Madras High Court
V. Thillainatesan vs The Additional Commissioner Of Income ... on 15 September, 2021
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam, Sathi Kumar Sukumara Kurup
W.A.No.2304 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 15.09.2021
CORAM
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Mr.Justice SATHI KUMAR SUKUMARA KURUP
W.A.No.2304 of 2021
and
C.M.P.No.14638 of 2021
V. Thillainatesan ...Appellant
Vs.
The Additional Commissioner of Income Tax,
Income Tax Department,
National E-Assessment Centre,
Delhi. ...Respondent
Appeal filed under Clause 15 of Letters Patent, praying to allow the above
Writ Appeal by setting aside the order dated 26.07.2021 passed in W.P.No.
15255 of 2021 on the file of this Hon'ble Court and allow the Writ Petition.
For Appellant : Mr. Raja Karthikeyan
For Respondent : Mrs. Hema Muralikrishnan
Senior Standing Counsel
******
JUDGME NT
(Delivered by T.S.Sivagnanam, J.)
This writ appeal filed by the writ petitioner is directed against the order
dated 26.07.2021 passed in W.P. No. 15255 of 2021.
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2. The Appeal filed the Writ Petition challenging the assessment order dated
19.04.2021 passed under Section 143(3) read with section 144-B of the Income
Tax Act, 1961 (‘the Act’ for brevity). The primary ground, on which the
assessment order was challenged, is by contenting that it is in gross violation of
principles of natural justice.
3. The Learned Single Bench dismissed the writ petition, at the admission stage,
holding that as against the assessment order, the appellant has appellate remedy
under the Act, and he has to avail the alternate remedy and there is no ground to
by-pass such remedy. The Learned Writ Court did not go into the merits of the
matter. Being aggrieved by such order, the appellant is before us by way of this
appeal.
4. We have heard Mr. Raja Karthikeyan, Learned counsel for the Appellant and
Mrs. Hema Muralikrishnan, Learned Senior Standing Counsel, who accepts
notice on behalf of the respondent-Revenue.
5. Before we examine as to whether the appellant was dis-entitled to
approach the Writ Court or not, we note the following facts:-
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(1) The appellant is an individual-assessee and for the Assessment Year
under consideration, AY 2018-19, he filed his income tax return
on 26.07.2018 admitting a total income of Rs.8,10,410/-. The
appellant case was selected for Scrutiny under the E-Assessment
Scheme, 2019.
(2) The Appellant would state that he is an individual, who is employed
and also doing a part-time business, as being a multilevel marketing
agent of the products promoted by M/s. Amway.
(3) The appellant would also state that he was not familiar with the E-
Assessment Scheme and he was not aware of an E-notice, which
was sent to him by the Assessing Officer, pursuant to the appellant's
case being selected for scrutiny assessment.
(4) The second e-notice was came to the knowledge of the appellant on
17.11.2020 and after which, he had collected the documents from
the Banks on 30.12.2020 and after receiving the Bank Statements,
he has filed his reply on 12.03.2021. After which, the Assessing
Officer sent another notice dated 18.03.2021. Whereunder, the reply
given by the appellant along with the documents were taken note of
and further, details with regard to the credit card payments regarding
'Amway' transactions were called for. The appellant was given only
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two days’ time to furnish the details and the 3rd day being Sunday
(21.03.2021). Since the appellant had to obtain the credit card
details from ICICI Bank and Standard Chartered Bank, he would
not comply with the same within the time frame given.
(5) Furthermore, the Authority called for the details on nine heads,
which according to the appellant were voluminous and only two
working days’ time was provided, which was grossly insufficient.
(6) In the meantime, the respondent issued Show Cause Notice dated
31.03.2021 enclosing the draft assessment order and granted one
day time to file objection. The appellant stated to have received the
credit card statements from the Standard Chartered Bank on
15.04.2021 and furnished all the details to the respondent on
17.04.2021, as directed in the notice dated 18.03.2021 and the show
cause notice dated 31.03.2021. The respondent has received the
documents filed by the appellant through E-filing mode on
17.04.2021.
(7) However, the assessment order was passed on 19.04.2021, without
taking note of any of the documents filed by the appellant. This
necessitated the appellant to approach the Writ Court challenging
the assessment order.
