Supreme Court of India
GENPACT INDIA PRIVATE LIMITEDversusDEPUTY COMMISSIONER OF INCOME TAX & ANR.
- Citation
- 2019 INSC 1277
- Decided
- 22 November 2019
- Disposal
- Dismissed
Holding
An appeal under Section 246A of the Income Tax Act is maintainable against a determination of liability under Section 115QA, and the High Court was correct in declining to entertain the writ petition.
Summary
Genpact India Private Limited bought back shares from its Mauritius holding company and was assessed a tax under Section 115QA of the Income Tax Act, 1961. The assessee denied liability and challenged the assessment order through a writ petition under Article 226, arguing that no statutory appeal was available. The High Court dismissed the petition, holding that an appeal under Section 246A was an adequate alternative remedy. The Supreme Court examined the scope of Sections 246(1)(a) and 246A(1)(a) and held that they cover orders where the assessee denies liability, including determinations under Section 115QA. Consequently, an appeal against a Section 115QA liability is maintainable, and the High Court was correct in refusing to entertain the writ petition. The appeal was dismissed, leaving the appellant to pursue the statutory appeal.
Issues considered
- The scope of Sections 246(1)(a) and 246A(1)(a) of the Income Tax Act with respect to orders arising from Section 115QA.
- Whether an appeal is maintainable against a determination of liability under Section 115QA.
- Whether the High Court was justified in refusing to entertain the writ petition on the ground of an available alternative remedy.
Legislation cited
- Companies Act, 1956s. 77A
- Income Tax Act, 1961s. 115QA, s. 143, s. 144, s. 246(1)(a), s. 246A(1)(a)
Subjects
Income TaxSection 115QABuy-back of sharesAppellate jurisdictionArticle 226Alternative remedyTax assessment
Judgment
[2019] 17 S.C.R. 139 139
GENPACT INDIA PRIVATE LIMITED A
v.
DEPUTY COMMISSIONER OF INCOME TAX & ANR.
(Civil Appeal No. 8945 of 2019)
NOVEMBER 22, 2019 B
[UDAY UMESH LALIT AND INDIRA BANERJEE, JJ.]
Income Tax Act, 1961:
ss. 246(1)(a) and 246A(1)(a) – Scope of – Held: Scope of
the provisions cannot be confined to the issues arising out of or C
touching upon assessment proceedings u/ss. 143 of 144 of Income
Tax Act – Determination u/s. 115QA of the Act would also get
covered under s. 246(1)(a).
s. 115QA – Assessment order – Liability u/s. 115QA – Denied
by assessee – Writ petition challenging assessment order – Petition D
disposed of by High Court on the ground that the same could not
be entertained due to availability of alternate remedy u/s. 246-A
of the Act – Appeal to Supreme Court – Held: An appeal is
maintainable against determination of liability u/s. 115QA – Hence
petition u/Art. 226 of the Constitution was rightly not entertained.
E
Practice and Procedure :
Petition u/Art. 226 of the Constitution – Preliminary objection
as to its maintainability – Notice issued without rejecting
preliminary objection which was later made absolute – After
completion of pleadings, petition disposed of as not entertainable F
on the ground of availability of alternative remedy – Plea that
preliminary issues are decided at the threshold and once that stage
is crossed, High Court could not have considered the preliminary
issue – Held: In the present case preliminary issue was not dealt
with and disposed of and the same was still at large – Therefore,
there is no infirmity in the approach adopted by the High Court in G
deciding the preliminary issue.
Dismissing the appeal, the Court
HELD:1.1 The kinds of orders or situations that are
referred to in Section 246(1) (a) of the Income Tax Act, 1961
H
139
140 SUPREME COURT REPORTS [2019] 17 S.C.R.
A are:- (i) An order against the assessee, where the assessee
denies his liability to be assessed under this Act, or (ii) An
intimation under sub-section (1) or sub-section (1B) of Section
143 where the assessee objects to the making of adjustments,
or (iii) Any order of assessment under sub-section (3) of Section
143 or Section 144, where the assessee objects:- to the amount
B
of income assessed, or to the amount of tax determined, or to
the amount of loss computed, or to the status under which he is
assessed. The contingencies detailed in (ii) and (iii) hereinabove
arise out of assessment proceedings under Section 143 or
Section 144 of the Act but the first contingency is a standalone
C postulate and is not dependant purely on the assessment
proceedings either under Section 143 or Section 144 of the Act.
The expression “denies his liability to be assessed” is quite
comprehensive to take within its fold every case where the
assessee denies his liability to be assessed under the Act. [Para
11] [157-H; 158-A-D]
D
Commissioner of Income Tax, U.P., Lucknow v. Kanpur
Coal Syndicate AIR (1965) SC 325 : [1964] SCR 85
– relied on.
1.2 Section 115QA of the Act stipulates that in case of buy
E back of shares referred to in the provisions of said Section, the
company shall be liable to pay additional income tax at the rate
of 20% on the distributed income. Any determination in that
behalf, be it regarding quantification of the liability or the question
whether such company is liable or not would be matters coming
F within the ambit of the first postulate referred to hereinabove.
Similar is the situation with respect to provisions of Section
246A(1)(a) where again out of certain situations contemplated,
one of them is “an order against the assessee, where the
assessee denies his liability to be assessed under this Act”. The
computation and extent of liability is determined under the
G provisions of Section 115QA of the Act. Such determination
under the Act would squarely get covered under said expression.
