Full Judgment Text
2021:BHC-OS:4332-DB
1 418-WP 1031-2020 @ Group-Judgment.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1031 OF 2020
WITH
WRIT PETITION NO.1280 OF 2020
WITH
WRIT PETITION NO.1292 OF 2020
WITH
WRIT PETITION NO.1321 OF 2020
WITH
WRIT PETITION NO.1362 OF 2020
WITH
WRIT PETITION NO.218 OF 2021
WITH
WRIT PETITION NO.222 OF 2021
Commissioner of Income Tax-TDS-1 ]
Smt. K. G. Mittal Ayurved Hospital, ]
Charni Road, Mumbai – 400 002. ] … Petitioner
Versus
Emsons Exim Pvt. Ltd. ]
001, Turf Estate, Shakti Mills Lane, ]
Near Famour Studio, Off. D.E.Moses Road, ]
Mumbai – 400 011. ]
PAN – AABCE1643B ]
TAN – MUME05625E ] … Respondent
Mr. Suresh Kumar for Petitioner.
None for Respondent.
CORAM :- K. R. SHRIRAM &
AMIT B. BORKAR , JJ.
DATE :- 13 OCTOBER , 20 21
URS 1 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
2 418-WP 1031-2020 @ Group-Judgment.odt
ORAL JUDGMENT : (PER : AMIT B. BORKAR. J.) :-
1. All these petitions were heard together and are being
disposed of by a common judgment as common question of
maintainability of all petitions is involved.
2. The Revenue is challenging the Order dated 28/09/2019
passed by the Income Tax Appellate Tribunal (hereinafter referred to as
‘ITAT’) under Section 234E of Income Tax Act, 1961 (hereinafter referred
to as ‘the Act’). It is not in dispute that an appeal against an order passed
by ITAT under Section 234E of the said Act is maintainable under Section
260 A of the act. In spite of the availability of the statutory remedy of
appeal, the Revenue has filed the present petitions invoking Article 226 of
the Constitution of India contending that the tax effect involved is below
monetary limits as prescribed in Central Board of Direct Taxes
th
(hereinafter referred to as ‘CBDT’) Circular No.17 of 2019 dated 8
August 2019 and the issue involved in the interpretation of Section has a
cascading effect.
3. Since we are deciding the petitions on a preliminary point of
maintainability, it is not necessary to burden the Judgment with the facts
of each case.
URS 2 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
3 418-WP 1031-2020 @ Group-Judgment.odt
4. Before considering the issue about the maintainability of writ
th
petitions, it is necessary to refer to the Circulars of CBDT dated 8 August
th th
2019, 11 July 2018 and 20 August 2018. The CBDT vide Circular No.3
th
of 2018 dated 11 July 2018, prescribed revision of monetary limits for
filing of appeals by Department before ITAT, High Courts and SLPs /
appeals before the Supreme Court as a measure for reducing litigation.
th
The circular dated 8 August 2019 provided that no appeal shall be filed
in the High Court in respect of an assessment year or years in which the
tax effect is less than the monetary limit of Rupees One Crore . It is not in
dispute that the tax effect involved in the writ petition is below the
monetary limit of Rupees One crore as prescribed in CBDT Circular No.17
of 2019. Paragraph 10 of Circular No.3 of 2018 as amended by Circular
th
dated 20 August 2018 reads as under :
“10. Adverse judgments relating to the following issues
should be contested on merits notwithstanding that the tax
effect entailed is less than the monetary limits specified in
para 3 or there is no tax effect;
(a) Where the Constitutional validity of the provisions of
an Act or Rule is under challenge, or
(b) Where Boards’ order, Notification, Instruction or
Circular has been held to be illegal or ultra vires, or
(c) Where Revenue Audit objection in the case has been
accepted by the Department, or
(d) Where the addition relates to undisclosed foreign
income / undisclosed foreign assets (including financial
assets) / undisclosed foreign bank account.
