KARAM CHAND THAPAR & BROS. (COAL SALES) LTD VS DEPUTY COMMISSIONER OF INCOME-TAX AND OTHERS
1999 P T D 2510
[227 I T R 793]
[Calcutta High Court (India)]
Before V. K. Gupta, J
KARAM CHAND THAPAR & BROS. (COAL SALES) LTD
Versus
DEPUTY COMMISSIONER OF INCOME-TAX and others
Writ Petition No.4960 (W) of 1997, decided on 21/03/1997.
Income-tax---
----Assessment---Writ---Existence of alternative remedy---Writ challenging jurisdiction of I.T.O. to issue notice---Petitioner purchasing 11 lakh meters from State Electricity Board and in turn leasing them to Board---Hundred per cent depreciation claimed on meters on ground meters brand new-- Assessing Officer issuing notice and calling upon petitioner to furnish certain information in regard to claim of depreciation on ground that sale and lease back of meters "mere paper transaction"---Observations made by Assessing Officer in notice are only stray or casual remarks or at best tentative conclusion---No final opinion was expressed by Assessing Officer with regard to claim for depreciation---Decision of Assessing Officer is subject to scrutiny by Appellate Authority---Petitioner not without remedy even if decision of Assessing Officer might go against it---Writ petition is to be dismissed---Indian Income Tax Act, 1961, Ss.32 & 143(2)---Constitution of India, Art.226.
The Courts interfere only when the facts clearly and unequivocally are admitted by both the parties and all those admissions amount to a patent jurisdictional error upon the authority (Assessing Officer) issuing the notice.
Quasi judicial authorities are supposed to pass final orders only after due consideration of all facts and circumstances of the case, consideration of the materials on record, due application of law upon such material and on hearing the parties with regard to all the issues involved in the case. No quasi judicial authority is supposed to act in a manner which may amount to a party being denied the opportunity of being heard.
The Assessing Officer issued notice calling upon the petitioner to furnish certain information with regard to the petitioner's claim for 100 per cent. depreciation allowance under section 32 of the Income Tax Act, 1961, in respect of 11 lakh electric meters which the petitioner purchased from the State Electricity Board and which in turn were leased out by the petitioner to the State Electricity Board. The petitioner who was aggrieved by certain observations made in the notice filed a writ petition under Article 226 of the Constitution challenging the jurisdiction of the Assessing Officer to issue the notice and contended that the Assessing Officer had expressed her mind with regard to the subject-matter of allowing or not allowing depreciation for the 11 lakh meters and that since all the meters were brand new, the petitioner was entitled to 100 per cent. depreciation in respect of all the meters. The petitioner further contended that the Deputy Commissioner by using the expression "you are required to show cause why depreciation of sale and lease back transaction not be disallowed in view of the fact that sale and lease back is merely a paper transaction" had shown that she had made up her mind in disallowing the depreciation and that was the jurisdictional error which, on the very face of the notice, was erroneous and hence, the High Court should interfere in exercise of its writ jurisdiction:
Held, dismissing the petition, (i) that the Assessing Officer had not passed any final order in the matter. She was seized of the assessment proceedings in the normal course. If in the course of her disposal of assessment proceedings and on consideration of the relevant facts, she found that she required certain information from the assesee, she might ask for it. If in some communication, as in the notice in the present case, she made some remarks or observations with regard to a particular claim of the petitioner, that at best could be termed as casual or stray remarks or at best a tentative conclusion about some issue. It is not unusual for quasi judicial authorities to make observations and remarks like the one attributed to the Assessing Officer, and even to make some tentative observations about some points in issue.
(ii) That whether the petitioner was entitled to claim depreciation at the rate of 100% or at some other rate and if so on all the meters that it purchased and ultimately leased out, were all such facts and issues which the High Court was not in a position to determine. All these facts, issues and questions were such as related to the exclusive domain of the Assessing Officer. She alone was the competent Authority under law to decide all these questions and undoubtedly she was supposed to decide them upon due consideration of all facts that were before her and after hearing the petitioner fully and effectively. Her decision on all such questions was always subject to further scrutiny by the first appellate forum and even further appeal before the Tribunal. The petitioner was not without any remedy even if it is presumed that the decision of the Assessing Authority might go against it.
