High Court of Kerala Dismisses Writ Appeal Challenging Income Tax Assessment Order

Case Name:

WA No. 2100 of 2023 - Heartwares Medicals India Private Limited v. Assessment Unit, Income Tax Department

Key Takeaways:

1. The appellant had a statutory remedy of appeal against the income tax assessment order but chose to file a writ petition without exhausting the remedy.
2. The High Court, in exercising the power of judicial review, cannot consider the merits of the assessment order under Article 226 of the Constitution of India.
3. The court found no jurisdictional error or violation of the principles of natural justice in the impugned assessment order.
4. The appellant was directed to file an appeal under Section 246A (of Income Tax Act, 1961) before the Appellate Authority within one week from the date of the judgment.
5. The appellant was allowed to file an application for stay, and the Appellate Authority was directed to consider and dispose of the appeal or stay application within one month from its receipt.
6. During this one-month period, recovery proceedings against the appellant for the amounts confirmed by the assessment order were to be kept in abeyance.

Case Synopsis:

The judgment is in relation to a writ appeal, WA No. 2100 of 2023, filed by Heartwares Medicals India Private Limited against the judgment of WP(C) 2789/2023 of the High Court of Kerala.

The appellant/petitioner in this case is Heartwares Medicals India Private Limited, represented by its Managing Director, Mr. Shihabudeen.K. The appellant’s address is Door No.3/1008-B, IMA Hall Road, Nadakkavu, Calicut, Kerala, India-673011. The appellant is represented by advocates Anil D. Nair, Anjana A., P.K. Biju, and Telma Raju.

The respondent/respondent in this case is the Assessment Unit, Income Tax Department, National Faceless Assessment Centre (NFAC), New Delhi, with PIN - 110001. The respondent is represented by advocate P.R. Ajith Kumar.

The judgment was delivered on Wednesday, the 6th day of December 2023, by the Honorable Dr. Justice A.K. Jayasankaran Nambiar and the Honorable Dr. Justice Kauser Edappagath.

The writ appeal was filed to challenge the judgment of the learned Single Judge in WP(c) No. 2789/2023 dated 22/11/2023. The appellant had filed a writ petition challenging the assessment order completed under Section 143(3) (of Income Tax Act, 1961) read with 144B of the Income Tax Act, 1961. The appellant claimed that the addition made under Section 68 (of Income Tax Act, 1961) of Rs. 6,96,31,355/- and assessed at a higher rate under Section 115BBE (of Income Tax Act, 1961) was against the provisions of the statute and in violation of the principles of natural justice.

After hearing both sides, the learned Single Judge dismissed the writ petition and directed the appellant to pursue the statutory appellate remedy. The appellant then filed this writ appeal challenging the said judgment.

During the hearing of the writ appeal, the appellant’s counsel, Sri. Anil D. Nair, and the respondent’s counsel, Sri. P.R. Ajith Kumar, presented their arguments.

The court observed that the appellant had a statutory remedy of appeal against the assessment order but instead chose to file a writ petition without exhausting the remedy. The court stated that in exercising the power of judicial review under Article 226 of the Constitution of India, it cannot consider the merits of the assessment order. The court found no jurisdictional error or violation of the principles of natural justice in the impugned assessment order.

Therefore, the court upheld the judgment of the learned Single Judge and directed the appellant to file an appeal under Section 246A (of Income Tax Act, 1961) before the Appellate Authority within a period of one week from the date of the judgment. The appellant was also allowed to file an application for stay. The Appellate Authority was directed to consider and dispose of the appeal or stay application within a period of one month from the receipt of the same, after hearing both sides. During this one-month period, recovery proceedings against the appellant for the amounts confirmed by the assessment order were to be kept in abeyance.

In conclusion, the writ appeal, WA No. 2100 of 2023, was disposed of with the above observations by the Honorable Dr. A.K. Jayasankaran Nambiar and the Honorable Dr. Kauser Edappagath.

FAQ:

Q1: What was the writ appeal about?

A1: The writ appeal was filed to challenge an income tax assessment order made against Heartwares Medicals India Private Limited.

Q2: What were the grounds for the appeal?

A2: The appellant claimed that the addition made under Section 68 (of Income Tax Act, 1961) and assessed at a higher rate under Section 115BBE (of Income Tax Act, 1961) was against the provisions of the statute and violated the principles of natural justice.

Q3: What did the High Court decide?

A3: The High Court upheld the judgment of the learned Single Judge, stating that the appellant should have pursued the statutory appellate remedy instead of filing a writ petition.

Q4: What was the direction given to the appellant?

A4: The appellant was directed to file an appeal under Section 246A (of Income Tax Act, 1961) before the Appellate Authority within one week from the date of the judgment.

Q5: Was the appellant allowed to file an application for stay?

A5: Yes, the appellant was allowed to file an application for stay during the appeal process.

This writ appeal has been filed challenging the judgment of the learned Single Judge in WP(c) No.2789/2023 dated 22/11/2023.

2. The appellant is the writ petitioner. The writ petition was filed challenging the assessment order completed u/s 143(3) (of Income Tax Act, 1961) r/w 144B of the Income Tax Act, 1961 (for short, 'the IT Act'), on the premises that the addition made under Section 68 (of Income Tax Act, 1961) of 6,96,31,355/- and assessed at a higher rate u/s 115BBE (of Income Tax Act, 1961) was against the provisions of the statute and in violation of the principles of natural justice. After hearing both sides, the learned Single Judge dismissed the writ petition, relegating the appellant to the statutory appellate remedy. It is challenging the said judgment; the appellant is before us.

3. We have heard Sri.Anil D. Nair, the learned counsel for the appellant and Sri.P.R.Ajith Kumar, the learned standing counsel for the Income Tax Department.

4. The appellant has a statutory remedy of appeal against the assessment order. Instead of exhausting the remedy, the appellant rushed to this court with a writ petition. The appellant was put to notice, and after that, the assessment proceedings were completed. In exercising the power of judicial review under Article 226 of the Constitution of India, this court cannot consider the merits of the assessment order. We do not find that the impugned assessment order is without jurisdiction or that there has been any violation of the principles of natural justice. Hence, the learned Single Judge was absolutely justified in relegating the appellant to the statutory appellate remedy. We find no reason to interfere with the said judgment. The time granted by the learned Single Judge to prefer the appeal is already over. In these circumstances, we permit the appellant to file an appeal under Section 246A (of Income Tax Act, 1961) before the Appellate Authority against the impugned assessment order within a period of one week from today. The appellant is also free to file an application for stay. If such an appeal and stay application are filed, the Appellate Authority is directed to consider and dispose of either the appeal itself or the stay application within a period of one month from the receipt of the same after hearing both sides. Needless to say, during the said period of one month, recovery proceedings against the appellant for recovery of the amounts confirmed by the assessment order shall be kept in abeyance.

The writ appeal stands disposed with the above observation.

Sd/-

DR. A.K.JAYASANKARAN NAMBIAR

JUDGE

Sd/-

DR. KAUSER EDAPPAGATH

JUDGE