Income Tax Act | Alternative Remedy No Bar When Reassessment Notice Lacks Jurisdiction U/S 148/149: Sikkim High Court
The Sikkim High Court stated that when the reassessment notice itself is illegal, issued without jurisdiction, or beyond the time limit prescribed under the Income Tax Act, the Court can directly examine the validity of the notice under Article 226, even though an appeal under the Act is otherwise available.A Single Bench of the Sikkim High Court, comprising Justice Meenakshi Madan Rai,...
The Sikkim High Court stated that when the reassessment notice itself is illegal, issued without jurisdiction, or beyond the time limit prescribed under the Income Tax Act, the Court can directly examine the validity of the notice under Article 226, even though an appeal under the Act is otherwise available.
A Single Bench of the Sikkim High Court, comprising Justice Meenakshi Madan Rai, held that the availability of an alternative statutory remedy does not bar the exercise of writ jurisdiction under Article 226 where the challenge goes to the very jurisdiction of reassessment notice under Sections 148 and 149 of the Income Tax Act, 1961.
Per Section 148 of the Act, the Assessing Officer (AO) holds the authority to issue a notice if there is information indicating that income chargeable to tax has escaped assessment.
In the case in hand, AO issued notice u/S 148A(b) of the IT Act based on the objections raised by the Revenue Audit of Zydus Healthcare Ltd.(assessee) having escaped assessment within the meaning of Section 147 of the Act.
The assessee preferred a writ petition before the High Court, aggrieved by the Order passed u/S 148A(d) and the consequential reassessment proceedings. The assessee argued that the notice reopening the assessment was issued beyond the limitation and without jurisdiction.
The assesse further argued that the Excise Duty refund of ₹22.99 crore, treated by the Assessing Officer as a deposit for the purpose of extending limitation, did not fall within the definition of “asset” under the Explanation to Section 149, and therefore, the reopening was time-barred and void ab initio.
The High Court looked into the principal issue whether the assessee could file an appeal u/S 246A(1)(b) against an order passed under Section 148A(d), and whether the existence of such an appeal automatically prevents a writ petition.
The Court noted that the rule of “alternative remedy” is not absolute and is only a matter of judicial discretion and made it clear that a writ can still be entertained when the assessee alleges that the reassessment notice is without jurisdiction, time-barred, or issued without satisfying mandatory pre-conditions for reassessment.
In view of the above findings, the High Court rejected the preliminary objection raised by the Revenue and held the writ to be maintainable.
Case Number: Writ Petition (Civil) No. 39 Of 2022
Case Titled: Zydus Healthcare Ltd. (Earlier M/S Zydus Healthcare, Sikkim (Firm)] Vs. Assistant Commissioner Of Income Tax, Circle 3(2), Gangtok
Appearance for Petitioner: Mr. Mukesh M. Patil, Senior Advocate With Mr. Anup Kumar Bhattacharjee And Ms. Babita Kumari, Advocates
Appearance for Respondent: Ms. Sangita Pradhan, Deputy Solicitor General Of India