Business Daily from THE HINDU group of publications
Saturday, Aug 05, 2006
Writ Petitions Maintainability matters
H. P. Ranina
A writ petition is a very powerful weapon available to a citizen who feels aggrieved by any order of an authority, which takes or proposes to take action not authorised by law. Where any illegal encroachment of rights is attempted by an authority, a citizen can, to protect his rights, invoke the aid of the court under Article 226 of the Constitution. .
Under this, the High Court has the power to issue not only writs of certiorari, prohibition and mandamus, but also other writs, directions and orders, as may be necessary to meet the ends of justice. A writ can be issued in respect of both administrative action and judicial or quasi-judicial action.
Under Section 293 of the Income-Tax Act, 1961, no suit can be brought in any civil court to set aside or modify any proceeding taken, or order made, under this Act. Further, no prosecution, suit or other proceeding shall lie against the government or any officer for anything done in good faith.
An officer cannot be said to act in good faith if he takes a view which is contrary in law, as pointed out by a judgment of the Supreme Court or the High Court under whose jurisdiction he falls.
In such an event, his action would not be saved by the provisions of Section 293. The tax-payer would then be fully justified in seeking remedy by filing a writ petition against the appropriate authority.
Common cause of action
Even a single writ petition is maintainable at the instance of several petitioners if they are jointly interested in the cause of action. A writ, direction or order may be issued by the High Court under Article 226 to
a person or authority amenable to the Court's jurisdiction either by residence, or
location within the State, even if the petitioner is from another State.
This power can be exercised under Article 226(2) of the Constitution notwithstanding that the person or authority is outside the territories over which the High Court has jurisdiction. This is subject to the cause of action arising, wholly or in part, within such territories.
A writ will not ordinarily be issued by a court where the order, not patently erroneous, is made by an authority within his jurisdiction. However, where there is a prima facie defect of jurisdiction , or an abuse of power, a writ of prohibition or other appropriate writ or order will be issued despite a delay in filing the petition, or even where there is existence of an alternative remedy, like the right of appeal.
Generally, a High Court would not exercise its jurisdiction under Article 226 where adequate and efficacious legal remedy is available, which the petitioner has not availed himself of. However, despite the alternative remedy being available, the court may still interfere by a writ if the action of the authority is mala fide or arbitrary or does not comply with the statutory requirements. Further, a writ may lie when the finding is perverse or capricious or is prima facie erroneous.
Maintainability of writ
In case of reopening of assessments under Section 147 of the Act, the Delhi High Court has held in Techspan India P. Ltd. v. I.T.O. (283 I.T.R. 212) that a writ petition would be maintainable to challenge reassessment proceedings though it is open to the assessee to challenge the same before appellate authorities after the order is passed.
This well-settled position has held the field since 1961 and as indicated by the Supreme Court in Whirlpool Corporation v. Registrar of Trade Marks ((1998) 8 SCC 1), though much water has flown under the bridge, there has been no corrosive effect on this position of law.
Therefore, if the Assessing Officer initiates proceedings under Section 147 without jurisdiction or usurps jurisdiction without any legal foundation, writ jurisdiction will be exercised by the court. It has also been held that the proposed reassessment proceedings can be challenged by a writ if the Assessing Officer does not have reasonable grounds to believe that income has escaped assessment, or if the initiation of proceedings is not in good faith or is an exercise in futility.
In Calcutta Discount Co. Ltd. v. I.T.O. (41 I.T.R. 191, 207), the Supreme Court quashed proceedings for reassessment as being without jurisdiction because the assessee had disclosed all material facts at the time of the original assessment.
No case on opinion change
In short, no reassessment proceedings can be initiated on a mere change of opinion. In Jindal Photo Films Ltd. v. C.I.T. (234 I.T.R. 170), the Delhi High Court held that no power was conferred on the Department to reopen the final decision made against the Revenue.
It was further held that if an expenditure or deduction was wrongly allowed while computing the taxable income of the assessee, it could not be brought to tax by reopening an assessment on account of the Assessing Officer subsequently forming an opinion that he had earlier erred in allowing the expenditure or deduction.
In Transworld International Inc. v. C.I.T. (273 I.T.R. 242), the Delhi High Court again held that if, on the same material, a different view is sought to be taken, that would be a case of change of opinion. This would not amount to escapement of income. Therefore, no jurisdiction would be conferred on the Assessing Officer under Section 147 to reopen the assessment. However, the lack of jurisdiction, which is challenged in a writ petition would need to be revealed from the notice itself issued under Section 148.
Jurisdiction not based on merit
Lack of jurisdiction cannot be determined by discussion on merits.
In Jagdish Gupta v. C.I.T. (283 I.T.R. 585), reassessment notices were issued to the assessee in respect of four assessment years. The assessee filed objections to the grounds taken by the Assessing Officer for issue of notices.
After filing the objections, the assessee moved the High Court on a writ petition. The Delhi High Court held that since the assessee had filed objections, he had to await the reassessment order dealing with the objections. After a speaking order was passed, he could move the appellate authorities. Hence, the writ petition was not entertained.
Writ, the last option
Similarly, the Madhya Pradesh High Court dismissed a writ petition filed against the order of the Commissioner under Section 263. In Motilal Jain (H.U.F) v. C.I.T. (283 I.T.R. 160), the Court held that an appeal could be filed to the Tribunal against the Commissioner's order and, therefore, a writ would not lie.
In conclusion, it must be emphasised that under Section 148(2), it is mandatory for the Assessing Officer to record his reasons before issuing any notice for initiation of reassessment proceedings.
Further, the notice must be issued within the time limit prescribed under Section 149. A writ would lie if the issue of notice is time barred.
(The author, a Mumbai-based advocate specialising in tax laws, can be contacted at email@example.com)
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