On the contention of the petitioner, that it might have to pay tax if the decision went against it:
Held, that no assessee could be permitted to circumvent or short circuit the normal procedure by approaching the High Court as and when proceedings were either initiated by the Income-tax Officer or when the Income-tax Officer was seized of proceedings in the normal course, only on the ground of liability to pay tax.
Dr. Debi Prosad Pal, A.K. Roy Chowdhury and Miss Manisha Seal for Petitioner.
Prodosh Kumar Mullick and J.C. Saha for Respondent.
JUDGMENT
Once again a notice issued by an Assessing Officer, Deputy Commissioner of Income-tax, Special Range-12, Calcutta, in this case, is the subject-matter of a writ application filed by an assessee under Article 226 or the Constitution of India. The Assessing Officer has called upon, by the notice, dated February 5, 1997, impugned in this petition the petitioner to furnish certain information with regard to the petitioner's claim for 100 per cent. depreciation allowance amounting to Rs.35.10 crores in terms of section 32 of the Income-tax Act. The petitioner is aggrieved by certain observations, made to the impugned notice and has come up to this Court assailing the very jurisdiction of the Assessing Officer to issue the notice and to call upon the petitioner to furnish the information mentioned in the notice itself. W
Dr. Pal, learned advocate for the petitioner, has very vehemently contended that the Assessing Officer has not only expressed her mind with regard to the subject-matter of allowing or not allowing depreciation for the I I lakh electric meters which the petitioner claims to have purchased from the Gujarat State Electricity Board and which to terms were leased out to that Board by the petitioner. The contention of the petitioner is that since all the 11 lakh electric meters were brand new, the petitioner was entitled to 100 per cent depreciation in respect of all those meters under section 32 of the Income-tax Act.
Reliance has been placed by Dr. Pal upon certain judgments of the Supreme Court and the Calcutta High Court. Later on, stress has been laid upon some facts which the petitioner claims are "admitted facts". Since the impugned notice is under challenge and it has been assailed very vehemently, it is desirable to reproduce the notice verbatim. It reads thus:
"Sub: Disallowance of depreciation of Rs.35.10 crores on electric meters. ---Reference is invited to hearings on various dates with your representative, Mr. T.K. Neogi, in connection with the income-tax assessment of K.C.T. Bros. (C.S.) for the assessment year 1994-95. It is found that the details relating to sale and lease back transactions relating to electric meters entered into with the G.S.E.B. have riot been furnished to date. It is also seen that you have claimed 100 per cent. depreciation amounting to Rs.35.10 crores on the leased electric meters. You are required to show-cause why depreciation on sale and lease back transaction not be disallowed in view of the fact that sale and lease back is merely a paper transaction.
Further, you are required to show-cause why penalty under section 271 (1)(b) not be imposed for failing to give information called for under section 143(2) in connection with the sale and lease back transaction.
The details pending are---
(i) whether the electric meters purchased by K.C.T. (C.S.) were already in use, or were brand new;
(ii) whether there was physical delivery of the electric meters from Baroda to Bombay and back and proof thereof;
(iii) Source of funding of the purchase of electric meters;
Compliance is called for on March 13, 1997 at 11 a.m."
The contention of Dr. Pal is that the Deputy Commissioner of Income-tax by using the expression "you are required to show-cause why depreciation of sale and lease back transaction not be disallowed in view of the fact that sale and lease back is merely a paper transaction" has shown that she has made up her mind in disallowing the depreciation and that according to Dr. Pal is the jurisdictional error which on the very face of the notice is erroneous and hence the petitioner wants that this Court should interfere in exercise of its writ jurisdiction. The grievance of the petitioner is that despite the petitioner having furnished all requisite information even prior to February 5, 1997, the Assessing Officer without taking into account all information has once again called upon the assessee-petitioner to furnish the information called for in the impugned show-cause notice.
