IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 6704 OF 2013 (@ SPECIAL LEAVE PETITION (CIVIL) NO.23898 OF 2011) COMMISSIONER OF INCOME TAX & ORS. ... APPELLANTS VERSUS CHHABIL DASS AGARWAL ... RESPONDENT ORDER 1. Application for impleadment is allowed. 2. Delay condoned. 3. Leave granted. 4. This appeal by special leave is directed against judgment and order passed by High Court of Sikkim at Gangtok in Writ Petition(C) No.44 of 2009, dated 05.10.2010. By impugned judgment and order, High Court has quashed order of assessment passed by Assistant CIT, Circle-I, Siliguri under Section 148 of Income Tax Act, 1961 (for short 'the Act') dated 11.12.2009, whereby assessing authority has confirmed notices issued under Section 148 of Act for Assessment Years 1995-1996 and 1996-1997, respectively. 5. facts in brief are: assessee is Sikkim based non- Sikkimese who had filed his first return of income for Assessment Year 1997-1998. Upon assessment, it was discovered that he had net profit of Rs.5,78,832/- during Assessment Year 1996-1997 Page 1 2 relevant to Assessment Year 1995-1996. Since no return was filed by assessee for Assessment Year 1996-1997 despite capitalizing aforesaid profit, proceedings under Section 147 of Act were initiated against him for said Assessment Year. Accordingly, on 26.05.1998 notice was issued under Section 148 of Act. Further, Revenue has found out that as on 31.03.1996 assessee had brought forward closing capital of Rs.1,73,90,397/- including aforesaid net profit during Assessment Year 1996- 1997. same remained unexplained as return of income for Assessment Year 1995-1996 was also not furnished by assessee. Hence, another notice under Section 148 was issued to assessee for Assessment Year 1995-1996, dated 30.03.2000. It has come on record that assessee did not comply with aforesaid notices issued under Section 148 of Act and thus, letter dated 19.01.2001 came to be issued to assessee as reminder to file his return of income for assessment years clearly mentioning that failure to do so would lead to ex-parte assessment under Section 144 of Act. Thereafter, upon filing of written submissions by assessee, notice under Section 142(1) of Act dated 25.06.2001 was issued for Assessment Year 1995-1996 alongwith final show cause fixing compliance for hearing dated 09.07.2001. assessee sought for adjournment which was not granted and assessments were completed ex-parte under Section 144 of Act raising tax demand of Rs.2,45,87,625/- and Rs.6,32,972/- for Assessment Years 1995-96 and 1996-97, respectively by orders dated 09.07.2001 and 28.03.2001, respectively. Further, Page 2 3 penalty proceedings under Section 271(1)(c) of Act were also initiated for both Assessment Years. 6. assessee approached Writ Court in Writ Petition(c) Nos. 31 and 38 of 2001 challenging aforesaid notices issued under Section 148, dated 26.05.1998 and 30.03.2000 and subsequent assessment orders, dated 09.07.2001 and 28.03.2001. issue raised before Writ Court was whether income of non-Sikkimese residing in Sikkim is taxable under Act. said question was referred to Committee for its consideration and Writ Petition was disposed of as withdrawn with direction to maintain status quo in matter till declaration of final decision by Committee, by order dated 21.07.2005. In meanwhile, Section 10 (26AAA) of Act was inserted by Section 4 of Finance Act, 2008 whereby certain income accruing or arising to Sikkimese individual was exempted from tax. Thereafter, Central Board of Direct Taxes (for short Board ) issued Instruction No. 8 dated 29.07.2008 in respect of tax liability of income accruing or arising to non-Sikkimese individual residing in Sikkim. In light of aforesaid amendment and instruction, Writ Court by order dated 15.07.2009 reiterated earlier order dated 21.07.2005 and granted liberty to parties to approach Writ Court or any other competent authority/forum for redressal of their grievances arising out of matter. 7. It is in aforesaid backdrop that assessing authority has passed assessment order against assessee confirming Page 3 4 earlier notices issued for Assessment Years 1995-1996 and 1996-1997 respectively and held that assessee is liable to pay income tax as demanded by demand notice dated 11.12.2009. 8. Aggrieved by aforesaid, assessee instead of exhausting statutory remedy available under Act, i.e., statutory appeal before Statutory Appellate Authority (Commissioner of Income Tax (Appeals)) has approached High Court under Article 226 of Constitution of India. Suffice it is to notice here that Writ Court has delved into merits of case and thought it fit to quash order of assessing authority dated 11.12.2009, by judgment and order dated 05.10.2010. 9. Being aggrieved by aforesaid judgment and order of Writ Court, Revenue is before us in this appeal questioning correctness or otherwise of impugned judgment and order. 10. We have heard Shri Gaurab Banerjee, learned Additional Solicitor General appearing for appellants and Shri Ganesh, learned Senior Counsel for respondent. 11. Shri Gaurab Banerjee would submit that Writ Court was not justified in entertaining Writ Petition since assessee has invoked its jurisdiction under Article 226 of Constitution of India despite availability of equally efficacious alternate remedy under Act and therefore, Writ Court ought not to have interfered with notices issued under Section 148 of Act, re-assessment order passed by assessing authority and Page 4 5 consequential demand notices issued thereon. 12. Au contraire, Shri Ganesh would support impugned judgment and order of High Court. 13. We have considered rival contentions made by learned counsel for parties to lis. 14. In instant case, only question which arises for our consideration and decision is whether High Court was justified in interfering with order passed by assessing authority under Section 148 of Act in exercise of its jurisdiction under Article 226 when equally efficacious alternate remedy was available to assessee under Act. 15. Before discussing fact proposition, we would notice principle of law as laid down by this Court. It is settled law that non-entertainment of petitions under writ jurisdiction by High Court when efficacious alternative remedy is available is rule of self-imposed limitation. It is essentially rule of policy, convenience and discretion rather than rule of law. Undoubtedly, it is within discretion of High Court to grant relief under Article 226 despite existence of alternative remedy. However, High Court must not interfere if there is adequate efficacious alternative remedy available to petitioner and he has approached High Court without availing same unless he has made out exceptional case warranting such interference or there exist sufficient grounds to invoke extraordinary Page 5 6 jurisdiction under Article 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. 