Cesc Ltd. And Another v. Deputy Commissioner Of Income-Tax And Others (No. 2)

D.K Seth, J.:— Facts:

2. This appeal is directed against the judgment and order dated September 10, 2001, passed by the learned single judge in W.P No. 598 of 2001 (CESC Ltd. v. Deputy CIT (No. 1), [2003] 263 ITR 382 (Cal)), dismissing the writ petition on the ground of alternative remedy. In the writ petition the petitioners have challenged two notices. One dated March 8, 2001, passed by the Deputy Commissioner of Income-tax. Circle-2(6), (DCIT) Mumbai, treating CESC Limited as “representative assessee”/“agent” of the non-resident assessee, Linklaters and Paines, U.K (L & P), under section 163 of the Income-tax Act, 1961. The other notice is dated March 20, 2001, passed by the same officer under section 148 seeking to reopen the assessment of the non-resident for the assessment year 1998-99 at the hands of the CESC requiring to submit return as “representative assessee” of L & P.

The challenge :

3. The petitioners/appellants have challenged the said two notices on the ground that each of these two notices are integral parts of the cause of action against which relief is being sought for in the writ petition. The issuing of these notices are preconditions for assuming jurisdiction under the respective provisions of law under which the liability of the non-resident assessee was sought to be foisted upon the CESC. These notices having been served on the CESC at Calcutta where it carries on business and has its principal office, the service of the notice at Calcutta gives rise to the cause of action to the CESC within the jurisdiction of this court. Therefore, the writ petition could be maintained in this High Court. The view contrary thereto taken by the learned single judge, therefore, is unsustainable. The second ground urged is that the absence of jurisdiction to issue these notices on the CESC makes those notices liable to be quashed as being without jurisdiction. The conditions precedent for assuming jurisdiction under section 163 and section 147, respectively, have not been fulfilled. Therefore, there was no ground for the Deputy CIT, Mumbai, to assume jurisdiction and issue the respective notices. As such those are liable to be quashed.

Submission of the appellants : Section 163 :

4. Dr. D. Pal appearing on behalf of the appellant/CESC, contended that the order passed under section 163(2) becomes effective, in view of the scheme of the statute, only on communication of the order upon such person. Therefore, the communication of such order to such person is an integral part of the cause of action, which arises at such place where it is communicated. Therefore, the jurisdiction of the court, within the territorial limits of which service is effected, is attracted. He then contended that the Deputy CIT could not treat CESC as a “representative assessee” under section 163 unless the conditions precedent provided in section 163 read with sections 160 and 161 are fulfilled. In the present case, according to him, the order under section 163(2) was passed on March 8, 2001, in the course of the assessment proceeding against the non-resident. The said assessment was concluded on March 30, 2001. The income of the non-resident was being assessed in the hands of the non-resident and in the course of such assessment, the same is again sought to be assessed in the hands of the “representative assessee”. Thus, the same income is being assessed in the hands of two persons twice, attracting the mischief of double assessment. He contended further that when the income at the hands of the non-resident is being assessed, it cannot be said that the non-resident is not available. When the non-resident is available, section 163 has no manner of application. Until the assessment is over in the hands of the non-resident and until there is a finding that the non-resident is not available, section 163 cannot be resorted to. Therefore, the Deputy CIT could not have assumed jurisdiction under section 163 to treat the CESC as “representative assessee”. Thus, the order passed under section 163(2) sought to be communicated by the notice dated March 8, 2001, is wholly without jurisdiction, amenable to a writ proceeding despite existence of alternative remedy. According to him, if there is a lack of jurisdiction, then alternative remedy will not stand in the way compelling the petitioner/appellant to undergo the whole odds of the lengthy process provided in the statute and wait till the finality, under the machinery provided in the statute, is achieved. In support of his contention, he relied on various decisions to which we will be referring at appropriate stages.

Section 147 :

5. With regard to the notice, dated March 20, 2001, under section 148, Dr. Pal contended that the service of notice under section 148 is a condition precedent for assuming jurisdiction under section 147. Therefore, the notice under section 148 is an integral part of the cause of action arising out of initiation of a proceeding under section 147 with the service of the notice under section 148. According to the scheme of the Act without a notice under section 148, jurisdiction under section 147 could not be assumed by the Deputy CIT, Mumbai. Such being the position, the service of notice at Calcutta upon the CESC has given rise to the cause of action against which relief was being sought in the writ petition arising within the territorial jurisdiction of this court. He then contends that jurisdiction under section 147 could be assumed only if there is a reason to believe that income of an assessee has escaped assessment and that such escapement of assessment was caused due to any action or inaction on the part of the person upon whom the notice under section 148 is issued. According to him, there cannot be any scope for escapement of assessment until the assessment is over. The question of escapement of assessment cannot arise during the course of assessment proceedings. That apart, CESC cannot be supposed to be responsible for any action or inaction on the part of the non-resident for any ground relating to assumption of jurisdiction under section 147. By the notice under section 148, the CESC has been asked to submit a return for the assessment year 1998-99. The time for submission of the return for the assessment year had expired before the notice, dated March 20, 2001, was issued. The CESC was never responsible to submit any return in respect of the income of the non-resident. Therefore, there cannot be any default on its part to submit the return. No notice except the present notice under section 148 was ever issued to the CESC, for which it can be said that CESC had failed to comply with any such notice, empowering the Deputy CIT to resort to section 147.

