My stay application was rejected on the 20% ground while my appeal is pending. Can I go straight to the High Court under Article 226 saying the assessment breached natural justice?
This Court said no. Having already filed the statutory appeal, the assessee cannot simultaneously attack the assessment order in writ under the guise of challenging the rejection of his stay application; that is resort to two forums at once. The remedy against the rejection is the review route in clause 4(C) of the Office Memorandum dated 29.02.2016 read with a revision under s.264, and the writ petitions were dismissed with liberty to take that route.
Decided by the High Court (Sharad Kumar Sharma J) on 2022-06-29, reported as Writ Petition (M/S) Nos. 1496, 1499, 1504, 1505 and 1506 of 2022 (High Court of Uttarakhand at Nainital). It bears on section 220(6), section 264, section 147, section 144B, section 271(1)(b), section 271(1)(c), section 143(3), section 148A(b) of the Income Tax Act 1961, in Demand, Recovery & Stay, Appeals and Revision & Rectification matters.
This is the Revenue-side answer to the writ that practitioners file the moment a stay application is refused, and it is worth carrying because it is a reasoned refusal, not a summary one. The Court draws a distinction it treats as decisive - an appeal under a taxing statute is a 'statutory remedy', not merely an 'alternative remedy', so the natural-justice exception to the alternative-remedy rule does not open the door. It also confirms that an order rejecting a stay application is an order amenable to s.264 revision, which is a route practitioners often overlook. Note the limits: it is a single-Judge decision which expressly and respectfully disagrees with a Division Bench of the Bombay High Court on the alternative-remedy point, and the Court offered to hear the merits only if the appeal were withdrawn.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner challenged assessment orders for AYs 2013-14 to 2017-18 passed under s.147 read with s.144B, and the consequential penalty proceedings under s.271(1)(b) and s.271(1)(c). Appeals against each assessment order were already filed and pending before the appellate authority. During their pendency the petitioner applied for stay; the application was rejected on the ground that under the Office Memorandum F.No.404/72/93-ITCC dated 29.02.2016 the precondition for interim relief is deposit of 20% of the disputed demand where the demand is contested before the CIT(A). The petitioner then filed writ petitions attacking both the rejection of stay and the assessment orders, relying on breaches of natural justice and on three decisions - SPL Gold India (Bombay, 28.10.2021), Shubham Thakral v. ITO (Delhi, 03.06.2022) and MMG Constructions LLP (Karnataka, 13.12.2021). Senior counsel was not in a position to undertake that the pending appeals would be withdrawn.
The writ petitions were dismissed (para 19). Having invoked the appellate forum and pursued the appeals on merits, the petitioner could not simultaneously challenge the assessment orders in writ under the garb of challenging the rejection of the stay application; that would amount to resorting to two judicial forums at once, which is not permissible (para 5). An appeal under a taxing statute is a statutory remedy and not an alternative remedy, so the natural-justice exception relied on does not apply (para 6). The remedy against the rejection of the stay application is a revision under s.264 read with sub-clause (C) of clause 4 of the Office Memorandum dated 29.02.2016, s.264 being wide enough to include any order passed by an authority subordinate to the Principal Chief Commissioner or Chief Commissioner (paras 4, 17 and 18). Liberty was granted to challenge the rejection before that revisional forum, and it was recorded that nothing said was an opinion on the merits of the assessments (paras 18 and 20).
The Court read clause 4(C) of the Office Memorandum together with s.264 and held that the two harmonise to give the assessee a revisional remedy against an order on a stay application (paras 4 and 17). It then addressed the argument that a writ lies notwithstanding a pending appeal where the order breaches natural justice, and rejected it on the ground that a taxing statute's appeal is a statutory and not an alternative remedy (para 6). Each of the three decisions relied on was distinguished on its facts: SPL Gold India was a case where the assessment order was passed without any opportunity during a lockdown and where the alternative-remedy point was not addressed (paras 8 to 10); Shubham Thakral concerned a s.148A(b) notice giving less than the statutory seven days (paras 11 and 12); and MMG Constructions was a case where the vires of s.144B(8) had been challenged and counsel had undertaken to withdraw the appeal (paras 13 and 14). The Court had offered to hear the merits if the petitioner withdrew his appeal, and no such instruction was forthcoming (para 15); had the petitioner come straight to the High Court without filing an appeal and without waiting for the stay rejection, his bona fides would have been explicit (para 16).
The "Appeals" under the taxing law, would always fall to be a "statutory remedy", and not an "alternative remedy".
