income under section 10(20A) of the Act. To this, the Commissioner has replied by his letter dated October 1, 1986, expressing his inability to grant exemption. Reference is also made in the said letter to the decision of the Gujarat High Court in Gujarat Industrial Development Corporation v. CIT .
8. It is, therefore, argued by Sri Sarangan that having regard to the view expressed by the Commissioner in his letter referred to above, it will be futile to go before the assessing authority under the Act and, hence, the petitioner has chosen to approach this court under article 226 of the Constitution for necessary relief.
9. Sri K. Srinivasan, appearing for the Revenue, has raised a preliminary objection that the question whether the Board is entitled to exemption under the provisions of section 10(20A) of the Act is a matter essentially for the assessing authority under the Act to decide having regard to the provisions of the Act (Act 18 of 1966) and consider the plea put forward by the Board in support of its claim for exemption on its merits.
10. Sri Sarangan has also taken me through the judgment of the Gujarat High Court in which more or less identical provisions of the Gujarat Act came up for consideration and the High Court took a view against the assessee. it is for these two reasons that learned counsel has urged that the matter whether the Board could be an assessee under the Act and whether it is entitled to exemption under section 10(20A) of the Act, has to be decided in these writ petitions.
11. It could be seen from the judgment of the Gujarat High Court that the judgment was delivered in a reference at the instance of the assessee, who had urged similar contention before the authorities under the Act and took up the matter in appeal and finally in reference before the High Court.
12. The question that, therefore, arises is, whether this court should interfere at the stage when the assessment proceedings have been initiated and the petitioner is issued with notices to produce the books of account. Any interpretation as to the application of the provisions of section 10(20A) of the Income-tax Act to the petitioner's case would result in foreclosing the authorities under the Act from applying their mind and giving a finding, one way or the other.
13. The petitioner has not been able to make out a case for interference on account of want of jurisdiction on the part of the Income-tax Officer in issuing the notices which are impugned in the writ petitions.
14. The question, whether the petitioner's income is eligible for exemption or not, is to be decided by the Income-tax Officer under the Act and not by the High Court in exercise of its power under article 226 of the Constitution.
15. It is well settled that when an alternative and equal efficacious remedy is open to a litigant, he should be required to pursue that remedy and not to invoke the special jurisdiction of the High Court for issue of a prerogative writ.
16. Sri G. Sarangan, learned counsel for the petitioner, submits that the Board is one constituted for purposes of orderly development of cities, towns and villages and also to establish industrial estates towards achieving this orderly development and also undertake activities for constructing buildings for accommodating individual citizens.
17. It is, therefore, contended that having regard to the objects of the Act (Act 18 of 1966), and the functions and obligations enumerated in the Act, the Board is entitled to exemption under section 10(20A) of the Act.
18. The jurisdiction of the High Courts to entertain writ petitions in a case like this is explained in a number of decisions :
In C. A. Abraham v. ITO Shah J. (as he then was), speaking for the court, observed, at page 428, thus :
"The Income-tax Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of any improper orders passed by the income-tax authorities, and the appellant could not be permitted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Tribunal."
19. This legal position was reiterated again by Shah J., in a later decision in Shivram Poddar V. ITO and later in Gita Devi Aggarwal v. CIT .
20. The observations of the Supreme Court in Shivram Poddar's case by Shah J. which is extracted below applies with equal force to the facts of the present case (at page 829) :
"It is however necessary once more to observe, as we did in C. A. Abraham's case [1961] 41 ITR 425, that the Income-tax Act provides a complete machinery for assessment of tax, and for relief in respect of improper or erroneous orders made by the revenue authorities. It is for the revenue authorities to ascertain the facts applicable to a particular situation and to grant appropriate relief in the matter of assessment of tax. Resort to the High Court in exercise of its extraordinary jurisdiction conferred or recognised by the Constitution in matters relating to assessment, levy and collection of income-tax may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts, the taxing authorities are shown to have assumed jurisdiction which they do not possess. In attempting to bypass the provisions of the Income-tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the revenue authorities, the party approaching the court has often to ask the court to make assumptions of facts which remain to be investigated by the revenue authorities."
21. The petitioner may be well advised to urge all the contentions raised in the writ petitions before the Income-tax Officer and challenge the order in appeals as provided under the Act, if aggrieved.
22. In my opinion, these are, therefore, not case where the assesses should be permitted to invoke the jurisdiction of the High Court under article 226 without exhausting the alternative remedy provided against the assessment orders when made.
23. The petitioner has thus failed to make out a case for interfering with the assessment proceedings which are within the jurisdiction of the Income Tax Officer.
24. The writ petitions are accordingly dismissed.