(e) Where addition is based on information received from
external sources in the nature of law enforcement agencies
URS 3 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
4 418-WP 1031-2020 @ Group-Judgment.odt
such as CBI / ED / DRI / SFIO / Directorate General of GST
Intelligence (DGGI).
(f) Cases where prosecution has been filed by the
Department and is pending in the Court."
5. It is undisputed that the subject-matter of present writ
petitions does not fall within any criterion prescribed in clause 10 of
th
Circular No.3 of 2018 as amended by Circular dated 20 August 2018.
6. At this stage, it would be relevant to consider the Judgment
of the Supreme Court in the case of CIT, Central-III Vs. Surya Herbal Ltd.
[ (2011) 15 SCC 482 ] wherein the Supreme Court has observed as under :
"1. Delay condoned.
2. Liberty is given to the Department to move the High
Court pointing out that the Circular dated 9th February,
2011, should not be applied ipso facto, particularly, when
the matter has a cascading effect. There are cases under
the Income Tax Act, 1961, in which a common principle
may be involved in subsequent group of matters or large
number of matters. In our view, in such cases if attention
of the High Court is drawn, the High Court will not apply
the Circular ipso facto. For that purpose, liberty is granted
to the Department to move the High Court in two weeks."
The said Judgment is subsequently followed by the Supreme Court in the
case of Director of Income Tax, Circle 26(1) Vs. S.R.M.B. Dairy Farming
(P) Ltd. [(2018) 13 Supreme Court Cases 239] wherein the Supreme
Court has held as under :
URS 4 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
5 418-WP 1031-2020 @ Group-Judgment.odt
"23. We are of the view that the matter needs to be put to
rest and a clarity be obtained in view of the impact of this
issue on pending cases before the High Courts as well as
the cases which have been disputed of by various High
Courts by applying the Circular of 2011 to pending
litigations. In our view the matter has been squarely put to
rest taking further care of the interest of the Revenue by
the order passed by the three-Judge Bench of this Court in
Surya Herbal Ltd. case, which had put two caveats even to
the retrospective application of the Circular. The
subsequent orders have been passed by the two-Judge
Bench without those orders being brought to the notice of
the Court, a duty which was cast on the Department to
have done so to avoid the ambiguity which has arisen.
Thus, the said view of the three-Judge Bench would hold
water and the Circular would apply even to pending
matters but subject to the two caveats provided in Surya
Herbal Ltd. case."
7. At this stage, it is necessary to quote para 7 of Circular No.3
of 2018 which reads as under :
"7. In a case where appeal before a Tribunal or a Court is
not filed only on account of the tax effect being less than the
monetary limit specified above, the Pr. Commissioner of
Income-tax / Commissioner of Income Tax shall specifically
record that "even though the decision is not acceptable, appeal
is not being filed only on the consideration that the tax effect is
less than the monetary limit specified in this Circular". Further,
in such cases, there will be no presumption that the Income-tax
Department has acquiesced in the decision on the disputed
issues. The Income-tax Department shall not be precluded from
filing an appeal against the disputed issues in the case of the
same assessee for any other assessment year, or in the case of
any other assessee for the same or any other assessment year, if
the tax effect exceeds the specified monetary limits."
URS 5 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
6 418-WP 1031-2020 @ Group-Judgment.odt
8. Reading of para 7 makes it clear that merely because the
Department has not challenged a decision on the ground of tax effect
being less than the monetary limit specified, there will be no presumption
that the Income Tax Department has reached the said decision on the
disputed issue.
9. If the revenue was of the opinion that the issue involved has
a cascading effect, it was necessary for the revenue to have filed an appeal
th
under Section 260A of the Act demonstrating that the Circular dated 8
th
August 2019 as amended by Circular dated 20 August 2018 will not
ipso-facto apply as the issue involved is having a cascading effect.
10. The power conferred by Article 226 of the Constitution of
India is designated to effectuate the law, to enforce the rule of law and to
ensure that the authorities and organs of the State act in accordance with
law. The said power cannot be invoked for directing the statutory
authority to act contrary to law.
