Facts of the Case

  • The Assessing Officer passed an order under Section 148A(d) dated 28.07.2022, followed by an assessment order dated 31.05.2023.
  • The assessment was framed under Sections 147 read with 144 for AY 2016–17.
  • The AO formed a view that income of ₹30,85,500 had escaped assessment.
  • The petitioner claimed:
    • He migrated from Quetta, Pakistan to India
    • Brought ₹27,50,000 in cash and 150 grams of jewellery
    • Deposited cash in Bank of India, Khanpur Branch
  • The AO added:
    • ₹27,00,000 (cash)
    • ₹3,85,500 (value of jewellery)
  • Total alleged escaped income: ₹30,85,500.

Issues Involved

  1. Whether a writ petition is maintainable when a statutory appellate remedy is available.
  2. Whether the Commissioner of Income Tax (Appeals) has the power to annul or set aside an assessment order under Section 251.
  3. Scope and interpretation of appellate powers under the Income Tax Act.

 Petitioner’s Arguments

  • The petitioner contended that:
    • The appellate authority under Section 251 does not have the power to set aside the assessment order.
    • Therefore, the writ petition should be entertained by the High Court instead of relegating the petitioner to an appellate remedy.

Respondent’s Arguments

    • A statutory appellate remedy is available to the petitioner.
    • The Commissioner of Income Tax (Appeals) has wide powers, including annulment of the assessment order.
    • Hence, the writ petition is not maintainable.

 

Court’s Findings / Order

    • The petitioner had an effective statutory remedy of appeal.
    • Section 251 confers wide powers on the appellate authority, including the power to annul the assessment.
    • The term “annul” is broader than “set aside” and includes complete cancellation of the assessment order.
    • Upon annulment, the assessment order ceases to exist, restoring parties to the original position.

Final Order

  • The writ petition was closed.
  • Liberty granted to the petitioner to file an appeal before CIT(A).
  • If filed within 3 weeks, the appeal shall be heard on merits, including limitation.

Important Clarification by the Court

  • The Court clarified:
    • The power of annulment under Section 251 is wider than setting aside.
    • CIT(A) can completely nullify an assessment order if justified.
    • Writ jurisdiction should not be invoked when an effective alternate remedy exists.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60811092023CW97322023_121608.pdf

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