Scope of Article 226 of the Constitution of India
We need not reiterate the settled law on the scope and ambit of Article 226 of the Constitution of India. A Writ in exercise of the power under Article 226 of the Constitution of India is discretionary and extraordinary, that too, when a complete mechanism is provided under the statute, more so, a fiscal one. In a writ of certiorari, the Court is concerned with the decision making process adopted by an authority, rather than the decision itself. Such a writ cannot be issued to cure all the defects even assuming they are available on record. The High Court will have to adopt a dignified reluctance in fiscal matters. A wrong assessment order cannot be presumed. Till the assessment order is passed, the proceedings are under adjudication before assessing officer. The power of the assessing Officer under Section 147 of the Act is not in dispute. A challenge made to an order passed on the objections of the assessee would in effect is a challenge made to a notice under Section 148 of the Act. Such an order passed by the assessing officer is only at the stage of process of determination and not a determination by itself. The process of assessment is not required to be challenged before Court of law, as it is a still born child. Therefore, the petitioners cannot have a legal right as there is no legal injury suffered by them at that stage.
While holding so, we are quite aware that the jurisdiction vested with High Court under Article 226 of the Constitution of India can be exercised in a given case. In other words, the restriction is self-imposed and nothing else. There may be a case, where an assessment is sought to be reopened by an Officer, who is not competent to do so. Similarly, there may be cases, where on the face of it would appear that the reopening is barred by limitation or lacks inherent jurisdiction. To put it differently, in a case, where no adjudication is required on facts, then certainly jurisdiction of this Court under Article 226 of the Constitution of India can very well be invoked. Therefore, to such a limited extent, we are inclined to hold that the jurisdiction of this Court under Article 226 of the Constitution of India can be exercised.
Provisions of the Income-tax Act, 1961:-
We would like to go through the provisions governing the case only for the purpose of deciding the issues framed. Section 148 of the Act deals with the issuance of notice when an income has escaped assessment. Section 148(2) of the Act mandates that the assessing officer has to record his reasons for doing so before issuing any notice under the said Section. Section 148(1) prescribes a procedure, which is required to be done before making the assessment, reassessment or recomputation, as the case may be. Accordingly, the assessing officer is required to ask the assessee to furnish a return of his income as required to be furnished under Section 139.
Under Section 147 of the Act, the assessing officer has the power to assess or re-assess the income. Such a power has to be exercised by the assessing officer alone. The pre-requisite of “has reason to believe” must be in existence for exercising the power under Section 147. The power can be exercised over any income which is chargeable to tax that has escaped assessment. While doing so, the assessing officer is required to follow the provisions contained in Sections 148 to 153, which are more procedural in nature. Under Section 147, the power is available to the assessing officer to assess any other income chargeable to tax, which has escaped assessment comes to his notice subsequently in the course of proceedings as well. Such a power can be exercised notwithstanding the fact that the reasons for such issue have not been included in the reasons recorded under Section 148(2) of the Act.
Proviso to Section 147 deals with limitation for exercise of the power under certain circumstances. While it places fetters on the power of the assessing officer after the expiry of four years from the end of the relevant assessment year in respect of scrutiny assessment only, it does give certain latitude when any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. The third proviso also gives a further power to the assessing officer to assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. If one looks at Explanation 2, it deals with the cases which are deemed to be involving income chargeable to tax escaping assessment. Accordingly, if an income chargeable to tax has been underassessed; or such income has been assessed at too low a rate; or such income has been made the subject of excessive relief under this Act; or excessive loss or depreciation allowance or any other allowance under this Act has been computed or where a person is found to have any asset (including financial interest in any entity) located outside India, having deemed to be the cases of escaped assessment, it would come under the purview of Section 147. Thus, the above said provision would make it clear that the power of the assessing officer is rather wide.
We are concerned in all these cases not on the sufficiency of reasons on the part of the assessing officer for his belief at this stage. The legislative intent is to allow the assessing officer to go through the process of assessment. Even under Section 147 of the Act, a Court of law cannot presume a lack of jurisdiction, when a fact in issue requires an adjudication. It has to be exercised in terms of Sections 139, 143(2) and 143(3). Therefore, considering the scheme of the enactment, particularly, with reference to Sections 147 to 153 of the Act, we are of the view that an order passed on the objections of the assessee over adjudicating facts is not open to challenge by way of filing a writ petition.
Learned counsels appearing for the petitioners submitted that the objections raised have not been considered properly by the assessing officer. It is also submitted that when a speaking order is required to be passed, the same is amenable to challenge. We are not able to countenance the said argument. We have already held that the order passed on a consideration of the objections raised cannot be termed as the order having civil consequences. The assessing officer is not required to consider the objections in detail. On the contrary, he is required to indicate the basis for his re-opening the assessment. When under Section 147 the assessing officer can even assess any other income chargeable to tax, which has escaped assessment, which comes to his notice subsequently during the course of the proceeding, the power being wide, it cannot be challenged on the ground of improper or inadequate consideration of objections. In any case, the conclusion arrived at can also be challenged after the assessment is concluded. There is no bar in law for the assessee to raise his contentions before the assessing officer based upon new materials. The assessee can also raise his contentions including those grounds urged before the assessing officer at the time of passing orders on them. Therefore, we are of the view that the order passed on the objections raised by the assessee would not prevent the assessing officer from exercising his power on merits while passing the assessment order.
33. Learned counsels appearing for the petitioners submitted that the assessing officer is not required to indicate the reasons in the assessment order and he has to pass a separate order on the new objections raised. Therefore, under those circumstances, the issues raised will have to be decided in the writ petitions by this Court alone. The said submission made by the learned counsel for the petitioners cannot be accepted. Passing a separate order giving reasons or incorporating it in the assessment order itself on the further objections of the assessee is procedural in nature. In any case, the same would not give any right to the assessee to approach this Court. However, we would only like to clarify that if any new contentions/objections are raised by the assessee concerned, the assessing officer concerned will have to consider the same and incorporate it either in the assessment order or by passing a separate order.
Submissions have been made by the learned counsel appearing for the petitioners that the proceedings have been initiated by the assessing officer on a change of opinion that the material facts have been disclosed fully and truly and the very same issues have been decided by the higher forums earlier. The learned counsel appearing for the revenue submitted that the said contentions are not correct. We are not inclined to go into the said issues involving conclusion arrived at earlier on the exercise of power under Article 226 of the Constitution of India. As all these issues involve an adjudicatory process, we leave them open to be decided by the authorities concerned.
For the foregoing reasons, both the issues are answered against the assessees and in favour of the revenue and the writ petitions are dismissed, subject to the general observations made above.