Facts of the Case

The petitioner, Orissa Cement Ltd., filed a writ petition before the Delhi High Court seeking issuance of a writ of prohibition against the Commissioner of Income Tax. The petitioner sought to restrain the Commissioner from proceeding under Section 263 of the Income-tax Act, 1961 and from passing any order pursuant to the notice issued under the said provision.

At the initial stage of the proceedings, the Court granted interim protection restraining the Commissioner from passing any final order pursuant to the notice issued under Section 263. Subsequently, various procedural orders were passed during the pendency of the writ petition.

Issues Involved

  1. Whether the Commissioner of Income Tax could proceed with revision proceedings under Section 263 of the Income-tax Act.
  2. Whether the writ petition challenging the proposed action under Section 263 remained maintainable after the Commissioner passed an order and the petitioner availed the statutory appellate remedy.
  3. Whether the writ petition had become infructuous in view of subsequent developments.

Petitioner’s Arguments

  • The petitioner challenged the initiation of proceedings under Section 263 of the Income-tax Act.
  • It sought a writ prohibiting the Commissioner from continuing with the revision proceedings and from passing any order pursuant thereto.
  • During the final hearing, counsel for the petitioner submitted that an order under Section 263 had already been passed.
  • The petitioner had also availed the appellate remedy available under the Income-tax Act against such order.
  • In view of these developments, the petitioner stated that it did not wish to press the writ petition further.

Respondent’s Arguments

  • The Revenue defended the proceedings initiated under Section 263 of the Income-tax Act.
  • During the pendency of the writ petition, the statutory proceedings culminated in the passing of an order under Section 263.
  • The respondents pointed out that the petitioner had already pursued the appellate remedy available under the Act, thereby rendering the writ proceedings unnecessary.

Court Order / Findings

The Delhi High Court noted the submission made on behalf of the petitioner that:

  • The order under Section 263 of the Income-tax Act had already been passed.
  • The petitioner had availed the statutory appellate remedy against such order.
  • Consequently, the petitioner was no longer pressing the writ petition.

Taking note of the above circumstances, the Court held that the writ petition had become infructuous and accordingly disposed of the same.

Important Clarification

  • The Court did not adjudicate upon the legality or validity of the proceedings initiated under Section 263.
  • No findings were recorded on the merits of the revision proceedings.
  • The writ petition was disposed of solely because the impugned proceedings had culminated in a final order and the petitioner had already availed the appellate mechanism prescribed under the Income-tax Act.
  • The decision reinforces the principle that where an effective statutory appellate remedy has been invoked and the original challenge has become academic, a writ petition may be treated as infructuous.

Legal Principle Emerging from the Case

Where a taxpayer challenges proceedings initiated under Section 263 of the Income-tax Act, but during the pendency of the writ petition a final revisional order is passed and the taxpayer avails the statutory appellate remedy, the writ petition may be disposed of as infructuous without examination of the merits of the controversy.

Sections Involved:

Section 263 of the Income-tax Act, 1961

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2002:DHC:5454/MMS08082002CW2301978_143759.pdf 

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