Bombay High Court
Tpl Hgiepl Joint Venture vs Union Of India on 27 March, 2025
Author: M. S. Sonak
Bench: M.S. Sonak
Digitally signed WPL-15292-2024.DOCX
2025:BHC-OS:4949-DB
by LAXMIKANT
GOPAL
LAXMIKANT CHANDAN
GOPAL Date:
CHANDAN 2025.03.27
15:15:33
+0530
lgc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 15292 OF 2024
TPL - HGIEPL Joint Venture, ]
Unincorporated joint venture between ]
HG Infra Engineering Pvt Ltd. and Tata ]
Projects Limited ]
Having its address at: ]
C/O Tata Projects Limited, One Boulevard, ]
Lake Boulevard Road, Hiranandani Business, ]
Park, Powai, Mumbai, Maharashtra - 400 076. ] ...Petitioner
Versus
1. Union of India ]
(through the Secretary) ]
Government of India, ]
Ministry of Finance, ]
Department of Revenue, North Block, ]
New Delhi. ]
2. Deputy Director of Income Tax, ]
CPC, Bengaluru ]
Centralized Processing Centre, ]
Prestige Alpha, Post Bag No. 3, ]
Electronic City Post, Hosur Road, ]
Bangalore - 560 100 ]
3. Assistant Commissioner of Income Tax ]
Circle 15(3)(1) Mumbai, Room No. 653, ]
6th Floor, Aayakar Bhawan, Maharishi ]
Karve Road, Mumbai - 400 020 ]..Respondents
______________________________________________________
Mr Dhinal Shah (Through V.C.) with Mr Mihir Beradia, i/b, V.
M. Legal, for Petitioner.
Mr Akhileshwar Sharma, for Respondents.
______________________________________________________
Page 1 of 13
::: Uploaded on - 27/03/2025 ::: Downloaded on - 27/03/2025 22:35:56 :::
WPL-15292-2024.DOCX
CORAM: M.S. Sonak &
Jitendra Jain, JJ.
Revered on 25 MARCH 2025
Pronounced on 27 MARCH 2025
JUDGMENT:
- (Per M. S. Sonak, J)
1. Heard learned counsel for the parties.
2. Rule. The rule is returnable immediately at the request
and with the consent of the learned counsel for the parties.
3. The Petitioner challenges the order dated 13 December
2023 (Exhibit-C) passed under Section 139(9) of the Income
Tax Act, 1961 ("IT Act"), declaring the Petitioner's return as
invalid. Though the impugned order contains no reasons, the
Respondent's reply states that the Petitioner's return was
declared invalid for non-filing a compulsory audit report
under Section 44AB of the IT Act.
4. The brief facts in which this challenge arises need to be
mentioned. This petition concerns Assessment Year 2022-23,
for which the Petitioner filed its income tax return on the
department's portal on 27 July 2022. On 14 December 2022,
the Petitioner received a notice, possibly generated by the
CPC/Portal, raising defects in the return. This notice stated
that the taxpayer, i.e. the Petitioner, had claimed gross receipt
or income under the head "Profits and Gains of Business or
Profession" of more than Rs.10 Crore, exceeding the threshold
limit under Section 44AB of the IT Act. However, no tax audit
report was filed as required under Section 44AB of the IT Act.
WPL-15292-2024.DOCX
5. The Petitioner responded to the defects notice by
pointing out that it had claimed gross receipts or income
under the head of "Profits and Gains of Business or
Profession" amounting to Rs.6.15 crores only, which was
much less than the threshold limit of Rs.10 crores. Hence, the
Petitioner submitted that there was no requirement to obtain
and e-file a tax audit report.
6. The Petitioner heard nothing further in the matter for
quite some time. Therefore, by communications dated 14
August 2023 and 22 August 2023, the Petitioner raised its
grievances through the department's online grievance portal,
requesting that its return be processed and refund, as
permissible under the law, be granted.
7. The Petitioner's case is that the Respondents, by
completely ignoring the Petitioner's plea and reasoning vide
the impugned order dated 13 December 2023, declared the
Petitioner's return invalid. There was no compliance with the
principles of natural justice, and the impugned order was
entirely non-speaking. Hence, this Petition.
8. Mr. Shah, the learned counsel for the Petitioner,
submitted that the impugned order is computer generated or
made by the CPC without any application of mind or
considering the cause shown by the Petitioner. He submitted
that the impugned order contains no reasons whatsoever. He
submitted that all this vitiates the impugned order for
violating the principles of natural justice and fair play.
9. Mr. Shah submitted that the gross turnover or receipts
under the head "Profits and Gains of Business or Profession"
WPL-15292-2024.DOCX
were only Rs.6.15 crores, which was less than the threshold
limit of Rs10 Crores prescribed under Section 44AB.
