I-T - Whether where assessee first accepts jurisdiction of AO and then questions it during reassessment, validity of notice issued cannot be challenged under Article 226 of Constitution as assessee is not remdedy-less - YES: HC
By TIOL News Service
MUMBAI, APRIL 28, 2016: THE issue is - Whether where assessee first accepts jurisdiction of AO and then questions it during reassessment, validity of notice cannot be challenged under Article 226 of Constitution as assessee is not remdedy-less. YES is the answer.
Facts of the case
Notice u/s 148 was issued on 30th March, 2015. Petitioner submitted its return of income on 29th December, 2015 in response to the said notice and sought reasons. On 4th January, AO furnished the reasons and on the same date AO issued notice u/s 142(1) and 143(2). On 8th January, 2016 assessee sought adjournment on the ground that the reasons for reopening of the assessment received from AO have been forwarded to its consultant and as the matter is very old it is collecting information and would produce the information sought for within a week. On 14th January, 2016, petitioner submitted the information subject to the objections to be filed. On 22nd January, 2016 the petitioners filed its objections to the reasons recorded. On 25th January, 2016, AO disposed of the objections. Petition was filed on 2nd March and an interim relief was granted staying the impugned notice dated 30th March, 2015.
Revenue contended that as the petitioner has participated in proceedings before AO in respect of the impugned notice, the Court should not exercise its extraordinary writ jurisdiction in favour of the petitioners.
The counsel of the petitioner submitted that petitioner submitted information to AO because the petitioner was apprehensive that in the absence of giving the required information, the AO may proceed to pass an assessment order to its prejudice. The information was given without prejudice to its objections to the reasons recorded. Thus, there was no participation in proceedings before AO.
After hearing both the parties, the High Court held that,
++ Jurisdiction under Article 226 of the Constitution of India is plenary. Having of jurisdiction does not make it obligatory upon us to exercise our extraordinary writ jurisdiction without reference to the facts before us. Therefore, where the petitioners have participated in the proceedings under the Act before AO and thereafter file a writ petition on the ground that the authority has no jurisdiction, normally the court will not entertain the petition. This is particularly so as an effective alternative remedy is available under the Act, to set aside the orders passed by the authority, which the petitioner claims is without jurisdiction. The provisions u/s 147 and 148 empowers AO to issue a reopening notice, subject to satisfaction of the parameters set out therein. It is open to the assessee to challenge the order of AO under the Act on the ground that the conditions precedent for its exercise is not satisfied. This could be done either by challenging it under Article 226 of the Constitution of India or by challenging it before the authorities under the Act. Therefore, where a party submits itself to the jurisdiction of the Assessing Officer and challenges the issue of his jurisdiction during the course of proceedings of reassessment, we would not normally exercise our jurisdiction. This is also particularly so as the petitioners are not remedyless and can challenge the orders of the Assessing Officer before the appellate authorities under the Act and secure the same ultimate relief.
++ the petitioners have filed detailed information called for by AO u/s 142(1) and 143(2) and thus participated in the assessment proceedings. This having been done, it is not open for the petitioners to now contend that this Court should exercise its extraordinary jurisdiction and prohibit the Authorities from proceeding further with the impugned notice. This is particularly so as the question of jurisdiction has been raised by the petitioners before the Assessing Officer during the assessment proceedings under the Act. The objections to the reasons recorded by the Assessing Officer in support of the impugned notice during the assessment proceedings is to point out to him the reassessment proceedings are bad as the requirement of Sections 147 and 148 of the Act are not satisfied. It would be completely different scenario where the petitioners have not participated in the proceedings before the AO and object to exercise of jurisdiction by the AO at the very threshold and not while participating in the reassessment proceedings. In such cases, it is not a case of a party seeking identical relief by two parallel modes. The orders passed by the AO are subject to effective, efficacious alternative remedy under the Act. Therefore, there is no reason to exercise our extraordinary jurisdiction in the facts of this case.
++ the object of the petitioners seems to be to delay the proceedings so as to leave very little time for the AO to complete the reassessment proceedings. The aforesaid conduct of the petitioners coupled with its submitting to the jurisdiction of AO, disentitles the petitioners to the extraordinary relief under Article 226 of the Constitution of India.
(See 2016-TIOL-837-HC-MUM-IT)