There is no reason why the scope of the such expression be
restricted and confined to issues arising out of or touching upon
assessment proceedings either under Section 143 or Section 144
H of the Act. [Para 12] [158-E-G]
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 141
COMMISSIONER OF INCOME TAX
1.3 If the expression in Section 246(1)(a) or in Section A
246A(1)(a) is considered as relatable to the liability of an
assessee to be assessed under Section 143(3) there would be
no appellate remedy in case of any determination under Section
115QA. The issues may arise not just confined to the question
whether the company is liable at all but may also relate to other
B
facets including the extent of liability and also with regard to
computation. If the dispute is taken up in proceedings such as
a petition under Article 226 of the Constitution, which normally
would not be entertained in case of any disputed questions of
fact or concerning factual aspects of the matter. The assessee
may thus, not only lose a remedy of having the matter considered C
on factual facets of the matter but would also stand deprived of
regular channels of challenges available to it under the hierarchy
of fora available under the Act. Therefore, an appeal would be
maintainable against the determination of liability under Section
115QA of the Act. [Paras 13 and 14] [158-H; 159-A-D]
D
2. There is no infirmity in the approach adopted by the
High Court in refusing to entertain the Writ Petition. The
submission that once the threshold was crossed despite the
preliminary objection being raised, the High Court ought not to
have considered the issue regarding alternate remedy, may not
be correct. The first order dated 25.01.2017 passed by the High E
Court did record the preliminary objection but was prima facie
of the view that the transactions defined in Section 115QA were
initially confined only to those covered by Section 77A of the
Companies Act. Therefore, without rejecting the preliminary
objection, notice was issued in the matter. The subsequent order F
undoubtedly made the earlier interim order absolute. However,
the preliminary objection having not been dealt with and
disposed of, the matter was still at large. [Para 16] [161-G; 162-
A-B]
Commissioner of Income Tax and others v. Chhabil
G
Dass Agarwal (2014) 1 SCC 603 ; Authorised Officer,
State Bank of Travancore & Anr. v. Mathew K.C.
(2018) 3 SCC 85 : [2018] 1 SCR 233 ; State of U.P.
v. U.P. Rajya Khanij Vikas Nigam Sangharsh Samiti
and Others (2008) 12 SCC 675 : [2008] 7 SCR 536
– relied on. H
142 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Case Law Reference
[1964] SCR 85 relied on Para 9
(2014) 1 SCC 603 relied on Para 15
[2018] 1 SCR 233 relied on Para 15
B [2008] 7 SCR 536 relied on Para 16
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8945
of 2019.
From the Judgment and Order dated 19.08.2019 of the High
C Court of Delhi at New Delhi in Writ Petition (Civil) No. 686 of 2017.
Mukul Rohatgi, S. Ganesh, Sr. Advs., Mahesh Agarwal, Rishi
Agrawala, Ankur Saigal, Karan Luthra, Ms. Niyati Kohli, E. C.
Agrawala, Shaishin S. Divatia, Zoheb Hossain, Rajat Nair, Mrs. Anil
Katiyar, Advs. for the appearing parties.
D The Judgment of the Court was delivered by
UDAY UMESH LALIT, J.
1. Leave granted.
2. This appeal arises out of the final judgment and order dated
E 19.08.2019 passed by the High Court of Delhi at New Delhi in Writ
Petition No.686 of 2017.
3. The facts leading to the filing of the present appeal, in brief,
are as under:
(a) Out of opening share capital of 25,68,700 shares held
F by its sole shareholder and holding company Genpact
India Investment, Mauritius, the appellant bought back
2,50,000 shares in May 2013 at the rate of Rs.32,000/-
per share for a total consideration of Rs.800 crores.
(b) On 10.05.2013, Chapter XIIDA consisting of Sections
G 115QA, 115QB and 115QC was inserted in the Income
Tax Act, 1961 (hereinafter referred to as ‘the Act’) by
the Finance Act, 2013 which came into effect from
01.06.2013. Section 115QA as it stood prior to the
amendment which came into effect on 01.06.2016 was
H to the following effect:
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 143
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
“Section 115QA: Tax on distributed income to shareholders A
–
(1) Notwithstanding anything contained in any other
provision of this Act, in addition to the income-tax
chargeable in respect of the total income of a domestic
company for any assessment year, any amount of B
distributed income by the company on buy-back of shares
(not being shares listed on a recognised stock exchange)
from a shareholder shall be charged to tax and such
company shall be liable to pay additional income-tax at
the rate of twenty per cent on the distributed income.
C
Explanation.—For the purposes of this section,—
(i) “buy-back” means purchase by a company of its
own shares in accordance with the provisions of
section 77A of the Companies Act, 1956 (1 of 1956);
(ii) “distributed income” means the consideration paid D
by the company on buy-back of shares as reduced
by the amount which was received by the company
for issue of such shares.
(2) Notwithstanding that no income-tax is payable by a
domestic company on its total income computed in E
accordance with the provisions of this Act, the tax on
the distributed income under sub-section (1) shall be
payable by such company.
(3) The principal officer of the domestic company and the
company shall be liable to pay the tax to the credit of F
the Central Government within fourteen days from the
date of payment of any consideration to the shareholder
on buy-back of shares referred to in sub-section (1).
(4) The tax on the distributed income by the company shall
be treated as the final payment of tax in respect of the G
said income and no further credit therefor shall be
claimed by the company or by any other person in
respect of the amount of tax so paid.
(5) No deduction under any other provision of this Act shall
be allowed to the company or a shareholder in respect H
144 SUPREME COURT REPORTS [2019] 17 S.C.R.
A of the income which has been charged to tax under sub-
section (1) or the tax thereon.”
The Explanation in relation to “buy back” was, however, amended
and with effect from 01.06.2016, it reads as:-
B “(i) “buy-back” means purchase by a company of its own shares
in accordance with the provisions of any law for the time being
in force relating to companies;”
(c) On 10.09.2013, a scheme for arrangement was
approved by the High Court of Delhi in Company Petition
C No.349 of 2013. Pursuant thereto, the appellant bought
back another tranche of 7,50,000 shares at the rate of
Rs.35,000 per share for a total consideration of Rs.2,625
crores from said Genpact India Investment, Mauritius.