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6. At this stage, we shall take note of the recent decision of the Hon'ble Supreme
Court in Radha Krishnan Industries -vs- State of Himachal Pradesh & Ors.
reported in [2021 SCC Online SC 334]. Wherein, one of the questions, which fell
for consideration, was with regard to the maintainability of a Writ Petition, when
an alternative remedy was available under the relevant statute reads as follows :-
“C.1 Maintainability of writ petition before the High Court
25. The High Court has dealt with the maintainability of the
petition under Article 226 of the Constitution. Relying on the
decision of this Court in Assistant Commissioner (CT) LTU,
Kakinada v. Glaxo Smith Kline Consumer Health Care Limited ,
the High Court noted that although it can entertain a petition
under Article 226 of the Constitution, it must not do so when the
aggrieved person has an effective alternate remedy available in
law. However, certain exceptions to this “rule of alternate
remedy” include where, the statutory authority has not acted in
accordance with the provisions of the law or acted in defiance of
the fundamental principles of judicial procedure; or has resorted
to invoke provisions, which are repealed; or where an order has
been passed in violation of the principles of natural justice.
Applying this formulation, the High Court noted that the appellant
has an alternate remedy available under the GST Act and thus, the
petition was not maintainable.
26. In this background, it becomes necessary for this Court, to
dwell on the “rule of alternate remedy” and its judicial exposition.
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In Whirlpool Corporation v. Registrar of Trademarks, Mumbai , a
two judge Bench of this Court after reviewing the case law on this
point, noted:
“14. The power to issue prerogative writs under Article 226
of the Constitution is plenary in nature and is not limited by
any other provision of the Constitution. This power can be
exercised by the High Court not only for issuing writs in the
nature of habeas corpus, mandamus, prohibition, quo
warranto and certiorari for the enforcement of any of the
Fundamental Rights contained in Part III of the Constitution
but also for “any other purpose”.
15. Under Article 226 of the Constitution, the High Court,
having regard to the facts of the case, has a discretion to
entertain or not to entertain a writ petition. But the High
Court has imposed upon itself certain restrictions one of
which is that if an effective and efficacious remedy is
available, the High Court would not normally exercise its
jurisdiction. But the alternative remedy has been
consistently held by this Court not to operate as a bar in at
least three contingencies, namely, where the writ petition
has been filed for the enforcement of any of the
Fundamental Rights or where there has been a violation of
the principle of natural justice or where the order or
proceedings are wholly without jurisdiction or the vires of
an Act is challenged. There is a plethora of case-law on this
point but to cut down this circle of forensic whirlpool, we
would rely on some old decisions of the evolutionary era of
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the constitutional law as they still hold the field.”
(emphasis supplied)
27. Following the dictum of this Court in Whirlpool (supra), in
Harbanslal Sahnia v. Indian Oil Corpn. Ltd. , this court noted
that:
“7. So far as the view taken by the High Court that the
remedy by way of recourse to arbitration clause was
available to the appellants and therefore the writ petition
filed by the appellants was liable to be dismissed is
concerned, suffice it to observe that the rule of exclusion of
writ jurisdiction by availability of an alternative remedy is a
rule of discretion and not one of compulsion. In an
appropriate case, in spite of availability of the alternative
remedy, the High Court may still exercise its writ
jurisdiction in at least three contingencies : (i) where the
writ petition seeks enforcement of any of the fundamental
rights; (ii) where there is failure of principles of natural
justice; or (iii) where the orders or proceedings are wholly
without jurisdiction or the vires of an Act is challenged.
(See Whirlpool Corpn. v. Registrar of Trade Marks [(1998)
8 SCC 1].) The present case attracts applicability of the first
two contingencies. Moreover, as noted, the appellants'
dealership, which is their bread and butter, came to be
terminated for an irrelevant and non-existent cause. In such
circumstances, we feel that the appellants should have been
allowed relief by the High Court itself instead of driving
them to the need of initiating arbitration proceedings.”
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28. The principles of law which emerge are that:
(i) The power under Article 226 of the Constitution to issue
writs can be exercised not only for the enforcement of
fundamental rights, but for any other purpose as well;
(ii) The High Court has the discretion not to entertain a writ
petition. One of the restrictions placed on the power of the
High Court is where an effective alternate remedy is
available to the aggrieved person;
(iii) Exceptions to the rule of alternate remedy arise where
(a) the writ petition has been filed for the enforcement of a
fundamental right protected by Part III of the Constitution;
(b) there has been a violation of the principles of natural
justice; (c) the order or proceedings are wholly without
jurisdiction; or (d) the vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest the High
Court of its powers under Article 226 of the Constitution in
an appropriate case though ordinarily, a writ petition should
not be entertained when an efficacious alternate remedy is
provided by law;
(v) When a right is created by a statute, which itself
prescribes the remedy or procedure for enforcing the right
or liability, resort must be had to that particular statutory
remedy before invoking the discretionary remedy under
Article 226 of the Constitution. This rule of exhaustion of
statutory remedies is a rule of policy, convenience and
discretion; and
https://www.mhc.tn.gov.in/judis/ (vi) In cases where there are disputed questions of fact, the
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High Court may decide to decline jurisdiction in a writ
petition. However, if the High Court is objectively of the
view that the nature of the controversy requires the exercise
of its writ jurisdiction, such a view would not readily be
interfered with.”
