Gujarat High Court

Nileshkumar Bhupendrabhai Shah vs Union Of India on 3 March, 2021

Bench: Ilesh J. Vora

         C/SCA/19013/2018                                                ORDER



             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

          R/SPECIAL CIVIL APPLICATION NO. 19013 of 2018
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               NILESHKUMAR BHUPENDRABHAI SHAH
                              Versus
                    UNION OF INDIA & 2 other(s)
==========================================================
Appearance:
MR MANAN A SHAH(5412) for the Petitioner(s) No. 1
DS AFF.NOT FILED (N)(11) for the Respondent(s) No. 1
MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 3
NOTICE SERVED BY DS(5) for the Respondent(s) No. 2
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  CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
         and
         HONOURABLE MR. JUSTICE ILESH J. VORA
                         Date : 03/03/2021
                          ORAL ORDER

(PER : HONOURABLE MR. JUSTICE ILESH J. VORA)

1. By filing this writ application under Article 226 of the Constitution

of India, the writ applicant has prayed for the following substantial

relief:-

"(A) Issue appropriate writ, order or direction, quashing and setting aside the order, if any, passed by the respondent No.3 in pursuance to the show-cause notice dated 13.11.2018 and direct the respondent No.3 to pass the order afresh after giving opportunity of persona hearing and leading evidence in support of his case in the interest of justice."

2. The brief facts giving rise to filing of the present writ application

are as follows:

2.1 The writ applicant being an independent assessee seeks to

challenge the scrutiny assessment order dated 05.12.2018 framed

under Section 143 of the Income Tax Act, 1961 (hereinafter

referred to as 'the Act' for short) for the A.Y. 2016-17, on the

C/SCA/19013/2018 ORDER

ground that, the impugned order is illegal, arbitrary, mala fide and

having been passed in violation of the principles of natural justice

and also violative of Article 14 of the Constitution of India, as

before passing the impugned order, the respondent No.3 - Income

Tax Officer, Surat, had not given reasonable opportunity of hearing

as well as to lead the documentary evidence in support of his

defense and to make effective representation.

2.2 According to the case of the writ applicant, the income of

return for the A.Y. 2016-17 filed on 17.10.2016 declaring his total

income at Rs.24,24,300/-. The case was selected for scrutiny and

the notices under Sectionss 143(2) and 142(1) of the Act were

issued on 17.07.2017, 10.07.2018 and 27.08.2018 respectively and

in response to the said notices, the writ applicant had complied in

part, by way of submitting his written explanation and necessary

material documents through e-compliance module on ITBA. The

revenue had served the show-cause notice dated 13.11.2018 calling

upon the writ applicant to show cause as to why the cash deposit

of Rs.71,92,000/- made in the bank account, which remains

unexplained within the meaning of Section 68 of the Act, should

not be treated as unexplained cash credit and added to his total

income by invoking the provisions of Section 68 of the Act.

2.3 It is further the case of the writ applicant that, pursuant to

the show-cause notice, he had sought time to file reply as his

Chartered Accountant was out of India and accordingly, the matter

was adjourned to 04.12.2018. According to the case of the writ

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applicant, on 04.12.2018, he along with his Chartered Accountant

remained present before the respondent No.3 and had sought time

for two days to submit reply as well as the necessary documents.

However, the respondent No.3 did not grant the time and

informed that, the right to file reply is closed and the order will be

uploaded online shortly. It is further case of the writ applicant that,

on the next day i.e. on 05.12.2018, he along with his Chartered

Accountant went to the office of the respondent No.3 to submit

reply as well as the documents, which have not been accepted and

finally, the assessment order having been passed ex parte under

Section 144 of the Act.

3. Being aggrieved by and dissatisfied with the impugned ex parte

assessment order dated 05.12.2018 passed by the respondent No.3,

the writ applicant has come up before this Court by filing present

writ application, inter alia, stating that, the impugned order is

illegal, arbitrary, unjust, unreasonable and bad in law and having

been passed in violation of the principles of natural justice and

thus, the same requires to be set aside.

