Setalvad Brothers vs M.K. Meerani, Additional Commissioner of Income Tax

J. M. Panchal , J.—By means of filing this petition under Article 226 of the Constitution, the petitioner has prayed to issue a writ of certiorari or any other appropriate writ, order or direction to quash and set aside the assessment order for the assessment year 1998-99 passed u/s 143(3) of the Income Tax Act, 1961, by holding that the case of the petitioner could not have been picked up for scrutiny in flagrant violation of the guidelines issued by the Central Board of Direct Taxes. The petitioner has further prayed to delete additions made by the Assessing Officer in his assessment order for the assessment year 1998-99 after holding that the said additions were in contravention of the binding decision of the first appellate authority in the petitioner''s own case and against acceptance of the petitioner''s claim in earlier years as well as in two immediate preceding years.

The petitioner had filed its return of income on October 27, 1998, declaring total loss of Rs. 8,85,255. The return was accompanied by the audited profit and loss account, balance-sheet and other supporting statements of accounts. The return was processed u/s 143(1)(a) of the Income Tax Act, 1961 ("the Act" for short), accepting the loss as returned. Thereafter the case was selected for scrutiny and the first statutory notice u/s 143(2) of the Act was issued on September 16,1999, and served upon the petitioner on September 18, 1999. The petitioner after a long time addressed a letter dated June 12, 2000, requesting the Assessing Officer to furnish credible information as well as reasons which might have been recorded in writing for the purpose of picking up his case for scrutiny. From the averments made in the petition, it appears that no reply was given by the Assessing Officer to the letter addressed by the petitioner on June 12, 2000. The petitioner participated in assessment proceedings and ultimately assessment order u/s 143(3) of the Act was passed by the Assessing Officer on November 29, 2000, which is produced at annexure D to the petition. The petitioner has averred in the petition that in view of the guidelines for selection of cases for Income Tax assessment u/s 143(3) of the Act, the petitioner''s case could have been picked up in the joint meeting of the Assessing Officer and his next superior authority on the basis of credible information after recording the reasons in writing and as neither there was credible information available nor reasons were recorded in writing, his case could not have been taken up for scrutiny. What is claimed in the petition is that additions made by the Assessing Officer while passing the assessment order u/s 143(3) of the Act, are contrary to the binding decisions of the first appellate authority rendered in the petitioner''s own case and also against the acceptance of the petitioner''s claim in earlier years as well as in the two immediate preceding years and, therefore, the said order is liable to be set aside. Under the circumstances, the petitioner has filed the present petition and claimed the reliefs to which reference is made earlier.

We have heard learned counsel for the petitioner and considered the documents forming part of the petition. From the record of the case, it is manifest that though notice u/s 143(2) of the Act was issued on September 29, 1999, informing the petitioner that his case was selected for scrutiny, the petitioner had not challenged the same as being violative of the guidelines for selection of cases for Income Tax assessment u/s 143(3) of the Act issued by the Central Board of Direct Taxes. As observed earlier, after a lapse of long time, the petitioner had addressed a letter dated June 12, 2000, requesting the competent authority to furnish credible information on the basis of which its case was taken up for scrutiny and the reasons recorded by the officer in writing in support of the decision to take the petitioner''s case up for scrutiny. It is an admitted fact that the petitioner was not given any reply at all by the Assessing Officer and in spite of this, the petitioner had participated in assessment proceedings u/s 143(3) of the Act, which has now culminated into a final order of assessment. The order passed u/s 143(3) of the Act on November 29, 2000, is the subject-matter of challenge before the appellate authority and, therefore, in our view, relief to set aside the said order cannot be granted by this court in a petition filed under article 226 of the Constitution, more particularly when an alternative statutory remedy is already resorted to. The contention that selection of the petitioner''s case for scrutiny is contrary to the guidelines for selection of cases for Income Tax assessment u/s 143(3) of the Act issued by the Central Board of Direct Taxes, can very well be agitated by the petitioner before the appellate authority. Moreover, the averments made in the petition indicate that for the assessment years 1983-84, 1991-92 and 1992-93, the department''s appeal is pending before the Income Tax Appellate Tribunal in which the dispute regarding deletion of the additions made by the Assessing Officer by way of service charges paid to New Chirag Tractors and commission paid to Tractor Sales Corporation, is at large and the same will have to be decided by the Tribunal after affording an opportunity of being heard to the parties. It is always open to the petitioner to request the Tribunal to take up the appeals filed by the Department for hearing immediately and give priority. Having regard to the facts of the case, we are of the opinion that the petitioner cannot be permitted to challenge the assessment order for the assessment year 1998-99 passed u/s 143(3) of the Act more particularly when an appeal filed by the petitioner is pending before the appellate authority. The net result of the above discussion is that we do not find any substance in the petition and it is liable to be dismissed.

We may clarify that we have not gone into the merits of the assessment order passed by the Assessing Officer u/s 143(3) of the Act because the validity of the same will have to be gone into by the appellate authority on the merits and in accordance with law in the light of the grounds raised in the memorandum of appeal as well as which may be additionally raised by the petitioner.

Subject to the foregoing observations, the petition fails and is summarily dismissed.