In terms of the above decision, if the appellant-assessee is able to establish a case
of violation of principles of natural justice, then it is one of the exceptions carved
out by the Hon'ble Supreme Court, where despite availability of an alternate
remedy, the appellant would be entitled to approach the Writ Court.
7. We also note yet another recent decision of the Hon'ble Supreme Court in
Assistant Commissioner of State Tax and Ors. Vs. Commercial Steel Limited
reported in [2021-VIL-80-SC]. In the said decision, the Hon'ble Supreme Court
pointed out that existence of an alternate remedy is not an absolute bar to the
maintainability of a Writ Petition under Article 226 of the Constitution and the
Writ Petition can be maintained in an exceptional circumstances, where there is
(i) a breach of fundamental rights;
(ii) a violation of the principles of natural justice;
(iii) an excess of jurisdiction; or
(iv) a challenge to the vires of the statute or delegated legislation.
As pointed out earlier, the appellant's case would fall within the exception No.2
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and therefore, the Writ Petition was maintainable.
8. In the preceding paragraphs, we have referred to the factual positions to
demonstrate that the appellant-assessee has been dealt with in a most unfair
manner. The appellant is an individual and to the best of his knowledge and
ability, he has furnished the details. The Assessing Officer, while completing the
assessment, false the appellant for not furnishing the statement of account of the
credit cards. The appellant has stated as to why there was a delay in furnishing
the details, as he had to obtain the same from the concerned banks and nine
particulars called for were voluminous. It may be true that the assessment was an
E-Assessment. Nevertheless, if it is a scrutiny assessment under Section 143(3)
of the Act, the Assessing Officer is bound to provide adequate opportunity to the
appellant. Adequacy of the opportunity would vary from case to case, and there
is no straight jacket formula on the same. In case of Companies registered under
the Companies Act or other financial institutions, they would have a large team
of legal experts to assess and who can appear before the Assessing Officer or
who can furnish details, as called for by the Assessing Officer. This may not be a
case, when it comes to an individual-assessee. Especially, when a person, like an
appellant, who states that he is employed and carrying on a part time business,
who being a multi-level marketing person in a chain of marketing persons, who
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handle projects, manufactured / marketed by M/s. Amway.
9. Therefore, we are of the clear view that the assessment order has been passed
in violation of principles of natural justice and therefore, the Writ Petition was
maintainable.
10. The other question, which may arise, is whether the opportunity, which can
be afforded to the appellant-assessee by the Appellate Authority, would be
sufficient? In this regard, we are guided by the decision of the Hon'ble Supreme
Court in Tin Box Company -vs- Commissioner of Income-tax reported in
[2001] 116 Taxman 491 (SC). In the said decision, the Hon'ble Supreme Court
held that opportunity of hearing by the Appellate Authority or the Tribunal or the
Court can be of no substitute to that of the opportunity that will be provided by
the Assessing Officer, at the first instance.
11. Thus, we are of the clear view that the assessment order calls for
interference. In the result, the Writ Appeal is allowed and the order passed in the
Writ Petition is set aside and consequently, the Writ Petition is allowed and the
assessment order dated 19.04.2021 is quashed and the matter is remanded to the
respondent or the appropriate authority for fresh assessment. The said authority
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shall provide reasonable opportunity and grant sufficient time to the appellant-
assessee to produce all records, that may be required for completing the
assessment and thereafter, after inviting additional objections, if any, which the
appellant-assessee may desire to submit, the assessment may be done afresh and
in accordance with law. No costs. Consequently, connected Miscellaneous
Petition is closed.
[T.S.S., J.] [S.S.K., J.]
15.09.2021
Maya/Sp
Index: Yes/ No
Speaking Order : Yes/ No
To
The Additional Commissioner of Income Tax,
Income Tax Department,
National E-Assessment Centre,
Delhi.
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T.S.Sivagnanam, J.
and Sathi Kumar Sukumara Kurup, J.
(Maya) W.A.No.2304 of 2021 and C.M.P.No.14638 of 2021 Dated : 15.09.2021 https://www.mhc.tn.gov.in/judis/ 13/13