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 226 confers very wide powers in matter of issuing writs on High Court, remedy of writ absolutely discretionary in character. If High Court is satisfied that aggrieved party can have adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. Court, in extraordinary circumstances, may exercise power if it comes to conclusion that there has been 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). Page 6 7 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 statute, party must exhaust statutory remedies before resorting to writ jurisdiction for relief and observed as follows: 12. In Thansingh Nathmal v. Supdt. of Taxes, AIR 1964 SC 1419 this Court adverted to rule of self-imposed restraint that writ petition will not be entertained if effective remedy is available to aggrieved person and observed: (AIR p. 1423, para 7). 7. High Court does not therefore act as court of appeal against decision of court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon alternative remedy provided by statute for obtaining relief. Where it is open to aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in manner provided by statute, High Court normally will not permit by entertaining petition under Article 226 of Constitution machinery created under statute to be bypassed, and will leave party applying to it to seek resort to 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 right or liability is created by statute which gives special remedy for enforcing it, 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 following passage: (ER p. 495) There are three classes of cases in which liability may be established founded upon statute. But there is third class viz. where liability not existing at common law is created by statute which at same time gives special and particular remedy for enforcing it. remedy provided by Page 7 8 statute must be followed, and it is not competent to party to pursue course applicable to cases of second class. form given by statute must be adopted and adhered to. rule laid down in this passage was approved by House of Lords in Neville v. London Express Newspapers Ltd., 1919 AC 368 and has been reaffirmed by 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. High Court was therefore justified in dismissing writ petitions in limine. 14. In Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 B.P. Jeevan Reddy, J. (speaking for majority of larger Bench) observed: (SCC p. 607, para 77) 77. So far as jurisdiction of High Court under Article 226 or for that matter, jurisdiction of this Court under Article 32 is concerned, it is obvious that provisions of Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising power under Article 226/Article 32, Court would certainly take note of legislative intent manifested in provisions of Act and would exercise their jurisdiction consistent with provisions of 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 and Punjab 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 aforesaid principle and observed: 8. Before we discuss correctness of impugned order, we intend to remind ourselves observations made by this Court in Munshi Ram v. Municipal Committee, Chheharta, (1979) 3 SCC 83. In said decision, this Court Page 8 9 was pleased to observe that: (SCC p. 88, para 23). 23. when revenue statute provides for person aggrieved by assessment thereunder, particular remedy to be sought in particular forum, in particular way, it must be sought in that forum and in that manner, and all other forums and modes of seeking [remedy] are excluded. 19. Thus, while it can be said that this Court has recognized some exceptions to rule of alternative remedy, i.e., where statutory authority has not acted in accordance with provisions of enactment in question, or in defiance of fundamental principles of judicial procedure, or has resorted to invoke provisions which are repealed, or when order has been passed in total violation of principles of natural justice, proposition laid down in Thansingh Nathmal case, Titagarh Paper Mills case and other similar judgments that High Court will not entertain petition under Article 226 of Constitution if effective alternative remedy is available to aggrieved person or statute under which action complained of has been taken itself contains mechanism for redressal of grievance still holds field. Therefore, when statutory forum is created by law for redressal of grievances, writ petition should not be entertained ignoring statutory dispensation. 20. In instant case, Act provides complete machinery for assessment/re-assessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by Revenue Authorities, and assessee could not be permitted to abandon that machinery and to invoke jurisdiction of High Page 9 10 Court under Article 226 of Constitution when he had adequate remedy open to him by appeal to Commissioner of Income Tax (Appeals). remedy under statute, however, must be effective and not 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 appeal is from Caesar to Caesar s wife existence of alternative remedy would be mirage and exercise in futility. In instant case, neither has assessee-writ petitioner described available alternate remedy under Act as ineffectual and non-efficacious while invoking writ jurisdiction of High Court nor has High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction in facts of instant case. 21. In light of same, we are of considered opinion that Writ Court ought not to have entertained Writ Petition filed by assessee, wherein he has only questioned correctness or otherwise of notices issued under Section 148 of Act, re-assessment orders passed and consequential demand notices issued thereon. 22. In view of above, we allow this appeal and set aside judgment and order passed by High Court in Writ Petition (Civil) No.44 of 2009. 23. We grant liberty to respondent, if he so desires, to file appropriate petition/ appeal against orders of re-assessment passed under Section 148 of Act within four weeks' time from Page 10 11 today. If petition is filed before appellate authority within time granted by this Court, appellate authority shall consider petition only on merits without any reference to period of limitation. 24. However, it is clarified that appellate authority shall not be influenced by any observation made by High Court while disposing of Writ Petition (Civil) No.44 of 2009, in its judgment and order dated 05.10.2010. 25. All contentions of parties are left open. Ordered accordingly. ......J. ( H. L. DATTU ) .....J. ( M. Y. EQBAL ) NEW DELHI; AUGUST 08, 2013. Page 11 Commissioner of Income-tax & Ors. v. Chhabil Dass Agarwal