Facts of the Case

·         The Petitioner, Kulbhushan Arora, filed a writ petition under Article 226 of the Constitution of India challenging the Assessment Order (Annexure A-1) dated March 7, 2003, for the Assessment Year 1997-98.

·         The assessment in question was re-opened by the Assessing Officer in the exercise of powers vested under Section 147 and Section 148 of the Income Tax Act, 1961.

·         The specific reasons justifying the re-opening of the assessment were formally disclosed and communicated to the assessee via a letter dated January 18, 2002.

Issues Involved

·         Whether the Assessment Order dated March 7, 2003, passed pursuant to the re-opening of assessment under Sections 147/148 of the Income Tax Act, 1961, was liable to be quashed under Article 226 of the Constitution.

·         Whether the Petitioner should be permitted to withdraw the writ petition to pursue the alternative statutory remedy of filing an appeal before the Commissioner of Income Tax (Appeals).

·         Whether the period during which the writ petition was actively pending before the High Court could be excluded/condoned for the purpose of limitation when filing the statutory appeal.

Petitioner’s Arguments

·         The matter was initially argued at length regarding the merits of the re-opened assessment under Sections 147-148.

·         However, the learned counsel for the Petitioner subsequently requested permission to withdraw the writ petition, seeking explicit liberty to file a statutory appeal against the assessment order before the competent appellate authority.

·         The Petitioner further submitted that because they had approached the High Court, a delay in filing the statutory appeal would occur. Consequently, a direction was sought praying that the Commissioner of Income Tax (Appeals) be directed to consider the appeal on merits.

Respondent’s Arguments

·         The Respondent, represented by the Commissioner of Income Tax, New Delhi, was present through counsel to defend the validity of the re-opening proceedings and the subsequent Assessment Order.

Court Order / Findings

·         The Division Bench of the Delhi High Court permitted the Petitioner to withdraw the writ petition with the requested liberty to file an appeal against the assessment order under the statute.

·         The Court held that since the Petitioner had approached the High Court for relief and was being permitted to withdraw the proceedings with liberty to appeal, the time period spent pursuing the matter before the High Court must be taken into consideration by the appellate authority.

·         The Court directed the Commissioner of Income Tax (Appeals) to hear the matter strictly on its merits, provided that the statutory appeal is preferred by the petitioner within a period of 10 days from the date of the order.

·         The petition was accordingly disposed of, and direct service (Dasti) of the order was permitted.

Important Clarification

·         When a taxpayer bypasses a statutory appellate remedy to file a writ petition under Article 226, and the High Court subsequently grants liberty to withdraw the writ to pursue that statutory remedy, the time spent bona fide litigating before the High Court should be adjusted/considered by the CIT(Appeals) to prevent the appeal from being dismissed purely on the grounds of limitation or delay.

Sections Involved

·         Article 226 of the Constitution of India

·         Section 147 of the Income Tax Act, 1961

·         Section 148 of the Income Tax Act, 1961



Link to download the order –https://delhihighcourt.nic.in/app/case_number_pdf/2004:DHC:18924-DB/BCP15012004CW22092003_122334.pdf

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