4. We have heard Mr. Dhaval Shah, the learned Counsel assisted by

Mr. Manan Shah, the learned counsel appearing for the writ

applicant and Mrs. Kalpana K. Raval, the learned Senior Standing

Counsel appearing for the respondents - Revenue.

5. Mr. Dhaval Shah, learned counsel appearing for the writ applicant

has contended that, the impugned order has been passed in gross

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violation of the principles of natural justice and therefore, though

the alternative efficacious remedy is available to redress the

grievance, the bar is not operate for the High Court to exercise its

jurisdiction under Article 226 of the Constitution of India. He

further submitted that, the assessment order has been passed ex

parte without giving any opportunity of being heard to the writ

applicant. In this regard, he pointed out that, on the day when the

matter was fixed, the writ applicant made a request for short

adjournment to submit the reply as well as necessary documents,

however, the request was refused and on the next day i.e. on

05.12.2019, when the writ applicant went to the office of the

respondent no.3 with a request to accept the reply as well as the

material documents as the order was yet to be passed, the

respondent No.3 refused to accept the same and passed the

impugned ex parte order. In this circumstances, the learned

counsel for the writ applicant submitted that, the impugned action

on the part of the respondent is de hors the principles of natural

justice, which requires to be set aside and alternatively, the matter

may kindly be ordered to be remanded back for denovo

proceedings.

6. On the other hand, Mrs. Kalpana Raval, the learned Sr. Standing

Counsel appearing for the Revenue vehemently opposed the

maintainability of the present writ application and contended that,

the impugned order is challengeable before the Commissioner of

Income Tax (Appeals), under Section 264A of the Act and

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therefore, the writ applicant ought to have exhausted the statutory

remedy before resorting to the remedy under Article 226 of the

Constitution of India. She, therefore, urged to dismiss this writ

application. On merits, she contended that, the reassessment shall

require to be adjudicated in time bound manner. Referring to the

impugned order, she contended that the order itself shows that,

during the entire assessment proceedings, the writ applicant had

given sufficient opportunities to furnish the details/explanation for

completion of assessment proceedings. She further submitted that,

the entire assessment proceedings was adjudicated through online

portal. Therefore, on the day i.e. on 4.12.2018 at about 11:30 A.M,

the writ applicant or his representative did not remain present and

his right was closed. In this circumstances, the authority was not

authorized to accept the reply or any other documents manually.

Thus, there being no merits in the case, the writ application may

not be entertained.

7. After having heard the learned counsel appearing for the

respective parties and having gone through the materials on

record, the issue arises for our consideration is whether this Court

in exercise of its jurisdiction under Article 226 of the Constitution

of India, can interfere with the assessment order passed by the

assessing officer under the Income Tax Act when an equal

efficacious alternative remedy is available to the writ applicant

under Section 264 A of the Income Tax Act, 1961.

C/SCA/19013/2018 ORDER

8. We are of the view that, we must determine the issue of

maintainability of the writ application without entering into the

merits of the case. Looking to the facts and circumstances of the

case, an identical issue was decided by the Apex Court in the case

of Commissioner of Income Tax & Ors. Vs. Chhabil Dass

Agrawal [(2014) 1 SCC 603]. The case before the Apex Court was

that, the assessee (Chhabil Dass Agrawal) had challenged the

assessment proceedings before the High Court invoking the writ

jurisdiction under Article 226 of the Constitution of India and the

challenge was ex parte assessment order passed by the assessing

officer under Section 148 of the Income Tax Act, wherein, the Apex

Court after considering the various decisions on the issue, held

that, the Income Tax Act provides complete machinery for

assessment/reassessment for obtaining the relief in respect of any

improper orders passed by the revenue authorities and the

assessee could not be permitted to abandon that machinery and

invoke the jurisdiction of the High Court under Article 226 of the

Constitution of India when the assessee had adequate remedy

open to him by an appeal to the Commissioner of the Income Tax

(Appeals). The relevant paras 14 to 21 are reproduced herewith as

under:

"14. In the instant case, the only question which arises for our consideration and decision is whether the High Court was justified in interfering with the order passed by the assessing authority under Section 148 of the Act in exercise of its jurisdiction under Article 226when an equally efficacious alternate remedy was available to the assessee under the Act.

