Director of Income Tax vs Ravi Vijay and Another

Alok Sharma, J,

The above two petitions have a common legal issue for determination without any determinative variation on facts and hence are being disposed of by a common order. These petitions have been filed against the orders of Tribunal holding that an appeal against an order of penalty imposed under s. 271FA falling under Chapter XXI of IT Act, 1961 (hereinafter the ''1961 Act'') was maintainable before the CIT(A) with reference to s. 246A(1)(q) of the 1961 Act. The Tribunal so holding has set aside the order of CIT(A)-III, Jaipur finding to the contrary and remanded the matter to CIT(A) to be heard on merits.

Learned counsel for the petitioners submits the order of the Tribunal is liable to be set aside on the ground that the Tribunal erred in holding that an appeal against an order passed under s. 271FA falling under Chapter XXI of the 1961 Act was maintainable before the CIT(A). It is submitted that the order of penalty under s. 271FA is an order passed by the Director of IT, who is equivalent to CIT with reference to s. 116(c) of the 1961 Act and that as generally an appeal provides for rectification of orders passed by lower authorities by their higher authority, no statutory appeal from an order of Director of IT (a person equivalent to a CIT) to CIT holding an equivalent rank under the 1961 Act is conceivable. He submits that an appeal against an order of Director of IT (CIT) passed under s. 271FA before an equivalent officer i.e. CIT(A) is impliedly not visualised under s. 246A(1)(q) of the 1961 Act and a literal reading of the provision would be an erroneous interpretation. A reference to s. 253 of the 1961 Act has been made and it is submitted that s. 253(1)(c) of the 1961 Act provides for an appeal to Tribunal--a higher authority--against the orders passed under ss. 271 and 272A of the 1961 Act, as the said orders are passed by the officers of the rank of CIT. Counsel submits that in this view of this matter, this Court ought to, resorting to the rule of "reading down", hold that s. 246A(1)(q) of the 1961 Act does not provide for an appeal to CIT(A) against an order of penalty passed by Director of IT (CIT rank) under s. 271FA of the 1961 Act and the appeal is liable to be heard by the Tribunal--a superior authority. Counsel further oddly and contrary to his earlier submissions submits that even otherwise this Court has entertained writ petitions directly against orders under s. 271FA of the 1961 Act, from which an inference ought to be drawn that no appeal at all is available under the 1961 Act from an order of penalty passed under s. 271FA of the 1961 Act.