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Handle my notice → Ask a CA on WhatsAppThis Court said no. Having already filed the statutory appeal, the assessee cannot simultaneously attack the assessment order in writ under the guise of challenging the rejection of his stay application; that is resort to two forums at once. The remedy against the rejection is the review route in clause 4(C) of the Office Memorandum dated 29.02.2016 read with a revision under s.264, and the writ petitions were dismissed with liberty to take that route. This was decided by the High Court (Sharad Kumar Sharma J) and bears on section 220(6), section 264, section 147, section 144B, section 271(1)(b), section 271(1)(c), section 143(3), section 148A(b) of the Income Tax Act 1961. It is reported as Writ Petition (M/S) Nos. 1496, 1499, 1504, 1505 and 1506 of 2022 (High Court of Uttarakhand at Nainital). This is the Revenue-side answer to the writ that practitioners file the moment a stay application is refused, and it is worth carrying because it is a reasoned refusal, not a summary one. The Court draws a distinction it treats as decisive - an appeal under a taxing statute is a 'statutory remedy', not merely an 'alternative remedy', so the natural-justice exception to the alternative-remedy rule does not open the door. It also confirms that an order rejecting a stay application is an order amenable to s.264 revision, which is a route practitioners often overlook. Note the limits: it is a single-Judge decision which expressly and respectfully disagrees with a Division Bench of the Bombay High Court on the alternative-remedy point, and the Court offered to hear the merits only if the appeal were withdrawn. If it applies to you, the first step is this: Decide which forum you are in. If the appeal is pending and being pursued, expect a Court to ask you to withdraw it before it will look at the assessment order in writ.
The petitioner challenged assessment orders for AYs 2013-14 to 2017-18 passed under s.147 read with s.144B, and the consequential penalty proceedings under s.271(1)(b) and s.271(1)(c). Appeals against each assessment order were already filed and pending before the appellate authority. During their pendency the petitioner applied for stay; the application was rejected on the ground that under the Office Memorandum F.No.404/72/93-ITCC dated 29.02.2016 the precondition for interim relief is deposit of 20% of the disputed demand where the demand is contested before the CIT(A). The petitioner then filed writ petitions attacking both the rejection of stay and the assessment orders, relying on breaches of natural justice and on three decisions - SPL Gold India (Bombay, 28.10.2021), Shubham Thakral v. ITO (Delhi, 03.06.2022) and MMG Constructions LLP (Karnataka, 13.12.2021). Senior counsel was not in a position to undertake that the pending appeals would be withdrawn. The matter was decided on 2022-06-29 by the High Court (Sharad Kumar Sharma J). On those facts the High Court held as follows. The writ petitions were dismissed (para 19). Having invoked the appellate forum and pursued the appeals on merits, the petitioner could not simultaneously challenge the assessment orders in writ under the garb of challenging the rejection of the stay application; that would amount to resorting to two judicial forums at once, which is not permissible (para 5). An appeal under a taxing statute is a statutory remedy and not an alternative remedy, so the natural-justice exception relied on does not apply (para 6). The remedy against the rejection of the stay application is a revision under s.264 read with sub-clause (C) of clause 4 of the Office Memorandum dated 29.02.2016, s.264 being wide enough to include any order passed by an authority subordinate to the Principal Chief Commissioner or Chief Commissioner (paras 4, 17 and 18). Liberty was granted to challenge the rejection before that revisional forum, and it was recorded that nothing said was an opinion on the merits of the assessments (paras 18 and 20).
The Court read clause 4(C) of the Office Memorandum together with s.264 and held that the two harmonise to give the assessee a revisional remedy against an order on a stay application (paras 4 and 17). It then addressed the argument that a writ lies notwithstanding a pending appeal where the order breaches natural justice, and rejected it on the ground that a taxing statute's appeal is a statutory and not an alternative remedy (para 6). Each of the three decisions relied on was distinguished on its facts: SPL Gold India was a case where the assessment order was passed without any opportunity during a lockdown and where the alternative-remedy point was not addressed (paras 8 to 10); Shubham Thakral concerned a s.148A(b) notice giving less than the statutory seven days (paras 11 and 12); and MMG Constructions was a case where the vires of s.144B(8) had been challenged and counsel had undertaken to withdraw the appeal (paras 13 and 14). The Court had offered to hear the merits if the petitioner withdrew his appeal, and no such instruction was forthcoming (para 15); had the petitioner come straight to the High Court without filing an appeal and without waiting for the stay rejection, his bona fides would have been explicit (para 16). In the words reproduced by the source cited on this page: "The "Appeals" under the taxing law, would always fall to be a "statutory remedy", and not an "alternative remedy"." The decision followed or applied SPL Gold India Private Limited v. ACIT, WP No. 1368 of 2021 (Bombay, 28.10.2021) - respectfully disagreed with and not applied; Shubham Thakral v. ITO, W.P.(C) 9293 of 2022 (Delhi, 03.06.2022) - distinguished; MMG Constructions LLP v. Union of India, WP No. 21638/2021 (Karnataka, 13.12.2021) - distinguished.