(d) In the income tax return filed on 28.11.2014 by the
D appellant for the assessment year 2014-15, “Details of
tax on distributed profits of domestic companies and its
payment” were given in “Schedule DDT” where the
details of aforesaid transactions were given but the
liability to pay any tax was denied. A notice under
Section 143(2) of the Act was issued to the appellant
E
on 03.09.2015 seeking further explanation, pursuant to
which requisite details were furnished.
(e) The matter was thereafter considered and an assessment
order was passed by the first respondent on 31.12.2016.
F As many as 10 additions were made by the first
respondent, one of them being in respect of liability under
Section 115QA of the Act. Since we are concerned in
this appeal only with the issue with regard to liability
under Section 115QA, we need not deal with other
issues.
G
(f) As regards the issue in question, the submissions
advanced on behalf of the appellant-assessee were noted
as under:
“Vide Letter dated 28.12.2016, the assessee has
H submitted that the buy back of shares has been done in
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 145
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
pursuance of scheme of arrangement under Section 391 A
of the Companies Act, 1956 approved by Hon’ble High
Court of Delhi and in such manner that the same is not
a buy back in terms of the Section 115QA of the Act.”
g) The matter was dealt with by the first respondent as
under: B
“The submission of the assessee was considered but
was not found acceptable as it has no substance.
Before discussing the facts of the case and argument
in support of the revenue it is also important to
understand the background of the Section 115QA. C
Section 115QA was inserted by Finance Act, 2013 to
counter the tax avoidance practice mainly adopted by
Indian subsidiaries to distribute income to shareholders
to Mauritius based Holding company under the garb of
Buyback of shares. Under Income Tax Act, buyback D
of shares is taxable u/s 46A in the hands of
shareholders. However, taking the benefit of Article 13
of India-Mauritius DTAA, which provides for capital
gain arising on transfer of shares of Mauritius resident
taxable in that country and under Mauritius tax laws
E
capital gain is totally exempt, entire transaction used to
escape the tax net. Thus to plug this loop hole in the
statute, Section 115QA is introduced to provide that
where shares are bought back at a price higher than
the price at which those shares were issued then,
balance amount will be treated as distribution of income F
to shareholder and Tax@20% will be payable by the
Company. Section 115QA is applicable only to domestic
unlisted companies.
The provisions of Section 115QA have been introduced
as part of Chapter XIIA as an anti-avoidance measure G
as also with an intent to widen the tax base in India.
The explanatory Memorandum made it clear that the
object is to curb tax avoidant practice of unlisted
companies resorting to buy-back of shares in lieu of
payment of income to shareholders and which is taxable H
146 SUPREME COURT REPORTS [2019] 17 S.C.R.
A in India. Buy back tax is attracted on amounts
distributed by the company on buy-back of its own
shares.
… … …
B Section 115QA overrides all the sections of the Act and
it is a separate charging section which taxes amount
distributed on buy back of shares.”
Rejecting the submission advanced on behalf of the appellant,
the first respondent thus held that over and above nine heads under
C which additions were made, the appellant-assessee was also liable to
pay tax at the rate of 20% in terms of Section 115QA of the Act in
respect of distributed income of Rs.2,625 crores.
h. It may be mentioned that insofar as those nine additions
made by the aforesaid assessment order by the first
respondent are concerned, an appeal was filed by the
D
appellant. We have been apprised that the appeal was
decided in favour of the appellant but further challenge
at the instance of the Revenue is under consideration.
As regards the issue concerning tax under Section 115QA, the
appellant filed Writ Petition (Civil) No.686 of 2017 in the High Court
E
submitting, inter alia, that the order passed by the first respondent was
without jurisdiction as buy back of shares in the instant case was in
pursuance of the scheme of arrangement approved by the High Court.
i) The matter came up before the High Court on
25.01.2017 when a preliminary objection was raised that
F alternate and efficacious remedy of filing an appeal was
available. While issuing notice it was observed by the
High Court:
“Prima facie, in this Court’s opinion, the non-obstante
clause in Section 115QA of the Act restricts the nature
G of the levy to the transactions defined by the provision
itself. The transactions defined are those covered by
Section 77A of the Companies Act. Significantly, the
Parliamentary intent to cover all manners of share
acquisition by the Company of its own shares, is evident
H from a subsequent amendment to Section 115QA of the
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 147
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
Act, when it explained the meaning of ‘buy-back’ in the A
First Explanation by not alluding merely to Section 77A
of the Companies Act but all other provisions of law.
That this provision was not given retrospective effect,
in this Court’s opinion, further strengthens the
petitioner’s submissions.
B
In view of these prima facie reasons, the Court is of
the opinion that the impugned demand to the tune it seeks
to recover levy under Section 115QA of the Act should
not be enforced till the next date of hearing. It is so
directed.