11. The powers conferred under Section 268A(4) of the Income
Tax Act to issue directions appears to be conferred with an intention to
reduce the burden on the Courts and Tribunal in respect of matters where
tax effect is less than the limits prescribed. The Income Tax authorities
URS 6 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
7 418-WP 1031-2020 @ Group-Judgment.odt
who are creatures of the Income Tax Act, are bound by the directions by
the CBDT in exercise of power under Section 268A(4). Even before
issuing such instructions, the CBDT has been issuing such instructions
where the monetary limit had been fixed. The only exceptions are the
cases where there is cascading effect as laid down by the Apex Court in
the case of Surya Herbal Ltd. (supra).
12. The right to challenge the order passed by the Tribunal by
way of statutory appeal has been circumscribed by the involvement of
substantial questions of law to be decided by the High Court. While a
High Court would normally not exercise its writ jurisdiction under Article
226 of the Constitution if an effective and efficacious alternate remedy is
available, the existence of an alternate remedy does not by itself bar the
High Court from exercising its jurisdiction in certain contingencies. This
principle has been crystallized by the Supreme Court in Whirpool
Corporation v. Registrar of Trademarks, Mumbai reported in 1998 (1)
SCC 1. Recently, in Radha Krishan Industries v. State of Himachal Pradesh
reported in 2021 SCC OnLine SC 334 Supreme Court has summarized
the principles governing the exercise of writ jurisdiction by the High Court
in the presence of an alternate remedy. The Supreme Court has observed:
URS 7 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
8 418-WP 1031-2020 @ Group-Judgment.odt
“28. The principles of law which emerge are that:
(i) The power under Article 226 of the Constitution to
issue writs can be exercised not only for the enforcement
of fundamental rights, but for any other purpose as well;
ii) The High Court has the discretion not to entertain a writ
petition. One of the restrictions placed on the power of the
High Court is where an effective alternate remedy is
available to the aggrieved person;
(iii) Exceptions to the rule of alternate remedy arise where
(a) the writ petition has been filed for the enforcement of a
fundamental right protected by Part III of the Constitution;
(b) there has been a violation of the principles of natural
justice; (c)the order or proceedings are wholly without
jurisdiction; or (d) the vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest the High
Court of its powers under Article 226 of the Constitution in
an appropriate case though ordinarily, a writ petition
should not be entertained when an efficacious alternate
remedy is provided by law;
(v) When a right is created by a statute, which itself
prescribes the remedy or procedure for enforcing the right
or liability, resort must be had to that particular statutory
remedy before invoking the discretionary remedy under
Article 226 of the Constitution. This rule of exhaustion of
statutory remedies is a rule of policy, convenience and
discretion; and
(vi) In cases where there are disputed questions of fact, the
High Court may decide to decline jurisdiction in a writ
petition. However, if the High Court is objectively of the
view that the nature of the controversy requires the
exercise of its writ jurisdiction, such a view would not
readily be interfered with.”
13. In the facts of the case, none of the exceptions as laid down
by the Supreme Court in the case of Radha Krishan Industries (Supra) has
been fulfilled.
URS 8 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::
9 418-WP 1031-2020 @ Group-Judgment.odt
14. On an overall consideration of the issue involved, particularly
in view of the case of the Petitioner that the issue involved is of
interpretation of Section which has a cascading effect, it was open for the
Petitioner to avail statutory remedy under Section 260A of the Act.
Having failed to avail the statutory remedy and the case of the Petitioner
does not fall into the exceptions laid down by the Supreme Court in the
case of Radha Krishan Industries (Supra), we decline to exercise
extraordinary jurisdiction under Article 226 of the Constitution of India.
The Petitions are therefore dismissed.
(AMIT B. BORKAR, J.) (K. R. SHRIRAM, J.)
URS 9 of 9
::: Uploaded on - 29/10/2021 ::: Downloaded on - 02/06/2024 01:39:12 :::