Ashoka Woollen Mills vs Inspecting Assistant Commissioner of Income Tax

D.K. Jain, J.—By this writ petition under article 226 of the Constitution of India, the petitioner (hereinafter referred to as "the assessee"), seeks a writ, order or direction in the nature of certiorari quashing the notice (annexure "E") issued u/s 154/155 of the Income Tax Act, 1961 (for short, "the Act"), requiring the assessed to show cause why the penalty order made u/s 271(1)(c) of the Act, the respect of the assessment year 1964-65 be not rectified. Since the rectification order was to result in enhancing the amount of penalty leviable, the notice was presumably issued under sub-section (3) of section 154 of the Act. It is pleaded in the petition that the said notice is without jurisdiction and ultra virus because : (i) it is vague inasmuch as it does not indicate the alleged mistake which needs rectification; (ii) the order sought to be rectified having merged in the order of the Income Tax Appellate Tribunal, the officer concerned had no jurisdiction to rectify the same; and (iii) there is no mistake apparent from the order.

After issue of rule, a counter-affidavit has been filed on behalf of the respondents and the writ petition is resisted on the ground of its non-maintainability and on the merits. It is stated that pursuant to the issue of the said notice the order sought to be rectified has since been rectified and the penalty livable has been rectified to Rs. 1,17,073 and thus the writ petition has become infructuous. It is further stated that after the making of the said order u/s 154 of the Act, an efficacious alternative remedy by way of an appeal to the Income Tax Appellate Tribunal is available to the assessed and, Therefore, this petition should not be entertained. In so far as the merits of the impugned action are concerned, it is stated that there was an arithmetical mistake in the penalty order inasmuch as the amount of tax sought to be evaded at 100 per cent. should have been taken at Rs. 1,17,073 instead of Rs. 55,545 adopted in the penalty order and such a mistake could be rectified u/s 154 of the Act.

The matter was called out for hearing yesterday, but no one was present on behalf of the assessee. Today again no one is present on behalf of the assessee. I have heard Mr. B. Gupta, senior standing counsel for the Income Tax Department.

It appears from the record that the assessed had filed two miscellaneous applications seeking stay of operation of the impugned order but both these applications were dismissed as not pressed with the result that there was no restriction on the respondent from proceeding further in the matter after issuing the aforesaid show-cause notice. In fact, it is clear from the second Miscellaneous Application (C.M. No. 426 of 1977) that the Inspecting Assistant Commissioner continued with the proceeding initiated by him and after granting an opportunity to the assessed to being heard, proceeded to rectify the penalty order and being aggrieved, the assessed did file an appeal to the Income Tax Appellate Tribunal, but without success. It is also pointed out by Mr. Gupta that against the said order of the Tribunal, the assessed had filed an application u/s 256(1) of the Act for a reference, which was allowed and the said reference has since been registered as Income Tax Reference No. 29 of 1978.

Be that as it may, the fact remains that pursuant to the issue of show-cause notice rectification was carried out by the respondent and the assessed availed of the appeal provisions under the Act by filing an appeal to the Appellate Tribunal against the impugned action of the respondent. That being so, the assessed cannot be permitted to take recourse to two parallel proceedings for the same cause of action. As noted above, the action of the respondent u/s 154 of the Act, impugned in this petition, is now the subject-matter of a regular reference before this court and, Therefore, the assessed cannot be permitted to continue to agitate the same issue in the writ petition.

In view of the aforesaid subsequent events, no relief can be granted to the assessed in the present writ petition. The same is accordingly dismissed. Rule is discharged.

Since the assessed is not represented, there will be no order as to costs.