Facts of the Case

  • Search Operation: A search and seizure operation under Section 132 of the Income Tax Act, 1961, was carried out at the premises of the petitioner, Mednomic Healthcare Private Limited, on January 8, 2021. A Warrant of Authorization under Section 132A(1) in Form 45C was executed, and a Panchnama was drawn on January 9, 2021.
  • Assessment History: Prior to the search, the assessee had filed its regular Return of Income for the Assessment Year (AY) 2020-2021 on January 7, 2020, declaring nil income. Post-search, notices under Section 153A were issued for AY 2015-2016 to AY 2020-2021. The petitioner again filed a return declaring nil income on January 21, 2022.
  • The Addition: The Assessing Officer passed a search assessment order under Section 153A/143(3) r.w.s. 153D on March 25, 2022. The officer discovered that the assessee received a cash amount of Rs. 11,65,000/- towards "Premium Share Investment," which was missing from the regular books of accounts. This sum was treated as unexplained money under Section 69A and taxed under Section 115BBE, along with the initiation of penalty proceedings under Section 271AAC.
  • First Appellate Round: The petitioner appealed to the Commissioner of Income Tax (Appeals). Despite five notices issued across 2022, 2023, and 2024, the petitioner failed to appear, leading to an ex-parte order on January 24, 2024, confirming the addition.
  • ITAT Remand: The petitioner challenged this before the Income Tax Appellate Tribunal (ITAT) (ITA No. 56/GTY/2024). Citing medical issues of a key person, the ITAT, via an order dated March 7, 2025, set aside the ex-parte order and remanded the matter back to the CIT(A) for fresh adjudication after providing a fair hearing.
  • The Writ Petition: While the appeal was active before the CIT(A) post-remand, the petitioner filed additional grounds and subsequently moved a writ petition before the High Court, fearing the CIT(A) would ignore the additional arguments and asserting that the original search warrant lacked proper jurisdiction.

Issues Involved

  1. Maintainability of Writ under Article 226: Whether an extraordinary writ petition under Article 226 can be maintained or entertained when statutory appeal proceedings on the exact same matter are actively pending before the appellate authority.
  2. Validity of Parallel Proceedings: Whether an assessee is permitted to open a "second front of attack" by running parallel judicial proceedings against an assessment when it has already availed its statutory remedy under Section 250.
  3. Premature Apprehension: Whether the petitioner’s apprehension that the CIT(A) would fail to consider additional grounds permitted under Section 250(5) warrants high court intervention before the final appellate order is passed.

Petitioner’s Arguments

  • Jurisdictional Defect: The petitioner argued that the Warrant of Authorization issued in Form 45C by the Additional/Joint Commissioner of Income Tax on January 8, 2021, under Section 132A(1) was fundamentally without jurisdiction and invalid. Consequently, they sought the quashing of all consequential search actions and assessments.
  • Fear of Bias/Non-Consideration: The petitioner highlighted that they had submitted additional legal grounds before the CIT(A) following the ITAT's remand order. They expressed an acute apprehension that these new grounds would be ignored or discarded during the final disposal by the appellate authority.
  • Subsequent Development: During the final hearing of the writ, the petitioner’s counsel pointed out that the CIT(A) had recently passed another ex-parte order dismissing the appeal without considering the additional grounds or providing an adequate hearing, thereby compounding the violation of natural justice.

Respondent’s Arguments

  • Premature Nature of Writ: The Income Tax Department, represented by standing counsel, argued that the writ petition was fully premature and misconceived since the CIT(A) was actively in seisin of the appeal when the writ was filed.
  • Statutory Mechanisms Available: The respondents asserted that Section 250(5) explicitly allows the appellate authority discretion to admit and evaluate new or omitted grounds during the hearing if the omission wasn't willful. Hence, bypassing this mechanism via a writ was procedurally flawed.
  • Bar on Parallel Remedy: The revenue argued that moving a writ petition while keeping a statutory appeal alive creates impermissible parallel litigation, which directly contradicts established principles laid down by the Supreme Court of India.

Court Order / Findings

  • Writ is Premature: The Gauhati High Court observed that at the time the writ petition was filed, the CIT(A) was actively handling the remanded appeal along with the petitioner's additional grounds. The court declared the petitioner's fear that the grounds would be ignored as entirely premature and legally misconceived.
  • Parallel Proceedings Barred: The Court held that an assessee cannot open a "second front of attack" or maintain a parallel proceeding while a statutory appeal is already pending.
  • Supreme Court Precedent: Relying on the Apex Court judgment in Bombay Metropolitan Region Development Authority vs. Gokak Patel Volkart Ltd and others (1995) 1 SCC 642, the High Court reiterated that a writ petition under Article 226 is explicitly non-maintainable during the pendency of a statutory appeal raising the exact same grounds.
  • Final Decision: The High Court dismissed the writ petition as non-maintainable. Addressing the petitioner's concern regarding the newly passed ex-parte order by the CIT(A), the court clarified that the petitioner is free to agitate all these grievances and additional grounds before the ITAT through a statutory appeal under Section 253 of the Act.

Important Clarification

  • Section 250(5) Discretion: The ruling underscores that Section 250(5) provides ample power to the first appellate authority to look into fresh grounds if it is satisfied that their omission wasn't willful or unreasonable.
  • Remedy Against Fresh Ex-parte Orders: If a lower appellate authority passes an ex-parte order failing to consider additional submissions post-remand, the correct legal pathway is to appeal to the higher statutory body (ITAT under Section 253) rather than approaching the High Court directly via Article 226.

Section Involved

  • Article 226 of the Constitution of India: Invoked by the petitioner to challenge the validity of the Search and Seizure authorization.
  • Section 132 & 132A(1) of the Income Tax Act, 1961: Pertaining to the execution of the Warrant of Authorization in Form 45C and search operations.
  • Section 69A of the Income Tax Act, 1961: Under which the Assessing Officer added Rs. 11,65,000/- as unexplained money.
  • Section 115BBE of the Income Tax Act, 1961: Applied for charging tax at a special rate on the unexplained income.
  • Section 153A read with Section 143(3) and Section 153D of the Income Tax Act, 1961: Pertaining to assessment proceedings initiated post-search.
  • Section 250 & Section 253 of the Income Tax Act, 1961: Procedure for filing and hearing statutory appeals before the CIT (Appeals) and the Income Tax Appellate Tribunal (ITAT) respectively.

Link to download the order - https://mytaxexpert.co.in/uploads/1783070152_472compressed.pdf

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