Therefore, there was no requirement for any tax audit, and
this crucial aspect was not even considered before making the
impugned order.
10. Mr. Shah submitted that the tax returns and the
documents accompanying the tax returns declare income of
Rs.16.82 crores, which arises from liabilities no longer
required to be written back at Note 19 of such statements. He
submitted that these receipts do not amount to Total Sales,
Turnover or Gross Receipts of the Business. He relied on
Guidance Note on Tax Audit under Section 44AB (Revised
2023) issued by ICAI. He submitted that the accounts were
prepared in terms of these Guidance Notes and should have
been accepted by the Respondents.
11. Mr. Shah submitted that the ICAI Guidance Note could
be relied upon, and adjustments for discounts, write-backs, or
other non-operational receipts should not be considered in the
turnover for audit requirements. He relied on M/s. Rohtak
Panipat Tollway Private Limited vs. Dputy Director of Income
Tax, CPC and Anr.1 in support of his arguments.
12. Mr. Shah submitted that the Guidance Notes issued by
the ICAI certainly have persuasive value in understanding
accounting terminology like gross receipts, turnover, etc. He
relied on Commissioner of Income Tax VII, New Delhi Vs.
Punjab Stainless Steel Industries2 to submit that the guidelines
SCA/5727/2024
([2014] 46 taxmann.com 68 (SC)
WPL-15292-2024.DOCX
issued by the ICAI can be relied upon while computing and
filing returns.
13. For all the above reasons, Mr. Shah submitted that the
impugned order declaring the Petitioner's return as invalid
warrants interference and may be set aside.
14. Mr. Sharma, learned counsel for the Respondents-
Revenue, submitted that the Petitioner has an alternate
remedy under Section 264 of the IT Act to impugn the order
dated 13 December 2023 made under Section 139(9) of the
IT Act. He submitted that there was no good reason why the
Petitioner has not availed of such an alternate and efficacious
remedy. He submitted that this Court must not entertain this
Petition because the Petitioner has an alternate and efficacious
remedy under Section 264 of the IT Act.
15. Without prejudice, Mr. Sharma submitted that the
Petitioner was admittedly engaged in carrying on business.
The write back would constitute sales, turnover or gross
receipt as per Section 44AB of the Act. Accordingly, the tax
audit report was essential, and in its absence, the income tax
return did not fulfil the vital conditions in Section 44AB of the
IT Act. Accordingly, Mr. Sharma submitted that there was no
infirmity in the impugned order.
16. Mr Sharma submitted that the impugned order was
generated by the portal (AI/CPC). Since the Petitioner was
engaged in business and further since declared income
exceeded Rs.10 crores, the return was declared invalid under
Section 139(9) because it was not accompanied by any tax
audit report as required under Section 44AB of the IT Act. He
WPL-15292-2024.DOCX
submitted that the defects notice was issued to the Petitioner,
and full opportunity was given to rectify such defects.
Accordingly, he submitted that there was no breach of the
principles of natural justice and fair play.
17. The rival contentions now fall for our determination.
18. As noted earlier, this petition challenges the impugned
AI-generated order dated 13 December 2023 by the CPC or
the computer portal. The same is at Exhibit C (pages 41-42 of
the paper book).
19. The relevant extract from the AI-generated impugned
order reads as follows:-
"The return of income filed by you for assessment year
2022-23 was found to contain the following defect(s)
________________________________________________
Sr.No. Defect(s)
________________________________________________
Notice u/s 139(9) of the Income Tax Act, 1961 was
issued on 14-Dec-2022 vide email to n rectify the
defect(s)
"The response filed by you has been considered and
same is not acceptable"
Therefore, as per the provisions of section 139(9) of
the Income Tax Act, 1961, the return of income for A.Y.
2022-23 filed on 27-Jul-2022 vide Acknowledgement
Number 155142050270722 is declared as INVALID.
N SAYIRAJ, I.R.S
Deputy Director of Income Tax,
CPC, Bengaluru"
20. From the above, it is apparent that the impugned order
contains no reasons. Though it states that the response filed
by the Petitioner was considered and found to be
unacceptable, no reasons why the response was not found to
WPL-15292-2024.DOCX
be acceptable are reflected in the impugned order. In short,
the impugned order contains only the conclusions, not the
reasons supporting the conclusions.
21. By now, it is well settled that the duty to give reasons in
support of adverse orders is a facet of the principles of natural
justice and fair play. In several cases, the necessity of
providing reasons by a body or authority to support its
decision was considered before the Hon'ble Supreme Court.