It was decided by the High Court on 2022-06-29 and is reported as Writ Petition (M/S) Nos. 1496, 1499, 1504, 1505 and 1506 of 2022 (High Court of Uttarakhand at Nainital). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 220(6), section 264, section 147, section 144B, section 271(1)(b), section 271(1)(c), section 143(3), section 148A(b), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The writ petitions were dismissed (para 19). Having invoked the appellate forum and pursued the appeals on merits, the petitioner could not simultaneously challenge the assessment orders in writ under the garb of challenging the rejection of the stay application; that would amount to resorting to two judicial forums at once, which is not permissible (para 5). An appeal under a taxing statute is a statutory remedy and not an alternative remedy, so the natural-justice exception relied on does not apply (para 6). The remedy against the rejection of the stay application is a revision under s.264 read with sub-clause (C) of clause 4 of the Office Memorandum dated 29.02.2016, s.264 being wide enough to include any order passed by an authority subordinate to the Principal Chief Commissioner or Chief Commissioner (paras 4, 17 and 18). Liberty was granted to challenge the rejection before that revisional forum, and it was recorded that nothing said was an opinion on the merits of the assessments (paras 18 and 20). It arises in Demand, Recovery & Stay, Appeals and Revision & Rectification matters, on section 220(6), section 264, section 147, section 144B, section 271(1)(b), section 271(1)(c), section 143(3), section 148A(b) of the Income Tax Act 1961, and was decided by Sharad Kumar Sharma J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Against a refusal of stay, first use para 4(C) of the OM of 29.02.2016 - a review by the jurisdictional administrative Pr.CIT/CIT - and then, if needed, a revision under s.264, which is wide enough to cover an order on a stay application. If you do go to writ, confine the challenge to the stay order itself and to the officer's failure to apply his mind; do not use it to reopen the assessment. Ask expressly for a direction that the observations do not bind the appellate authority on merits - the Court recorded that request at para 20.
Validity check could not be completed. Later treatment was not checked, and no search was made for any appeal against this order. The proposition that a taxing statute's appeal is a 'statutory' and not an 'alternative' remedy is the reasoning of a single Judge who expressly records his respectful disagreement with a Division Bench of the Bombay High Court on the point; it should not be treated as a settled or pan-India position. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to 20 numbered paragraphs. Paragraphs 8, 11 and 14 reproduce extracts from orders of the Bombay, Delhi and Karnataka High Courts, so paragraph numbers inside those blocks belong to those orders. Two things in the order do not sit easily: para 3 records that the stay application was rejected by 'the Appellate Authority', although a stay application under s.220(6) lies to the Assessing Officer and the OM's review lies to the Pr.CIT/CIT; and para 4 cites 'Section 254(2)(a)' in a passage that appears to be about the Tribunal's stay power under s.254(2A). The impugned rejection orders are dated 02.06.2022 in four of the petitions and 13.06.2022 in the fifth. This is a single Judge expressing 'respectful disagreement' with a Division Bench of the Bombay High Court in SPL Gold India Private Limited (WP 1368 of 2021, decided 28.10.2021) on the alternative-remedy question; that feature should be weighed before the order is relied on outside Uttarakhand. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petitions were dismissed (para 19). Having invoked the appellate forum and pursued the appeals on merits, the petitioner could not simultaneously challenge the assessment orders in writ under the garb of challenging the rejection of the stay application; that would amount to resorting to two judicial forums at once, which is not permissible (para 5). An appeal under a taxing statute is a statutory remedy and not an alternative remedy, so the natural-justice exception relied on does not apply (para 6). The remedy against the rejection of the stay application is a revision under s.264 read with sub-clause (C) of clause 4 of the Office Memorandum dated 29.02.2016, s.264 being wide enough to include any order passed by an authority subordinate to the Principal Chief Commissioner or Chief Commissioner (paras 4, 17 and 18). Liberty was granted to challenge the rejection before that revisional forum, and it was recorded that nothing said was an opinion on the merits of the assessments (paras 18 and 20).
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