C
List on 28.03.2017.”
j) The matter thereafter came up on 30.08.2017 when the
interim order dated 25.01.2017 was made absolute.
k) When the matter was taken up after completion of
pleadings, it was submitted on behalf of the Revenue D
that since the remedy of appeal was available to the
appellant, the Writ Petition may not be entertained. On
the other hand, it was submitted by the appellant that
the demand raised under Section 115QA could not be
considered as forming part of the assessment order E
passed by the first respondent and it must be something
separate from the order of assessment. The submission
was, however, rejected by the High Court observing as
under:
“At the outset, the Court would first like to deal with F
the submissions of Mr. Ganesh that the impugned
demand raised under Section 115QA of the Act should
not be construed as forming part of the impugned
assessment order and that it is something separate from
it. While it is true that the demand under Section 115QA
of the Act would be in addition to the total income, the G
fact of the matter is that in the present case it forms
an integral part of the impugned assessment order under
Section 143(3) of the Act. Reading the assessment
order as a whole, it is plain to the Court that this demand
under Section 115QA of the Act is in addition to demands H
148 SUPREME COURT REPORTS [2019] 17 S.C.R.
A under other issues, all of which form part of the
impugned assessment order. In fact, paragraph 11 of
the impugned assessment order, which gives the
computation of the total taxable income, includes the
demands raised under all heads and it includes the
demand under Section 115QA of the Act. Therefore, it
B
is not possible for this Court to read this part of the order
separate from the rest of the assessment order.”
l) On the issue whether the Writ Petition be entertained
in the face of availability of an alternate remedy, the
High Court considered relevant case law touching upon
C
the issue and observed:
“23. The question regarding the interpretation of Section
115QA of the Act, as it stood at the relevant time, can
definitely be gone into by the CIT (A). Further, this
Court has in fact not expressed any view yet on the
D
maintainability of the petition, although as rightly pointed
out the matter was heard on this aspect earlier as well.
The fact remains that the Respondent raised the
objection at the first available opportunity. Due to
reasons noted hereinbefore, the issue could not be
E decided till now. It would, however, not be correct to
state that this Court has impliedly overruled such an
objection and decided to hear the petition on merits.
24. The Court also notes in this context that the
Assessee has in fact succeeded in its appeal before the
F CIT (A) on other issues arising out of the same
impugned assessement order and it is the Revenue which
is now in appeal before the ITAT. There is no reason
why this one other issue arising from the impugned
assessment order cannot also be examined by the CIT
(A).”
G
m) The High Court also recorded certain concessions made
on behalf of the Revenue and disposed of the Writ
Petition by its Judgment and Order dated 19.08.2019 with
following directions:
H “(i) The Court declines to entertain this writ petition
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 149
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
under Article 226 of the Constitution against the A
impugned demand raised by the Revenue by way of the
impugned assessment order under Section 115QA of the
Act against the Assessee.
(ii) The Assessee is granted an opportunity to file an
appeal under Section 246-A of the Act before the CIT B
(A) to challenge the impugned assessment order only
insofar as it creates a demand under Section 115QA of
the Act.
(iii) If such an appeal is filed within ten days from today,
it will be considered on its own merits and a reasoned C
order disposing of the appeal will be passed by the CIT
(A) on all issues raised by the Assessee, not limited to
the issues raised in the present petition as well as on
the response thereto by the Revenue in accordance with
law.
D
(iv) The reasoned order shall be passed by the CIT (A)
not later than 31st October, 2019. It will be
communicated to the Petitioner within ten days
thereafter. For a period of two weeks after the date of
such communication of order, the demand under the
impugned assessment order, if it is affirmed by the CIT E
(A) in appeal, will not be enforced against the Assessee.
(v) The Court places on record the statement of the
Revenue that it will not raise any objection before the
CIT (A) as to the maintainability of such an appeal and
as to the appeal being barred by limitation. The Court F
also takes on record the statement of the Revenue that
it will not enforce the demand in terms of the impugned
assessment order till the disposal of the above appeal.
All of the above is subject to the Assessee filing the
appeal before the CIT (A) within ten days from today. G
(vi) It is made clear that this Court has not expressed
any view whatsoever on the contentions of either party
on the merits of the case.”
4. Challenge to the aforesaid view taken by the High Court was
raised by way of Special Leave Petition No.20728 of 2019 filed in this H
150 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Court on 26.08.2019. Within the time limit of 10 days as afforded by
the High Court, an appeal was also preferred by the appellant “without
prejudice” on 30.08.2019 against the “demand raised/order passed under
Section 115QA”. The aforesaid Special Leave Petition came up before
this Court on 06.09.2019, whereafter the matter was adjourned on few
occasions and then taken up for final disposal.
B
5. We heard Mr. Mukul Rohatgi and Mr. S. Ganesh, learned
Senior Advocates for the appellant and Mr. Zoheb Hossain, learned
Advocate for the respondents.
It was submitted by the appellant that in relation to an order
C passed under Section 115QA of the Act, no right of appeal would be
available under the provisions of the Act and as such the premise on
which the High Court proceeded was wrong; in any case plea of
existence of any alternate and efficacious remedy would be considered
at the threshold when a writ petition is taken up for preliminary hearing;
since the preliminary objection was taken and despite such objection,
D
discretion was exercised by the High Court which is evident from orders
dated 25.01.2017 and 30.08.2017, the very same issue ought not to have
weighed with the High Court; that the scheme of amalgamation was
approved by the High Court and any buy back of shares in pursuance
thereof would not be covered by the provisions of Section 115QA of
E the Act.
On the other hand it was submitted by the Revenue that any
order determining the liability to pay tax under Section 115QA would
be appealable; any other view would entail tremendous prejudice to the
concerned assessees; the concessions given on behalf of the Revenue
F which were recorded in the directions passed by the High Court, would
completely take care of any inconvenience and prejudice that could
possibly arise in the matter.
6. In its written submissions, the appellant submitted:-
I. No statutory appeal has been provided against an order
G
under section 115QA after it was introduced into the
statute book with effect from 01.06.2013. A section
115QA order cannot possibly be equated with an
assessment order passed under section 143(3) against
which an appeal lies under section 246A. An order
H under section 143(3) only makes an assessment of the
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 151
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
“total income” of the assessee, as defined in section A
2(45) of the IT Act. The tax payable under section
115QA by the company making a buy-back is a tax
payable on the payment made by the company and not
the tax payable on its “total income” and, therefore,
section 115QA does not at all speak of an “assessment”,
B
which is a term of art in the Income Tax Act, confined
to the determination of the “total income of the
assessee.” The “denial of the assessee’s liability to be
assessed” in section 246A is also confined to his liability
to be assessed under section 143(3) and the same has
nothing to do with an assessee’s liability to pay tax under C
section 115QA.
