The Madras High Court has upheld an order under Section 263 of the Income Tax Act, dismissing a writ petition filed against it. The court emphasised the clear distinction between the scrutinised assessment order under Section 143(3) and the impugned decision, directing the petitioner to pursue statutory appeal before the Appellate Tribunal under Section 253(1)(c) of the Income Tax Act, 1961, within a period of 45 days from the date of receipt of a copy of the order.
The case centered around a petitioner, Suresh Patel, challenging an order issued by the Principal Commissioner of Income Tax, Madurai, under Section 263 of the Income Tax Act, 1961. The petitioner sought relief under Article 226 of the Constitution of India, urging the court to quash the said order.
The crux of the petitioner’s argument rested on the completion of scrutiny assessment based on the income tax return filed in December 2019. The petitioner, represented by Mr. N. Ramakrishnan contended that they had complied with the order by paying the differential tax amount and an additional sum towards the Pradhan Mantri Garib Kalyan Yojana Scheme.
The respondents, Principal Commissioner of Income Tax and others, represented by Mr. N. Dilip Kumar and Mr. K. Prabhu, countered that the assessment order passed in December 2019 was erroneous and prejudicial to the revenue’s interests. They argued that the invocation of Section 263 was justified to rectify the erroneous assessment.
The single bench of Justice C. Saravanan noted that a survey conducted in March 2017 revealed discrepancies in the petitioner’s declarations under the Pradhan Mantri Garib Kalyan Yojana Scheme. Subsequently, the petitioner filed a return in November 2017, declaring a significant loss.
The scrutiny assessment order was issued in December 2019, which the petitioner sought to distinguish from the impugned order under Section 263. The bench highlighted this distinction, asserting that the two orders served different purposes and could not be conflated.
Further, the bench stressed the petitioner’s delayed approach to the court, noting that instead of pursuing appellate remedies, the petitioner chose to file a writ petition. Emphasising the importance of exhausting statutory appeal mechanisms, the bench directed the petitioner to file an appeal before the Appellate Tribunal within 45 days.
In conclusion, the Madras High Court disposed of the writ petition highlighting the importance of procedural compliance and the availability of legal recourse for taxpayers dissatisfied with income tax assessments.
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