Magadh Sugar & Energy Limited & Anr vs Assessment Unit
2022 Latest Caselaw 7574 Cal

Item No.17.
              IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
                      CIVIL APPELLATE JURISDICTION
                              APPELLATE SIDE


                             HEARD ON: 16.11.2022

                        DELIVERED ON:16.11.2022

                                  CORAM:

                THE HON'BLE MR. JUSTICE T. S. SIVAGNANAM
                                    AND
         THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA


                          M.A.T No.1737 of 2022
                          I.A. No.CAN 1 of 2022

                  Magadh Sugar & Energy Limited & Anr.
                                   Vs.
         Assessment Unit, Income Tax Department, National Faceless
                         Assessment Centre & anr.


Appearance:-
Mr. Asim Chaudhury,
Mr. Soham Sen                                       .....   for the appellants.

Mr. Smarajit Roy Chowdhury                   ...... for the respondent no.1.


                                 JUDGMENT

(Judgment of the Court was delivered by T.S. SIVAGNANAM, J.)

1. This intra Court appeal by the writ petitioners is directed

against the order dated 28th September, 2022 passed in W.P.A.

No.21656 of 2022. The said writ petition was filed challenging

an assessment order passed under Section 143(3) read with

Section 144B of the Income Tax Act, 1961 (for short, "the Act")

dated 8th September, 2022. The challenge to the assessment order

was primarily on the ground of violation principles of natural

justice inasmuch as the assessing officer has failed to issue

notice as required to be issued under Section 144B (1)(xii) (b)

of the Act. The learned Single Bench was of the view that as

against the assessment order, an effective alternate remedy by

way of an appeal is provided for and therefore, was not inclined

to interfere with the assessment order.

2. The moot question would be as to whether existence of an

alternate remedy under the relevant statute will be a total bar

for the exercise of jurisdiction under Article 226 of the

Constitution of India. This issue had been elaborately dealt

with in several decisions of the Hon'ble Supreme Court and the

oft quoted decisions is in the case of Whirlpool Corporation Vs.

Registrar of Trade Marks, Mumbai & Ors. reported at (1998) 8 SCC

1. In a recent decision of the Hon'ble Supreme Court in M/s.

Radha Krishan Industries Vs. State of Himachal Pradesh & Ors.

( Civil Appeal No.1155 of 2021), the Hon'ble Supreme Court has

culled out all the decisions on the issue pertaining to whether

existence of an alternate remedy will always pushed a

jurisdiction of the writ Court under Article 226 of the

Constitution and culled out the legal principles in paragraph 27

of the judgment, which reads as follows:-

"27.- 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

(vi) In cases where there are disputed questions of fact, the 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."

3. In terms of the above decision, this Court has discretion

to entertain or not to entertain a writ petition and one of the

exceptions to the rule of alternate remedy is in cases where

there has been violation of principles of natural justice.

4. Thus, we are required to see as to whether there has been

violation of principles of natural justice in this case on hand.

The assessing officer had issued a notice to the assessee dated

10th March, 2022 under Section 142(1) of the Act. In the

annexure to the said notice, the assessee was called upon to

furnish certain information, which is to the following effect:

"It is seen that your have claimed agriculture income for

deduction in this regard please submit details of receipts and

expenditure in respect of agricultural activities". The

appellants had promptly complied with the information called for

in the said notice and a reply dated 10th March, 2022 was

submitted furnishing all the details relevant to the information

sought for. Thereafter, this was received by the assessing

officer on 15th March, 2022.

5. It appears that subsequently no further notice was issued

to the assessee, nor assessee was afforded an opportunity of

personal hearing, nor any further information was called for

from the assessee but the assessing officer straightway

proceeded to complete the assessment and passed the assessment

order dated 8th September, 2022.

6. Curiously enough, in the assessment order in paragraph 3,

the assessing officer stated that in response to the statutory

notices issued under Section 143(2) and 143(1), the assessee has

furnished the requisite details along with supporting

documentary evidences regarding the issue of selection, which

have been duly verified. However, in paragraph 5, the assessing

officer states that the assessee did not furnish any evidence as

to when the land was tilted, when the crop was sown, when the

crop was ready for harvest, etc. We find that no such

information was called for from the assessee at any earlier

point of time after the assessee submitted their reply dated 10 th

March, 2022 received by the assessing officer on 15 th March,

2022.