15. Before discussing the fact proposition, we would notice the principle of law as laid down by this Court. It is settled law that non-

C/SCA/19013/2018 ORDER

entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-

imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 22 6despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction underArticle 226.(See:State of U.P. vs. Mohammad Nooh, AIR 1958 SC 86;Titaghur Paper Mills Co. Ltd. vs. State of Orissa, (1983) 2 SCC 433;Harbanslal Sahnia vs. Indian Oil Corpn. Ltd., (2003) 2 SCC 107;State of H.P. vs. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499).

16. The Constitution Benches of this Court in K.S. Rashid and Sons vs. Income Tax Investigation Commission, AIR 1954 SC 207;Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC 425;Union of India vs. T.R. Varma, AIR 1957 SC 882;State of U.P. vs. Mohd. Nooh, AIR 1958 SC 86 and K.S. Venkataraman and Co. (P) Ltd. vs. State of Madras, AIR 1966 SC 1089 have held that though Article 226confers a very wide powers in the matter of issuing writs on the High Court, the remedy of writ absolutely discretionary in character. If the High Court is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted.

(See:N.T. Veluswami Thevar vs. G. Raja Nainar, AIR 1959 SC 422;Municipal Council, Khurai vs. Kamal Kumar, (1965) 2 SCR 653;Siliguri Municipality vs. Amalendu Das, (1984) 2 SCC 436;S.T. Muthusami vs. K. Natarajan, (1988) 1 SCC 572;Rajasthan SRTC vs. Krishna Kant, (1995) 5 SCC 75; Kerala SEB vs. Kurien E. Kalathil, (2000) 6 SCC 293;A. Venkatasubbiah Naidu vs. S. Chellappan, (2000) 7 SCC 695;L.L. Sudhakar Reddy vs. State of A.P., (2001) 6 SCC 634;Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha vs. State of Maharashtra, (2001) 8 SCC 509;Pratap Singh vs. State of Haryana, (2002) 7 SCC 484 and GKN Driveshafts (India) Ltd. vs. ITO, (2003) 1 SCC 72).

17. In Nivedita Sharma vs. Cellular Operators Assn. of India, (2011) 14 SCC 337, this Court has held that where hierarchy of appeals is provided by the statute, party must exhaust the statutory remedies before resorting to writ jurisdiction for relief and observed as follows:

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"12.In Thansingh Nathmal v. Supdt. of Taxes, AIR 1964 SC 1419 this Court adverted to the rule of self-imposed restraint that the writ petition will not be entertained if an effective remedy is available to the aggrieved person and observed: (AIR p. 1423, para

7).

"7. ... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up."

13.In Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 this Court observed: (SCC pp. 440-41, para 11) "11. ... It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Waterworks Co. v. Hawkesford, 141 ER 486 in the following passage: (ER p. 495) '... There are three classes of cases in which a liability may be established founded upon a statute. ... But there is a third class viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. ... The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to.' The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspapers Ltd., 1919 AC 368 and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd., 1935 AC 532 (PC) and Secy. of State v. Mask and Co., AIR 1940 PC 105 It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine."

14.In Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 B.P. Jeevan Reddy, J. (speaking for the majority of the larger Bench) observed: (SCC p. 607, para 77)

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"77. ... So far as the jurisdiction of the High Court underArticle 226

--or for that matter, the jurisdiction of this Court underArticle 32

--is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power underArticle 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment."" (See:G. Veerappa Pillai v. Raman & Raman Ltd., AIR 1952 SC 192;CCE v. Dunlop India Ltd., (1985) 1 SCC 260;Ramendra Kishore Biswas v. State of Tripura, (1999) 1 SCC 472;Shivgonda Anna Patil v. State of Maharashtra, (1999) 3 SCC 5;C.A. Abraham v. ITO, (1961) 2 SCR 765;Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433; H.B. Gandhi v. Gopi Nath and Sons, 1992 Supp (2) SCC 312;Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1;Tin Plate Co. of India Ltd. v. State of Bihar, (1998) 8 SCC 272;Sheela Devi v. Jaspal Singh, (1999) 1 SCC 209 andPunjab National Bank v. O.C. Krishnan, (2001) 6 SCC 569)