Initially, the Court recognised a sort of demarcation between
administrative orders and quasi-judicial orders. Still, with the
passage of time, the distinction between the two got blurred
and thinned out, reaching virtually a vanishing point. The
Hon'ble Supreme Court held that the face of an order passed
by a quasi-judicial authority or even an administrative
authority affecting the parties' rights must speak. It must not
be like the "inscrutable face of a sphinx." (see Kranit
Associates Private Limited and another Vs. Masood Ahmed
Khan and others3).
22. In Assistant Commissioner, Commercial Tax Department,
Works Contract and Leasing, Kota Vs. Shukla and Brothers 4
the Hon'ble Supreme Court has held that a litigant has a
legitimate expectation of knowing reasons to reject his
claim/prayer. Only then would a party be able to challenge
the order on appropriate grounds. Recording of reasons would
also benefit the appellate court. As arguments bring things
hidden and obscure to the light of reasons, reasoned
judgment, where the law and factual matrix of the case are
discussed, provides lucidity and foundation for conclusions or
(2010) 9 SCC 496
(2010) 4 SCC 785
WPL-15292-2024.DOCX
exercise of judicial discretion by the courts. The reason is the
very life of the law. When the reason for a law once ceases,
the law itself generally ceases. Such is the significance of
reasoning in any rule of law. Giving reasons furthers the cause
of justice and avoids uncertainty.
23. The Court held that the absence of reasons essentially
introduces an element of uncertainty and dissatisfaction and
gives entirely different dimensions to the questions raised
before the higher/appellate courts. The principle is that when
reasons are announced and can be weighed, the public can be
assured that the correction process is in place and working.
Reasons for an order would ensure and enhance public
confidence and would provide due satisfaction to the
consumer of justice under our justice dispensation system.
Procedural law and established practice impose an unqualified
obligation upon the Courts to record reasons. The Court noted
that there was hardly any statutory provision under the
Income Tax Act or the Constitution itself requiring the
recording of reasons in the judgments. Still, it was no more
res integra and stands unequivocally settled by different
decisions of the Court, holding that the courts and tribunals
are required to pass reasoned judgments/orders.
24. In Union of India Vs Mohan Lal Capoor5, the Hon'ble
Supreme Court explained that reasons are the links between
the materials on which certain conclusions are based and the
actual conclusions. They should reveal a rational nexus
between the facts considered and the conclusions reached.
(1973) 2 SCC 836
WPL-15292-2024.DOCX
25. The AI-generated impugned order contains no reasons
in this case. The argument that the software is not
programmed to record elaborate reasoning or that the
previous system was too cumbersome may not be the answer.
The new system certainly offers numerous advantages and is
efficient. However, it must evolve to include what was
essential in the earlier system. For example, while no detailed
judgment is expected when declaring a return invalid, the
order must provide minimal reasoning so that the affected
party can take corrective action or effectively challenge the
reasoning. Such minimum compliance with the principle of
natural justice cannot be dispensed with on the grounds of
expediency or due to the machine's limitations. Nothing in the
impugned order explains why the cause presented by the
Petitioner was deemed unacceptable. There is no indication
that the cause shown by the Petitioner was given due
consideration despite the order's format stating that a
response was considered. The impugned order indeed
resembles the "inscrutable face of a sphinx."
26. Therefore, based upon the violation of principles of
natural justice or because the impugned order is a non-
speaking order, we could have set aside the order and
remanded the matter for fresh consideration. However, our
apprehension is that the CPC or the portal, which is
programmed in a particular manner, may be able to do no
better, even upon remand. Therefore, a remand may not solve
the problem.
27. Mr Shah submitted that we should follow the decision of
the Gujarat High Court in M/s. Rohtak Panipat Tolway Private
Limited (supra) and hold that the accounts or the returns in
WPL-15292-2024.DOCX
the present case were consistent with the guidance note
issued by ICAI. Therefore, there was no requirement for a tax
audit. This exercise would involve scrutinizing the accounts
and interpreting the guidance note. If each time, the return of
an assessee is declared invalid by the CPC based upon the
programming of the portal through its AI-generated
responses, this Court is required to exercise its extraordinary
jurisdiction for scrutinising the returns, profit and loss
accounts and computation of income, then that would impose
an extraordinary strain on the working of the Court. If no
alternate remedy were available to an assessee, then this
Court would undoubtedly step in and discharge its
Constitutional duty, undaunted by the volumes of similar
Petitions and contentions.
