[ITO v. M. Pirai Choodi, (2011) 334 ITR 262 (SC)] The assessee had preferred a writ appeal against the order of the learned Single Judge dated 21st February, 2007, made in writ petition No. 3247 of 2007, where the learned Judge refused to quash the assessment order dated 29th December, 2006, for the A.Y. 2004-05 made u/s.143(3) of the Incometax Act, on the ground that the assessee had got an alternative remedy to prefer a statutory appeal before the Appellate Tribunal.
The Division Bench of the High Court observed that it is a general rule that it may not be proper to entertain the writ petition when effective alternative remedy by way of statutory appeal is available. But, the above general rule is subject to exceptions as laid by the Apex Court in Harbanslal Sahnia v. Indian Oil Corporation Ltd., (2003) 2 SCC 107, where the Apex Court has held that in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: viz., (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of the principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged.
According to the High Court, the present case rightly attracted the second exception, viz., the failure of the principles of natural justice in the sense that the respondent-Department refused to admit the agricultural income of Rs.11,32,232.42 for the A.Y. 2004-05 of the assessee by placing reliance on the statement of the Village Administrative Officer, overlooking the materials furnished by the assessee to substantiate his agricultural activity, viz., (1) Chitta Adangal for the relevant periods, (2) Proof for purchase of agricultural inputs and sale of agricultural products, (3) Yearwise chart showing the expenses incurred for the agricultural activities, (4) Application of capital in the crops/herb, and (5) Books of account for business activities for the relevant period.
According to the assessee, in spite of the documentary evidence furnished to substantiate the agricultural income to the tune of Rs.11,32,232.42 for the A.Y. 2004-05, the respondent/assessing authority had chosen to overlook the same and refused to admit the said agricultural income for the A.Y. 2004-05, merely based on a statement alleged to have been obtained from the Village Administrative Officer behind the back of the assessee.
Admittedly, the assessee was not present when the statement of the Village Administrative Officer was obtained by the assessing authority. The High Court found some force in the contention of the assessee that such a statement obtained from the Village Administrative Officer behind the back of the assessee, depriving him of an opportunity to cross-examine the Village Administrative Officer, would amount to violation of the principles of natural justice and, therefore, would vitiate the assessment order.
Hence, the High Court was satisfied that there was a glaring violation of the principles of natural justice apparent on the face of the records, which fact was not properly appreciated by the learned Single Judge while dismissing the writ petition on the ground of alternative remedy. Accordingly, the High Court allowed the writ appeal and the order of the learned Single Judge was set aside. Consequently, the impugned assessment order was quashed.
On an appeal, the Supreme Court observed that in this case, the High Court had set aside the order of assessment on the ground that no opportunity to cross-examine was granted, as sought by the assessee. The Supreme Court was of the view that the High Court should not have set aside the entire assessment order. At the highest, the High Court should have directed the Assessing Officer to grant as opportunity to the assessee to cross-examine the concerned witness. The Supreme Court was of the view that even on this particular aspect, the assessee could have gone in appeal to the Commissioner of Income-tax (Appeals). The assessee had failed to avail of the statutory remedy. In the circumstances, the Supreme Court was of the view that the High Court should not have quashed the assessment proceedings vide the impugned order.
Consequently, the Supreme Court set aside the impugned order.
Liberty was however granted to the assessee to move the Commissioner of Income-tax (Appeals).