… … …
II. The Division Bench which admitted the matter and
granted interim relief had unequivocally exercised its
discretion in case of the Petitioner to entertain the Writ D
Petition despite the argument of alternative remedy.
Further, another Division Bench also similarly exercised
it’s discretion again in favour of the Petitioner on
26.07.2017 and 30.08.2017. It was therefore not open
for another Division Bench, which heard the matter on E
19.08.2019 to exercise it’s discretion in a fundamentally
different way, as compared to the two earlier Division
Benches….
….the objection of alternative remedy can only be raised
at the admission stage and not at the stage of final F
hearing, after the completion of the pleadings…”
7. Two issues arise for consideration, one regarding availability
of appellate remedy and the other concerning refusal to exercise
Jurisdiction under Article 226 because of availability of an alternate
efficacious remedy. In essence, the matter revolves around the question G
whether there is in fact an appellate remedy available, in case any
determination is made under Section 115QA of the Act that the
Company is liable to pay “additional income tax at the rate of 20% on
the distributed income”. For the purpose of considering whether there
is any such appellate remedy, we must note the concerned Sections in
the Act dealing with appellate remedy and provisions touching upon H
152 SUPREME COURT REPORTS [2019] 17 S.C.R.
A exercise of such right of appeal. Sections 246(1) and 246A(1) being
relevant for the present purposes are extracted hereunder:-
“246. Appealable orders - (1) Subject to the provisions of sub-
section (2), any assessee aggrieved by any of the following
orders of an Assessing Officer other than the Joint Commissioner
B may appeal to the Deputy Commissioner (Appeals) before the
1st day of June, 2000 against such order–
(a) an order against the assessee, where the assessee
denies his liability to be assessed under this Act, or an
intimation under sub-section (1) or sub-section (IB) of
C section 143, where the assessee objects to the making
of adjustments, or any order of assessment under sub-
section (3) of section 143 or section 144, where the
assesse objects to the amount of income assessed, or
to the amount of tax determined, or to the amount of
D loss computed, or to the status under which he is
assessed;
(b) an order of assessment, reassessment or recomputation
under section 147 or section 150;
(c) an order under section 154 or section 155 having the
E effect of enhancing the assessment or reducing a refund
or an order refusing to allow the claim made by the
assesssee under either of the said sections;
(d) an order made under section 163 treating the assessee
as the agent of a non-resident;
F
(e) an order under sub-section (2) or sub-section (3) of
section 170;
(f) an order under section 171;
(g) any order under clause (b) of sub-section (1) or under
G sub-section (2) or sub-section (3) or sub-section (5) of
section 185 in respect of any assessment for the
assessment year commencing on or before the 1st day
of April, 1992;
(h) any order cancelling the registration of a firm under sub-
H section (1) or under sub-section (2) of section 186 in
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 153
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
respect of any assessment for the assessment year A
commencing on or before the 1st day of April, 1992;
(i) an order under section 201;
(j) an order under section 216 in respect of any assessment
for the assessment year commencing on the 1st day of
April, 1988, or any earlier assessment year; B
(k) an order under section 237;
(l) an order imposing a penalty under-
(i) section 221, or
C
(ii) section 271, section 271A, section 271B, section
272A, section 272AA or section 272BB;
(iii) section 272, section 272B or section 273, as they
stood immediately before the 1st day of April, 1989,
in respect of any assessment for the assessment
year commencing on the 1st day of April, 1988, or D
any earlier assessment years.
246A. Appealable orders before Commissioner (Appeals).– (1)
Any assessee or any deductor or any collector aggrieved by any
of the following orders (whether made before or after the
appointed day) may appeal to the Commissioner (Appeals) E
against–
(a) an order passed by a Joint Commissioner under clause
(ii) of sub-section (3) of section 115VP or an order
against the assessee where the assessee denies his
liability to be assessed under this Act or an intimation F
under sub-section (1) or sub-section (1B) of section 143
or sub-section (1) of section 200A or sub-section (1) of
section 206CB, where the assessee or the deductor or
the collector objects to the making of adjustments, or
any order of assessment under sub-section (3) of section
143 except an order passed in pursuance of directions G
of the Dispute Resolution Panel or an order referred to
in sub-section (12) of section 144BA or section 144, to
the income assessed, or to the amount of tax determined,
or to the amount of loss computed, or to the status under
which he is assessed; H
154 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (aa) an order of assessment under sub-section (3) of
section 115WE or section 115WF, where the
assessee, being an employer objects to the value of
fringe benefits assessed;
(ab) an order of assessment or reassessment under
B section 115WG;
(b) an order of assessment, reassessment or recomputation
under section 147 except an order passed in pursuance
of directions of the Dispute Resolution Panel or an order
referred to in sub-section (12) of section 144BA or
C section 150;
(ba) an order of assessment or reassessment under
section 153A except an order passed in pursuance
of directions of the Dispute Resolution Panel or an
order referred to in sub-section (12) of section
D 144BA;
(bb) an order of assessment or reassessment under sub-
section (3) of section 92CD;
(c) an order made under section 154 or section 155 having
E the effect of enhancing the assessment or reducing a
refund or an order refusing to allow the claim made by
the assessee under either of the said sections except of
an order referred to in sub-section (12) of section
144BA;
F (d) an order made under section 163 treating the assessee
as the agent of a non-resident;
(e) an order made under sub-section (2) or sub-section (3)
of section 170;
G (f) an order made under section 171;
(g) an order made under clause (b) of sub-section (1) or
under sub-section (2) or sub-section (3) or sub-section