28. However, where the Petitioner has an alternate and
effective remedy in the form of a revision under Section 264
of the IT Act, we see no reason to entertain this Petition or
investigate issues of compliance with the requirements of
Section 44AB in the specific facts of each case. Such
investigation would, as noted earlier, involve scrutiny of the
returns, interpretation of the documents accompanying the
returns, and not merely interpreting the provisions of Section
44AB. There would also be the question of interpreting the
guidance note and other matters. In the present case, we are
concerned with the alleged non-compliance with the
requirements of Section 44AB. However, returns can be
declared invalid under Section 139(9) of the IT Act for
various reasons.
29. In each such case, it would not be possible to exercise
extraordinary jurisdiction and undertake such an elaborate
WPL-15292-2024.DOCX
exercise bypassing the alternate and statutory remedy under
Section 264 of the IT Act. If such a remedy is resorted to, an
official of the Commissioner of Income Tax rank would
examine whether declaring the return as invalid was legal and
proper. The factual matters which invariably arise could also
be effectively investigated by the Commissioner exercising
revisional jurisdiction in the first instance.
30. In B. Muralidhar Vs. Deputy Commissioner of Income-
tax Corporate Circle-16 the Madras High Court, has held that a
rule of exhaustion of alternate remedy, though a rule of
discretion and not a rule of compulsion, must be applied with
utmost rigour when it comes to fiscal law statutes. This rule
may be deviated only when it falls within the exceptions set
out in the long line of authorities, i.e. complete lack of
jurisdiction to pass the order, violation of principles of natural
justice where vires of the statute is challenged or where the
alternative remedy is ineffectual or not efficacious. Upon
considering the judgments of the Hon'ble Supreme Court, the
Court has held that where the Petitioner could file a statutory
revision under Section 264 of the Income Tax Act against the
impugned order, the Writ Petition should not be entertained.
Accordingly, the Petition was disposed of, relegating the
Petitioner to avail of the remedy of statutory revision under
Section 264 of the Income Tax Act.
31. Mr. Sharma submitted that a revision under Section 264
of the IT Act lies against "any order" other than an order to
which Section 263 applies. He submitted that the impugned
order under Section 139(9) of the IT Act was certainly
revisable. Even Mr. Shah did not dispute that the impugned
[2019] 110 taxmann.com 54 (Madras)
WPL-15292-2024.DOCX
order under Section 139(9) was revisable. However, he
submitted that since the issue was covered by the decision of
the Gujarat High Court, the Petitioner should not be relegated
to the alternate remedy, and this Court should exercise its
extraordinary jurisdiction and declare that the return was
valid.
32. Though the Hon'ble Gujrat High Court's decision prima
facie supports the Petitioner's contention, we still think that
this matter would require deeper scrutiny of returns, profit
and loss accounts, and other documents accompanying the
income tax returns. The Commissioner exercising revisional
jurisdiction under Section 264 of the IT Act can more
conveniently undertake such an exercise. Even the guidance
note of the ICAI would require interpretation in the context of
the provisions of Section 44AB of the IT Act.
33. Recently, in the case of Oberoi Constructions Ltd Vs. The
Union of India and others 7, we considered several precedents
on the exhaustion of alternate remedies. By following the
reasoning in the said decision, we do not think that this is a
matter which falls within the exceptions or that this is an
exceptional case where the rule of exhaustion of alternate
remedies must be bypassed.
34. For the reasons indicated above, the Petitioner is best
placed to avail of the alternate remedy under Section 264 of
the IT Act. At the same time, we believe that the Respondents
must create a system in which their CPC or portal
demonstrates thoughtful consideration, and the essence of the
orders is not like the "inscrutable face of a sphinx. " Resorting
Writ Petition (L) No.33260 of 2023 & connected matters decided on 11-11-2024
WPL-15292-2024.DOCX
to Artificial Intelligence (AI) is certainly welcome. However,
when the application of thoughtful consideration through
actual intelligence is required, it cannot be cast aside simply
because AI and automation represent the expedient future.
The principles of natural justice and fairness are too valuable
to be sacrificed at the altar of AI and automation expediency.
35. Accordingly, we decline to entertain this Petition but
relegate the Petitioner to avail of the alternate remedy under
Section 264 of the IT Act. Suppose such a revision is instituted
within four weeks from today. In that case, we direct the
Revisional Authority to dispose of the revision petition as
expeditiously as possible and, in any event, within three
months of its institution. Needless to add, the Revisional
Authority must give the Petitioner an opportunity of hearing
and pass a reasoned order on merits and not remand the
matter to CPC.
36. All contentions of all parties are left open for the
decision of the Revisional Authority in the first instance.
37. The rule is disposed of in the above terms without any
cost orders.
38. All concerned to act upon an authenticated copy of this
order.
(Jitendra Jain, J) (M.S. Sonak, J)
