Facts of the Case

The case involves a batch of six income tax appeals filed before the High Court of Delhi, registered under ITA Nos. 724/2010, 725/2010, 726/2010, 727/2010, 728/2010, and 729/2010. The appellant in all six connected matters is Lachman Dass Bhatia, who challenged the underlying tax or assessment orders passed by the revenue authorities. The respondent representing the Revenue department is the Assistant Commissioner of Income Tax.

The appeals were preferred under the relevant statutory provisions of the Income-tax Act, 1961, which allow aggrieved assessees to approach the High Court on substantial questions of law. During the course of the judicial proceedings and before the court could adjudicate the merits of the statutory appeals, the appellant evaluated their litigation strategy concerning the procedural and jurisdictional nature of the dispute. When the matters came up for a formal hearing before the Division Bench, the appellant's counsel determined that the issues involved could be more appropriately and comprehensively addressed through the extraordinary writ jurisdiction of the High Court rather than the restrictive scope of a statutory income tax appeal. Consequently, the appellant chose not to press the statutory appeals further and sought specific judicial intervention to alter the course of the litigation.

Issues Involved

  • Procedural Recourse and Liberty to Refile: Whether an appellant, having preferred a statutory appeal before the High Court under the Income-tax Act, can be permitted to withdraw the pending appellate proceedings with explicit liberty to seek an alternative constitutional remedy.
  • Maintainability of Alternative Remedy: Whether the extraordinary writ jurisdiction of the High Court under Article 226 of the Constitution of India can be validly invoked by an assessee as a substitute for statutory remedies when specific procedural or legal nuances necessitate a writ petition.
  • Consent of the Revenue: Whether the Income Tax Department/Revenue has any procedural or legal objections to the withdrawal of statutory tax appeals when the assessee intends to switch the forum of litigation to a writ court.

Petitioner’s (Appellant's) Arguments

The learned counsel appearing on behalf of the appellant, Mr. R.M. Mehta, opened his arguments by submitting that the appellant did not wish to prosecute the current batch of statutory income tax appeals on their merits.

  • Request for Alternative Remedy: The counsel explicitly sought formal permission and the court’s leave to withdraw all six interconnected appeals (ITA Nos. 724-729/2010).
  • Intent to File Writ Petitions: The core of the appellant's submission was that the nature of the grievances, legal anomalies, or procedural actions taken by the lower tax authorities required a broader constitutional scrutiny. The counsel argued that a writ petition under Article 226 of the Constitution would serve as a more appropriate and effective legal vehicle to challenge the underlying departmental actions or orders.
  • Protection of Rights: The appellant requested the court to record the withdrawal in a manner that ensures their legal rights to approach the writ court remain unhindered and are not prejudiced by the abandonment of the statutory appeals.

Respondent’s Arguments

The Income Tax Department (Revenue) was represented by its learned counsel, Mr. Deepak Chopra.

  • No Objection to Withdrawal: Upon hearing the appellant's specific request to withdraw the appeals to file writ petitions, Mr. Chopra stated that the Revenue had no objection to the court granting such permission.
  • Consensual Procedural Transition: The respondent did not contest the withdrawal request, nor did they argue that the appellant should be forcefully bound to exhaust or conclude the statutory appeal mechanism once initiated. By offering no objection, the Revenue effectively conceded to a clean procedural termination of the current appeals, leaving the question of the maintainability of any future writ petitions to be decided at the appropriate stage.

Court Order / Findings

The matter was heard and disposed of by a Division Bench of the Delhi High Court consisting of Hon'ble the Chief Justice and Hon'ble Mr. Justice Manmohan.

  • Grant of Withdrawal Permission: Taking note of the statements made by the counsels of both sides, the Court accepted the appellant’s request. The Bench noted that since the appellant’s counsel actively sought permission to withdraw the appeals to file writ petitions, and the Revenue’s counsel expressly stated he had no objection to the same, there was no legal impediment to granting the request.
  • Formal Dismissal as Withdrawn: In view of the mutual consensus and the explicit prayer made by the appellant, the High Court ordered: "the present appeals are permitted to be withdrawn."
  • Disposal of the Batch: The Court formally disposed of the entire batch of appeals (ITA Nos. 724-729/2010) as withdrawn on September 16, 2010, without expressing any opinion on the merits of the underlying tax dispute.

Important Clarification

  • Procedural Liberty vs. Statutory Finality: This order clarifies an important rule of tax litigation procedure: the filing of a statutory appeal does not permanently lock an assessee into that specific forum if they later realize a constitutional writ is a more suitable remedy. The court's unconditional acceptance of the withdrawal—coupled with the recorded reason of "filing writ petitions"—safeguards the litigant from facing an argument of res judicata or absolute abandonment of rights when they subsequently file their writ petitions. It establishes that with the court's permission and the opposite party's non-objection, an appellant can strategically pivot their legal route mid-litigation.

Sections and Acts Involved

  • Section 260A of the Income-tax Act, 1961: (Statutory provisions governing Appeals to the High Court from orders of the Income Tax Appellate Tribunal).
  • Article 226 of the Constitution of India: (Constitutional provisions governing the power of High Courts to issue certain writs, which was the intended alternative remedy sought by the appellant).

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2010:DHC:9977/MMH16092010ITA7262010_163334.pdf 

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