(5) of section 185 in respect of an assessment for the
assessment year commencing on or before the 1st day
H of April, 1992;
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 155
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
(h) an order cancelling the registration of a firm under sub- A
section (1) or under sub-section (2) of section 186 in
respect of any assessment for the assessment year
commencing on or before the 1st day of April, 1992, or
any earlier assessment year;
(ha) an order made under section 201; B
(hb) an order made under sub-section (6A) of section
206C;
(i) an order made under section 237;
(j) an order imposing a penalty under– C
(A) section 221; or
(B) section 271, section 271A, 271AAA, 271AAB,
section 271F, section 271FB, section 272AA or
section 272BB; D
(C) section 272, section 272B or section 273, as they
stood immediately before the 1st day of April, 1989,
in respect of any assessment for the assessment
year commencing on the 1st day of April, 1988, or
any earlier assessment years; E
(ja) an order of imposing or enhancing penalty under sub-
section (1A) of section 275;
(k) an order of assessment made by an Assessing Officer
under clause (c) of section 158BC, in respect of search
initiated under Section 132 or books of account, other F
documents or any assets requisitioned under section
132A on or after the 1st day of January, 1997;
(l) an order imposing a penalty under sub-section (2) of
section 158BFA;
G
(m) an order imposing a penalty under section 271B or
section 271BB;
(n) an order made by a Deputy Commissioner imposing a
penalty under section 271C, section 271CA, section
271D or section 271E; H
156 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (o) an order made by Deputy Commissioner or a Deputy
Director imposing a penalty under section 272A;
(p) an order made by a Deputy Commissioner imposing a
penalty under section 272AA;
(q) an order imposing a penalty under Chapter XXI;
B
(r) an order made by an Assessing Officer other than a
Deputy Commissioner under the provisions of this Act
in the case of such person or class of persons, as the
Board may, having regard to the nature of the cases,
the complexities involved and other relevant
C considerations direct.
Explanation.– For the purposes of this sub-section, where on
or after the 1 st day of October, 1998, the post of Deputy
Commissioner has been redesignated as Joint Commissioner and
the post of Deputy Director has been redesignated as joint
D Director, the references in this sub-section for “Deputy
Commissioner” and “Deputy Director” shall be substituted by
“Joint Commissioner” and “Joint Director” respectively.”
8. One of the key expressions appearing in Section 246(1)(a) as
well as in Section 246A(1)(a) is “where the assessee denies his liability
E to be assessed under this Act.”
9. Similar expression occurring in Section 30 of the Income Tax,
1922 came up for consideration before this Court in Commissioner of
Income Tax, U.P., Lucknow v. Kanpur Coal Syndicate1. The relevant
part of Section 30(1) as quoted in the decision was:-
F
“30.(1) Any assessee objecting to the amount of income assessed
under Section 23 … or the amount of tax determined under
Section 23 … or denying his liability to be assessed under this
Act … may appeal to the Appellate Assistant Commissioner
against the assessment or against such refusal or order:”
G The contention raised by the assessee was considered as under:-
“The Income Tax Officer may reject its contention and may
assess the total income of the association as such and impose
the tax on it. Under Section 30 an assessee objecting to the
1
H AIR (1965) SC 325 : 1964 (53) ITR 225
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 157
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
amount of income assessed under Section 23 or the amount of A
tax determined under the said section or denying his liability to
be assessed under the Act can prefer an appeal against the order
of the Income Tax to the Appellate Assistant Commissioner. It
is said that an order made by the Income Tax Officer rejecting
the plea of an association of persons that the members thereof
B
shall be assessed individually does not fall under one or other of
the three heads mentioned above. What is the substance of the
objection of the assesses? The assessee denies his liability to be
assessed under the Act in the circumstance of the case and
pleads that the members of the association shall be assessed only
individually. The expression “denial of liability” is comprehensive C
enough to take in not only the total denial of liability but also the
liability to tax under particular circumstances. In either case the
denial is a denial of liability to be assessed under the provisions
of the Act. In one case the accessee says that he is not liable to
be assessed to tax under the Act, and in the other case the
D
assessee denies his liability to tax under the provisions of the Act
if the option given to the appropriate officer under the provisions
of the Act is judicially exercised. We, therefore, hold that such
an assessee has a right of appeal under Section 30 of the Act
against the order of the Income Tax Officer assessing the
association of members instead of the members thereof E
individually.”
It was concluded that the expression “denial of liability” is
comprehensive enough to take in not only the total denial of liability
but also the liability to tax under particular circumstances.
10. The submission advanced on behalf of the appellant, however, F
is that “denial of the assessee’s liability to be assessed” in Section 246A
is confined to his liability to be assessed under Section 143(3) of the
Act and the same has nothing to do with the liability to pay tax under
Section 115QA. According to the appellant, tax payable in respect of
buy back of shares under Section 115QA is not a tax payable on “total G
income”.
11. We may now consider kinds of orders or situations that are
referred to in Section 246(1)(a) of the Act, which are:-
(i) An order against the assessee, where the assessee
denies his liability to be assessed under this Act, or H
158 SUPREME COURT REPORTS [2019] 17 S.C.R.
A (ii) An intimation under sub-section (1) or sub-section (1B)
of Section 143 where the assessee objects to the making
of adjustments, or
(iii) Any order of assessment under sub-section (3) of
Section 143 or Section 144, where the assessee objects:-
B to the amount of income assessed, or
to the amount of tax determined, or
to the amount of loss computed, or
to the status under which he is assessed.