What is the true purport and meaning of the expression "paper transaction" is also the argument advanced by the learned Advocate for the Petitioner. According to Dr. Pal, "paper transaction" is a concept which is not borne out from any provision of the Income-tax Act and even though the 11 lakh electric meters were not physically taken over in the sale and lease transaction between the Gujarat State Electricity Board and the petitioner, the transaction cannot be called merely a paper transaction as the impugned expression may connote something other than a legitimate and genuine transaction.
Upon hearing the detailed submissions of the learned Advocate for the parties and on consideration of all facts and circumstances, as also after giving my thoughtful consideration to the record shown by the learned advocates for the parties. I am of the opinion that this again is a case where the petitioner has unnecessarily approached this Court by invoking its extraordinary jurisdiction. I am saying so on the basis of the fact that the Assessing Officer has not passed any final order in the matter. She is seized of the assessment proceedings in absolutely the normal course. If in the course of her disposal of assessment proceedings and on consideration of the relevant facts, she finds that she requires certain information from the assessee, she may ask for it. If in some communication, as in the impugned notice, dated February 5, 1997, in the present case, she made some remarks or observations with regard to a particular claim of the petitioner, that at best can be termed as her casual or stray remarks or at best tentative conclusion about some issue. It is not unusual for quasi judicial authorities to make observations and remarks like the one attributed to the Assessing Officer, and even to make some tentative observations about some points in issue. Quasi judicial authorities are supposed to pass final orders only after due consideration of all facts and circumstances of the case, consideration of the materials on record, due application of law upon such material and on hearing the parties with regard to all the issues involved in the case. No quasi judicial authority is supposed to act in a manner which may amount to a party being denied the opportunity of being heard. 1 have very carefully seen the impugned show-cause notice and I have no doubt in my mind that the Assessing Officer in the present case has not expressed any final opinion with regard to the issues involved before her, particularly with respect to the petitioner's claim for 100 per cent depreciation for 11 lakh meters which it says it has leased to the Gujarat State Electricity Board. Whether the petitioner is entitled to claim this depreciation, at the rate of 100 per cent or at some other rate and if so on all the meters that it says it purchased and ultimately leased out, are all such facts and issues which this Court is hardly in a position to determine. All these facts, issues and questions are such which relate to the exclusive domain of the Assessing Officer. She alone is the competent Authority under law to decide all these questions and undoubtedly she is supposed to decide them upon due consideration of all facts that are before her and after hearing the petitioner fully and effectively. Her decision on all such questions is always subject to further scrutiny of the first appellate forum and even further appeal before the Income-tax Appellate Tribunal. The petitioner is not without any remedy even if it presumes that the decision of the assessing authority may go against it. I am only referring to the petitioner's apprehension. I am not saying that the decision will or will not go against the petitioner. For all one may say, the Assessing Officer may ultimately decide in favour of the petitioner and may even allow 100 per cent depreciation with regard to all the 11 lakh meters that the petitioner claims it purchased and ultimately leased out to the Gujarat State Electricity Board.
The argument that if the decision goes against the petitioner, the petitioner may have to pay income-tax is also without substance. No assessee can be permitted to circumvent or short circuit the normal procedure by approaching this Court as and when the proceedings are either initiated by the Income-tax Officer or when the Income-tax Officer is seized of proceedings in the normal course, only on the ground of liability to pay tax.
All the judgments that Dr. Pal cited in support of his contention are wholly inapplicable to the facts of the case. In all these judgments, it has clearly been held and laid down that the Courts interfere only when the facts clearly and unequivocally are admitted by both the parties, all those admissions amounting to a patent jurisdictional error upon the authority issuing notice. That undoubtedly is the settled law. In the case before us, such is not the position.
For the foregoing reasons, therefore, dismiss this petition with costs assessed at Rs.5,000.
The prayer of the learned Advocate for the petitioner for stay of the operation of the judgment is rejected.
M.B.A./2076/FC Petition dismissed.