7. To examine the correctness of the order passed by the

assessing officer, we need to look into as to what are the

statutory requirements. At this juncture, it will be relevant

to take note of the statutory provision, namely, Section 144B,

which deals with faceless assessment. For the purpose of the

case on hand, Section 144B (1)(xii) would be relevant, which is

quoted below:-

"144B(1)(xii) - the assessment unit shall, after taking into account all the relevant material available on the record, prepare, in writing, -

(a) an income or loss determination proposal, where no variation prejudicial to assessee is proposed and send a copy of such income or loss determination proposal to the National Faceless Assessment Centre; or

(b) in any other case, a show cause notice stating the variations prejudicial to the interest of assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such show cause notice, on the assessee, through the National Faceless Assessment Centre;"

8. In terms of the above provision, the assessment unit shall,

after taking into account all the relevant material available on

record, has two options, namely, (a) to prepare in writing an

income or loss determination proposal, where no variation

prejudicial to the assessee is proposed and send a copy of such

income or loss determination proposal to the National Faceless

Assessment Centre (for short, "NFAC"). The second alternative

is as mentioned in clause (b) is to issue a show cause notice

stating variations prejudicial to the interest of the assessee

proposed to be made to the income of the assessee and calling

upon him to submit as to why the proposed variation should not

be made and serve such show cause notice on the assessee through

NFAC. Admittedly, clause (b) of Section 144B (1)(xii) has not

been followed in the case on hand.

9.      In         Sardar       Co-op.         Credit           Society         Ltd.        Vs.

Additional/Joint/Deputy/Assistant                       Commissioner      of        Income-tax

reported at [2022] 139 taxmann.com 414 (Gujarat), it was held

that the obligation is on the assessing officer to serve a show

cause notice calling upon him to show cause as to why the

proposed variation should not be made failing which the

assessement would be non-est. Similar view was taken in the case

of Gandhi Realty (ndia) (P) Ltd. Vs. Asstt./Jt./Dy./Asstt. CIT

reported at [2021] 133 taxmann.com 83. The decision in the case

Novelty Merchants (P.) Ltd. Vs. National Faceless Assessment

Centre Delhi reported at [2021] 131 taxmann.com 289 (Delhi) is

also to the same effect wherein it was held that where no prior

show cause notice as well as draft assessment order have been

issued before passing final assessment order there was violation

of principles of natural justice as well as mandatory procedure

prescribed under the Faceless Assessment Scheme and therefore,

the matter was remanded to the assessing officer. The decision

in Novelty Merchants (P.) Ltd. (supra) was prior to the

amendment and after the amendment, the provision mandates that a

show cause notice stating variations prejudicial to the interest

of the assessee, has to be served.

10. In the absence of such a show cause notice, the assessment

order has to be held in violation of principles of natural

justice and in violation of the statutory provision and

therefore, non-est.

11. In the result, the appeal is allowed along with the

connected application and the order passed in the writ petition

is set aside. Consequently, the writ petition is allowed and the

assessment order dated 8th September, 2022 is set aside and the

matter is remanded to the assessing officer for a fresh

decision. The assessing officer is directed to issue a show

cause notice under Section 144B(1)(xii)(b) clearly setting out

the proposed variations and the assessee should be granted

reasonable time to file objections along with the documents and

after receipt of the same, fresh proceedings be initiated in

accordance with law.

12. In the light of the above, the penalty proceedings, which

have been initiated as a consequence of the assessment order

also stands set aside with liberty to proceed in accordance with

law after the assessment is complete.

13. There shall be no order as to costs.

14. Urgent photostat certified copy of this order, if applied

for, be furnished to the parties expeditiously upon compliance

of all legal formalities.

(T.S. SIVAGNANAM, J)

I agree,

(HIRANMAY BHATTACHARYYA, J.)

NAREN/PALLAB(AR.C)