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Case Law Details

Case Name : Shapoorji Pallonji Solar Holdings Private Limited Vs ITO (Madras High Court)
Appeal Number : W. P. Nos. 9142 & 9145 of 2023
Date of Judgement/Order : 29/03/2023
Related Assessment Year :

Shapoorji Pallonji Solar Holdings Private Limited Vs ITO (Madras High Court)

Writ Petition- Remedy Under Article 226 of Constitution of The India Constitutes An Extraordinary Remedy

Assessee challenged the assessment order mainly on the ground of violation of principles of natural justice  urging the point that the order had travelled beyond the scope of show-cause notice. While the order rejected the assesse’s  entitlement to carry-forward long term capital loss though such a proposal was  not form part of pre-assessment SCN.

The Court, though observed that normally it  is inclined to treat violation of   principles of natural justice, particularly of the nature as set out by the assessee in this petition , seriously, & that  there have been several instances where the Court has intervened in the order of assessment in question, directing de novo assessment, in line with the principles of natural justice,  in the present case, the petitioner has challenged the  assessment order  by way of statutory appeal, inter alia, raising the ground raised in the writ petition.

Assessee  relied upon the  decisions of – Tin Box Company v CIT  [2001] 249 ITR 216 (SC),  K.S.Shivji & Co., v JCIT  1965 SCC Online Mad 87,  Irecti Services Private Limited v ACIT – Bombay High Court,  Kantilal Somehand Shah and Another v Collector of Customs & C.Ex., 1982 (10) E.L.T. 902(Cal.)   and pointed out that in the aforaesaid  cases, the respective petitioners had availed appellate remedy despite which the Courts were inclined to intervene for violation of principles of natural justice.

The Court noted that the assessee  has approached the statutory authority with the full belief that this is the appropriate avenue for remedy and that  the remedy under Article 226 of the Constitution  constitutes an extraordinary remedy and  in this case, it has been resorted to only as an afterthought. In such circumstances, the Court held that it is not inclined to consider the identical prayer now raised by way of writ petition.

The Court observed that Division Bench of Madras High  Court in the case K.S.Shivji (supra) has reiterated the position that when a statutory remedy is available to an assessee, he must first resort to it & in a case where appeal remedy was availed, Courts are normally reluctant to interfere with an order of assessment. The Court has, also observed that there might be cases where the aforesaid rule may not outweigh other considerations which may compel interference. In that case they were of the view that such interference was warranted.

In the present case, the revenue impact of the disallowance in the order of assessment is nil, though the assessee is aggrieved by the fact that the entitlement to carry forward losses has been rejected. That apart, the power of an appellate authority under the Act is co-terminus with that of an AO & hence any lacunae in procedure can well be corrected even at that stage.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner has challenged order of assessment dated 28.12.2022 passed in terms of the provisions of the Income-Tax Act, 1961 (in short, ‘Act’). Various grounds have been raised challenging the impugned order, primary of which is the violation of principles of natural justice.

2. Mr. Vijay Narayan, learned Senior Advocate appearing for Mr.Rahul Unnikrishnan, learned counsel on record, would urge the point that the order of assessment had travelled beyond the scope of show-cause notice. While the order rejects the petitioner’s entitlement to carry-forward long term capital loss, such a proposal does not form part of pre-assessment show-cause notices.

3. Normally this Court is inclined to treat violation of principles of natural justice, particularly of the nature as set out by the petitioner hereinbefore, seriously, and there have been several instances where this Court has intervened in the order of assessment in question, directing de novo assessment, in line with the principles of natural justice.

4. However, in the present case, the petitioner has challenged the impugned order of assessment by way of statutory appeal in January, 2023. Inter alia the petitioner has specifically raised the ground now raised and argued in this writ petition. The petitioner has approached the statutory authority with the full belief that this is the appropriate avenue for remedy. Remedy under Article 226 of the Constitution of the India constitutes an extraordinary remedy but in this case, it has been resorted to only as an afterthought. In such circumstances, I am not inclined to consider the identical prayer now raised by way of writ petition.

5. The petitioner relies upon the judgment of the Hon’ble Supreme Court in the case of Tin Box Company v Commissioner of Income-Tax [2001] 249 ITR 216 (SC), decision of this Court in the case of S.Shivji & Co., v Joint Commercial Tax Officer, Esplanade Division, Madras 1965 SCC Online Mad 87, decision of Bombay High Court in the case of Irecti Services Private Limited v The Assistant Commissioner of Income Tax, International Tax, Circle 2(1)(2) [W.P.No.1439 of 2021 dated 25.10.2021] as well as decision of Calcutta High Court in the case of Kantilal Somehand Shah and Another v Collector of Customs & C.Ex., West Bengal and another 1982 (10) E.L.T. 902(Cal.).

6. They point out that in the cases cited above, the respective petitioners had availed appellate remedy despite which the Courts were inclined to intervene for violation of principles of natural justice.

7. The Division Bench of this Court in the case S.Shivji (supra) has, at paragraph 3, has reiterated the position that when a statutory remedy is available to an assessee, he must first resort to it and in a case where appeal remedy was availed, Courts are normally reluctant to interfere with an order of assessment. The Court has, also observed that there might be cases where the aforesaid rule may not outweigh other considerations which may compel interference. In that case they were of the view that such interference was warranted.

8. In the present case, the revenue impact of the disallowance in the order of assessment is nil, though the assessee is aggrieved by the fact that the entitlement to carry forward losses has been rejected. That apart, the power of an appellate authority under the Act is co-terminus with that of an Assessing Officer and hence any lacunae in procedure can well be corrected even at that stage. There are thus, in my considered view, no extraordinary circumstances in the present case to persuade me to intervene in the impugned order and I thus leave it to the petitioner to pursue the statutory appeal that it has filed.

9. These writ petitions are dismissed. No costs. Connected miscellaneous petitions are closed.

Author Bio

CA Vijayakumar Shetty qualified in 1994 and in practice since then. Founding partner of Shetty & Co. He is a graduadte from St Aloysius College, Mangalore . View Full Profile

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