Per contra, counsel for respondents would submit that appeals are creatures of statute and are to be availed only as provided. It is submitted that the appellate authority under a statute has to be determined by a plain and literal reading of the statute and the status of the appellate authority qua the authority which has passed the order is not germane. Counsel has submitted that the Revenue Appellate Authority under the Rajasthan Tenancy Act is an officer belonging to the Rajasthan Administrative Services while it hears appeals from orders passed by Sub-Divisional Officers who are members of the Indian Administrative Services--a higher services. The submission is that in the instant case the CIT(A) is not even subordinate to the Director of IT (CIT) in the pecking order and hence the submissions of the petitioner''s counsel in this case are a non sequitur. It is submitted that in the case at hand a reference be had to the plain language of s. 246A, cl. (q) of the 1961 Act which provides that all orders of penalty falling under Chapter XXI are appealable to CIT(A). It is submitted that an order of penalty under s. 271FA is an order under Chapter XXI of the 1961 Act and consequently appealable to the jurisdictional CIT(A). It is submitted that a literal reading of the statute should be not abandoned for a stretched interpretative exercise entailing a result contrary to the plain language used by the law-makers. It is submitted that as long as the statute i.e. s. 246A(1)(q) is not challenged and set aside, its inexorable effect would be entertaining and hearing of appeals against order of penalty under s. 271FA by the CIT(A). Counsel submits that a reference to s. 253(1)(c) of the 1961 Act by the petitioner''s counsel is for the present case misdirected as the said provision provides for appeals against orders passed under ss. 271 and 272A of the 1961 Act and not against the orders passed under s. 271FA of the IT Act. Counsel submits that the orders passed under ss. 271 and 272A of the 1961 Act even while falling under Chapter XXI would not be appealable under s. 246A(1)(q) of the 1961 Act for the reason of a specific provision for appeal in respect thereof having been made to the exclusion of the otherwise general provision under s. 246A(1)(q) of the 1961 Act. It is submitted that in the absence of specific provision for appeal under s. 253 of the 1961 Act--as in the case of orders of penalty under ss. 271 and 272A, an appeal against orders of penalty under Chapter XXI would be governed by other relevant provision which in the instant case is s. 246A(1)(q) of the 1961 Act. It is submitted that merely because writ petitions have been entertained directly against orders under s. 271FA of the 1961 Act by this Court, it is not a ratio determined by this Court that appeals against orders passed under s. 271FA of the 1961 Act are not maintainable. Counsel submits that entertaining of writs even while an alternative statutory remedy is available is a matter of discretion of this Court in a given case and nothing turns on it to read a universal rule therein. Counsel submits that in any event the aforesaid argument is bad for contrariety in as much while on the one hand it is contended that an order of penalty under s. 271FA of the 1961 Act is appealable not under s. 246A(1)(q) to the CIT(A) but under s. 253 of the 1961 Act before the Tribunal, on the other it is contended that no appeal is at all provided for and hence only writs are maintainable. Reference has been made to the judgment of this Court in State of Rajasthan vs. Dy. CIT (SB Civil Writ Petn. No. 5399 of 2011) decided on 13th July, 2011, wherein this Court in the context of a challenge to an order passed under s. 271FA of the 1961 Act has held that the petitioner therein had efficacious alternative legal remedy to challenge the said order under the statute i.e. by way of appeal and therefore the writ laid before the Court was not maintainable.

Heard learned counsel for the parties, and perused the material available on record of writ petition.

The question before this Court is whether an order passed under s. 271FA of the 1961 Act by the Director of IT, who holds the rank of a CIT in the IT Department is appealable under s. 246A(1)(q) of the 1961 Act to the CIT(A). Sec. 246A(1)(q) of the 1961 Act provides for appeals before the CIT(A) against an order of penalty passed under Chapter XXI of the 1961 Act. Sec. 271FA admittedly falls within Chapter XXI of the 1961 Act. To my mind therefore on a plain reading of the said provision, an appeal against an order passed by an officer of the rank of CIT under s. 271FA of the 1961 Act is maintainable before the CIT(A). From a mere reading of the provision for filing appeals against orders passed under ss. 271 and 272A (also under Chapter XXI) of the 1961 Act before the Tribunal, this Court cannot oh analogy hold that because the said orders passed by an officer of the rank of CIT are appealable before the Tribunal under ss. 253 of the 1961 Act, an order under s. 271FA of the 1961 Act also passed by an officer of the rank of CIT should also be appealable before the Tribunal. In my considered view even though orders of penalty under ss. 271 and 272A of the 1961 Act fall under Chapter XXI appeals therefrom stand excluded before the CIT(A) under the general provisions of s. 246A(1)(q) by virtue of a specific provision under s. 253(1)(c) of the 1961 Act. Consequently, in my view an order under s. 271FA (Chapter XXI) of the 1961 Act is plainly appealable under s. 246A(1)(q) of the 1961 Act and no amount of interpretative exercise can displace law as enacted. Further it is an admitted fact that in the course of the demand notice under s. 156 of the 1961 Act following the order of penalty under s. 271FA of the 1961 Act, the assessee was informed that the said order was appealable before the Jurisdictional CIT(A)--in the instant case CIT(A)-III, Jaipur.

For the aforesaid reasons, I find no error in the orders dt. 13th May, 2011 in Appeal No. 1207/Jp/2010 and 4th Feb., 2011 in Appeal No. 1195/Jp/2010 passed by the Tribunal. The above two writ petitions are consequently dismissed. Stay applications also stand dismissed.