C
The contingencies detailed in (ii) and (iii) hereinabove arise out
of assessment proceedings under Section 143 or Section 144 of the Act
but the first contingency is a standalone postulate and is not dependant
purely on the assessment proceedings either under Section 143 or
Section 144 of the Act. The expression “denies his liability to be
D assessed” as held by this Court in Kanpur Coal Syndicate1 is quite
comprehensive to take within its fold every case where the assessee
denies his liability to be assessed under the Act.
12. Section 115QA of the Act stipulates that in case of buy back
of shares referred to in the provisions of said Section, the company
E shall be liable to pay additional income tax at the rate of 20% on the
distributed income. Any determination in that behalf, be it regarding
quantification of the liability or the question whether such company is
liable or not would be matters coming within the ambit of the first
postulate referred to hereinabove. Similar is the situation with respect
to provisions of Section 246A(1)(a) where again out of certain situations
F
contemplated, one of them is “an order against the assessee, where
the assessee denies his liability to be assessed under this Act”. The
computation and extent of liability is determined under the provisions
of Section 115QA of the Act. Such determination under the Act would
squarely get covered under said expression. There is no reason why
G the scope of the such expression be restricted and confined to issues
arising out of or touching upon assessment proceedings either under
Section 143 or Section 144 of the Act.
13. If the submission of the appellant is accepted and the
concerned expression as stated hereinabove in Section 246(1)(a) or in
H Section 246A(1)(a) is to be considered as relatable to the liability of an
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 159
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
assessee to be assessed under Section 143(3) as contended, there would A
be no appellate remedy in case of any determination under Section
115QA. The issues may arise not just confined to the question whether
the company is liable at all but may also relate to other facets including
the extent of liability and also with regard to computation. If the
submission is accepted, every time the dispute will be required to be
B
taken up in proceedings such as a petition under Article 226 of the
Constitution, which normally would not be entertained in case of any
disputed questions of fact or concerning factual aspects of the matter.
The assessee may thus, not only lose a remedy of having the matter
considered on factual facets of the matter but would also stand deprived
of regular channels of challenges available to it under the hierarchy of C
fora available under the Act.
14. We, therefore, reject the submissions advanced by the
appellant and hold that an appeal would be maintainable against the
determination of liability under Section 115QA of the Act.
15. We now turn to the question whether the High Court was D
justified in refusing to entertain the writ petition because of availability
of adequate appellate remedy. The law on the point is very clear and
was summarised in Commissioner of Income Tax and others v.
Chhabil Dass Agarwal2 as under:-
“11. Before discussing the fact proposition, we would notice the E
principle of law as laid down by this Court. It is settled law that
non-entertainment of petitions under writ jurisdiction by the High
Court when an efficacious alternative remedy is available is a
rule of self-imposed limitation. It is essentially a rule of policy,
convenience and discretion rather than a rule of law. Undoubtedly, F
it is within the discretion of the High Court to grant relief under
Article 226 despite the existence of an alternative remedy.
However, the High Court must not interfere if there is an
adequate efficacious alternative remedy available to the petitioner
and he has approached the High Court without availing the same
unless he has made out an exceptional case warranting such G
interference or there exist sufficient grounds to invoke the
extraordinary jurisdiction under Article 226. (See State of U.P.
v. Mohd. Nooh 3, Titaghur Paper Mills Co. Ltd. v. State of
2
(2014) 1 SCC 603
3
AIR 1958 SC 86 H
160 SUPREME COURT REPORTS [2019] 17 S.C.R.
A Orissa4, Harbanslal Sahnia v. Indian Oil Corpn. Ltd. 5 and
State of H.P. v. Gujarat Ambuja Cement Ltd.6)
12. The Constitution Benches of this Court in K.S. Rashid and
Son v. Income Tax Investigation Commission7, Sangram Singh
v. Election Tribunal8, Union of India v. T.R. Varma9, State of
B U.P. v. Mohd. Nooh3 and K.S. Venkataraman and Co. (P) Ltd.
v. State of Madras10 have held that though Article 226 confers
very wide powers in the matter of issuing writs on the High Court,
the remedy of writ is absolutely discretionary in character. If the
High Court is satisfied that the aggrieved party can have an
adequate or suitable relief elsewhere, it can refuse to exercise
C its jurisdiction. The Court, in extraordinary circumstances, may
exercise the power if it comes to the conclusion that there has
been a breach of the principles of natural justice or the procedure
required for decision has not been adopted. [See N.T. Veluswami
Thevar v. G. Raja Nainar 11 , Municipal Council, Khurai v.
D Kamal Kumar12, Siliguri Municipality v. Amalendu Das13, S.T.
Muthusami v. K. Natarajan 14, Rajasthan SRTC v. Krishna
Kant15, Kerala SEB v. Kurien E. Kalathil16, A. Venkatasubbiah
Naidu v. S. Chellappan 17, L.L. Sudhakar Reddy v. State of
A.P. 18 , Shri Sant Sadguru Janardan Swami (Moingiri
Maharaj) Sahakari Dugdha Utpadak Sanstha v. State of
E Maharashtra19, Pratap Singh v. State of Haryana20 and GKN
Driveshafts (India) Ltd. v. ITO21.]