18.In Union of India vs. Guwahati Carbon Ltd., (2012) 11 SCC 651, this Court has reiterated the aforesaid principle and observed:

"8. Before we discuss the correctness of the impugned order, we intend to remind ourselves the observations made by this Court inMunshi Ram v. Municipal Committee, Chheharta, (1979) 3 SCC

83. In the said decision, this Court was pleased to observe that: (SCC p. 88, para 23).

"23. ... when a revenue statute provides for a person aggrieved by an assessment thereunder, a particular remedy to be sought in a particular forum, in a particular way, it must be sought in that forum and in that manner, and all the other forums and modes of seeking [remedy] are excluded.""

19. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titagarh Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law

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for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.

20. In the instant case, the Act provides complete machinery for the assessment/re-assessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In Ram and Shyam Co. vs. State of Haryana, (1985) 3 SCC 267 this Court has noticed that if an appeal is from "Caesar to Caesar's wife" the existence of alternative remedy would be a mirage and an exercise in futility. In the instant case, neither has the assessee-writ petitioner described the available alternate remedy under the Act as ineffectual and non-efficacious while invoking the writ jurisdiction of the High Court nor has the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction in the facts of instant case.

21. In light of the same, we are of the considered opinion that the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the re-assessment orders passed and the consequential demand notices issued thereon."

9. In view of the law laid down by the Apex Court in the case of

Chhabil Dass Agrawal (supra), this Court cannot overlook the

settled law that, ordinarily the writ petition under Article 226 of

the Constitution of India ought not to be entertained, if an

effective remedy is available, except in case if falls within the well

defined exception as observed by the Apex Court in para 15 of the

above judgment.

10. We take the notice of the undisputed fact that, the notices under

Sections 143(2) and 142(1) of the Act were served upon the writ

applicant on 17.08.2007, 10.07.2018 and 27.08.2018 respectively to

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submit the explanation and/or documents to explain the cash

deposit of Rs.71,92,000/- made by the writ applicant in his bank

account. The writ applicant replied to the notices in part. The

revenue authority had served the show-cause notice on 13.11.2018.

The writ applicant sought an adjournment for 15 days for hearing

and accordingly, the matter was fixed for hearing on 04.12.2018

and on that day, in absence of the writ applicant, the matter was

concluded finally and ex parte assessment order came to be

passed. It is required to be noted that, the whole exercise

undertaken by the respondent authority was faceless, in other

words, everything to be submitted online as per the CBDT

guidelines in a time bound manner.

11. In view of the aforesaid facts and considering the conduct of the

writ applicant, we are of the view that, it cannot be said that, the

writ applicant had not been given a fair opportunity of hearing. In

this context, we may refer to and rely on the decision of Sahara

India Real Estate Corporation Ltd. Vs. SEBI [(2013) 1 SCC 1],

wherein, the Apex Court on the subject of principles of fairness

observed as under:

"the rule of natural justice have limitations. The party concerned cannot always enjoy the advantage of procedural prescription under the rules of natural justice, whether fair or not. The rule of natural justice being founded on principles of fairness can be availed only to a party which has itself been fair and therefore, deserves to be treated fairly."

12. In view of the facts and circumstances of the case and considering

Section 264A of the Income Tax Act, which provides statutory

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alternative remedy against the impugned order of assessment, we

decline to entertain this writ application as the writ applicant failed

to make out his case for invoking the discretionary jurisdiction of

this Court under Article 226 of the Constitution of India.

Consequently, we relegate the writ applicant to avail the alternative

remedy by way of filing statutory appeal before the competent

authority. If the appeal is filed, the appellate authority shall not

raise technical issue of limitation and decide the same on merits in

accordance with law. However, it is made clear that, this writ