4
(1983) 2 SCC 433 : 1983 SCC (Tax) 131
5
(2003) 2 SCC 107
6
(2005) 6 SCC 499
7
F AIR 1954 SC 207
8
AIR 1955 SC 425
9
AIR 1957 SC 882
10
AIR 1966 SC 1089
11
AIR 1959 SC 422
12
AIR 1965 SC 1321 : (1965) 2 SCR 653
13
(1984) 2 SCC 436 : 1984 SCC (Tax) 133
14
G (1988) 1 SCC 572
15
(1995) 5 SCC 75 : 1995 SCC (L&S) 1207 : (1955) 31 ATC 110
16
(2000) 6 SCC 293
17
(2000) 7 SCC 695
18
(2001) 6 SCC 634
19
(2001) 8 SCC 509
20
(2002) 7 SCC 484 : 2002 SCC L&S) 1207 : (1995) 31 ATC 110
H 21
(2003) 1 SCC 72
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 161
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
… A
15. Thus, while it can be said that this Court has recognised some
exceptions to the rule of alternative remedy i.e. where the
statutory authority has not acted in accordance with the
provisions of the enactment in question, or in defiance of the
fundamental principles of judicial procedure, or has resorted to B
invoke the provisions which are repealed, or when an order has
been passed in total violation of the principles of natural justice,
the proposition laid down in Thansingh Nathmal case22, Titaghur
Paper Mills case4 and other similar judgments that the High
Court will not entertain a petition under Article 226 of the C
Constitution if an effective alternative remedy is available to the
aggrieved person or the statute under which the action
complained of has been taken itself contains a mechanism for
redressal of grievance still holds the field. Therefore, when a
statutory forum is created by law for redressal of grievances, a
writ petition should not be entertained ignoring the statutory D
dispensation.”
Recently, in Authorised Officer, State Bank of Travancore &
Anr. v. Mathew K.C.23, the principles laid down in Chhabil Dass
Agarwal2 were reiterated as under:
E
“The discretionary jurisdiction under Article 226 is not absolute
but has to be exercised judiciously in the given facts of a case
and in accordance with law. The normal rule is that a writ
petition under Article 226 of the Constitution ought not to be
entertained if alternate statutory remedies are available, except
in cases falling within the well-defined exceptions as observed F
in CIT v. Chhabil Dass Agarwal2 …”
16. We do not, therefore, find any infirmity in the approach
adopted by the High Court in refusing to entertain the Writ Petition.
The submission that once the threshold was crossed despite the
preliminary objection being raised, the High Court ought not to have G
considered the issue regarding alternate remedy, may not be correct.
The first order dated 25.01.2017 passed by the High Court did record
the preliminary objection but was prima facie of the view that the
22
AIR 1964 SC 1419
23
(2018) 3 SCC 85 H
162 SUPREME COURT REPORTS [2019] 17 S.C.R.
A transactions defined in Section 115QA were initially confined only to
those covered by Section 77A of the Companies Act. Therefore,
without rejecting the preliminary objection, notice was issued in the
matter. The subsequent order undoubtedly made the earlier interim
order absolute. However, the preliminary objection having not been
dealt with and disposed of, the matter was still at large.
B
In State of U.P. v. U.P. Rajya Khanij Vikas Nigam Sangharsh
Samiti and others 24 this Court dealt with an issue whether after
admission, the Writ Petition could not be dismissed on the ground of
alternate remedy. The submission was considered by this Court as
under:
C
“38. With respect to the learned Judge, it is neither the legal
position nor such a proposition has been laid down in Suresh
Chandra Tewari25 that once a petition is admitted, it cannot be
dismissed on the ground of alternative remedy. It is no doubt
correct that in the headnote of All India Reporter (p. 331), it is
D stated that “petition cannot be rejected on the ground of
availability of alternative remedy of filing appeal”. But it has not
been so held in the actual decision of the Court. The relevant
para 2 of the decision reads thus: (Suresh Chandra Tewari case,
AIR p. 331)
E “2. At the time of hearing of this petition a threshold question,
as to its maintainability was raised on the ground that the
impugned order was an appealable one and, therefore, before
approaching this Court the petitioner should have approached the
appellate authority. Though there is much substance in the
F above contention, we do not feel inclined to reject this
petition on the ground of alternative remedy having regard
to the fact that the petition has been entertained and an
interim order passed.”
(emphasis supplied)
G Even otherwise, the learned Judge was not right in law. True it
is that issuance of rule nisi or passing of interim orders is a relevant
consideration for not dismissing a petition if it appears to the High Court
that the matter could be decided by a writ court. It has been so held
24
(2008) 12 SCC 675
25
H AIR 1992 All 331 (Suresh Chandra Tewari vs. District Supply Officer)
GENPACT INDIA PRIVATE LIMITED v. DEPUTY 163
COMMISSIONER OF INCOME TAX [UDAY UMESH LALIT, J.]
even by this Court in several cases that even if alternative remedy is A
available, it cannot be held that a writ petition is not maintainable. In
our judgment, however, it cannot be laid down as a proposition of law
that once a petition is admitted, it could never be dismissed on the ground
of alternative remedy. If such bald contention is upheld, even this Court
cannot order dismissal of a writ petition which ought not to have been
B
entertained by the High Court under Article 226 of the Constitution in
view of availability of alternative and equally efficacious remedy to the
aggrieved party, once the High Court has entertained a writ petition
albeit wrongly and granted the relief to the petitioner.
17. We do not, therefore, find any error in the approach of and
conclusion arrived at by the High Court. It is relevant to mention that C
the concessions given on behalf of the Revenue as recorded in the
directions issued by the High Court also take care of matters of
prejudice, if any. Consequently, the appellant, as a matter of fact, will
have a fuller, adequate and efficacious remedy by way of appeal before
the appellate authority. D
18. Certain issues raised during the course of hearing touching
upon the aspects whether the appellant is liable under Section 115QA
of the Act or whether the transaction of buy back of shares in the
present matter would come within the statutory contours of said Section
115QA or not, are issues which will be gone into at the appropriate E
stages by the concerned authorities; and as such we have refrained
from dealing with those issues.
19. In the circumstances we find that the judgment and order
under appeal does not call for any interference. This appeal is, therefore,
dismissed. No costs. F
20. Needless to say that the appeal preferred by the appellant
on 30.08.2019 shall now be proceeded with in accordance with law.
Kalpana K. Tripathy Appeal dismissed.
G
H
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