Jurisdiction :

6. He further contended that the CESC had deducted tax under section 195 from the amount payable to the non-resident out of the transaction with the CESC and the non-resident with the approval of the Assessing Officer of the income of the CESC and the Reserve Bank of India, all of which emanated and communicated within Calcutta, the situs of the jurisdiction of this court. The CESC is subject to assessment to tax under the Assessing Officer at Calcutta. Therefore, even if it can be assessed, it can be assessed at Calcutta even in relation to the non-resident, the transactions whereof were subjected to deduction of tax within the jurisdiction of the Assessing Officer at Calcutta. Therefore, this court's territorial jurisdiction is attracted. Inasmuch as the deduction of tax in respect of the transaction between the CESC and the nonresident is also a part of the cause of action in respect of which section 163(2) has been invoked. Dealing with the question relating to the jurisdiction of this court, he contended that cause of action is a bundle of facts relevant for the purpose of deciding a question at issue in order to grant the relief. Therefore, this court has jurisdiction to entertain the writ petition.

7. Dr. Pal relied on CIT v. Ranchhoddas Karsondas, [1959] 36 ITR 569, 576 (SC); AIR 1959 SC 1154 (para. 17), to support his contention that unless the condition precedent for assumption of jurisdiction under section 147 exists, the notice under section 148 is without jurisdiction. He relied on Commissioner Of Income Tax, Madras v. M.K.K.R Muthukaruppan Chettiar , [1970] 78 ITR 69, 73 (SC); Estate of the late A.M.K.M Karuppan Chettiar v. CIT, [1969] 72 ITR 403, 407 (SC); Bidhu Bhusan Sarcar (Deceased) v. Commissioner Of Income-Tax, Calcutta., [1966] 59 ITR 531, 546-547 (Cal) in which the same view was taken. He then relied on CIT v. Murlidhar Jhawar and Puma Ginning and Pressing Factory, [1966] 60 ITR 95, 97 (SC); AIR 1966 SC 1536 (para. 3) and jyotendra-sinhji v. S.I Tripathi, [1993] 201 ITR 611, 632 (SC); 1993 Supp (3) SCC 389 : AIR 1993 SC 1991 (para. 36), in order to support his contention that the same income cannot be assessed in the hands of the agent of the non-resident (representative assessee) and the non-resident hitting at the mischief of double assessment rendering the notice under section 148 invalid and without jurisdiction. He relied on Calcutta Discount Co. Ltd. v. ITO, [1961] 41 ITR 191, 207 (SC); AIR 1961 SC 372 (para. 27), to contend that if the notice under section 148 is patently without jurisdiction and the Income-tax Officer has no competence or jurisdiction to reopen the proceeding, as no income of the non-resident can be said to have escaped assessment, the question of not allowing the relief on account of existence of alternative remedy is not sustainable in law. Lack of jurisdiction would invite the court to invoke its discretion to interfere with such notice in writ jurisdiction. The existence of alternative remedy is not, however, always a sufficient reason for refusing a party quick relief by a writ and order prohibiting an authority acting without jurisdiction from continuing such action. This decisions of the five judge Bench was followed in Madhya Pradesh Industries Ltd. v. ITO, [1965] 57 ITR 637 (SC); Madhya Pradesh Industries Ltd. v. ITO, [1970] 77 ITR 268 (SC); (1970) 2 SCC 32 : AIR 1970 SC 1011 (para. 15), holding that three contingencies may invite the court to exercise its discretion for invoking the writ jurisdiction, viz., (1) for the enforcement of any of the fundamental rights, (2) where there has been a violation of the principle of natural justice, (3) where the order or proceedings are wholly without jurisdiction or vires of an Act is challenged. The same view was taken in Shivram Poddar v. ITO, [1964] 51 ITR 823, 829 (SC) in a matter relating to tax. Relying on Mohindra Mohan Sirkar v. ITO, [1978] 112 ITR 47, 53, 57 (Cal), Dr. Pal contended that at the stage of notice under section 148, there is no alternative remedy. In Y. Narayana Chetty v. ITO, [1959] 35 ITR 388, 392 (SC); AIR 1959 SC 213 (para. 5), the apex court had held that the notice prescribed by section 34 (now 148) cannot be regarded as a mere procedural requirement. It is only if the said notice is served upon the assessee, as required, then the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. The same view was taken in CIT v. Thayaballi Mulla Jeevaji Kapasi, [1967] 66 ITR 147, 150 (SC); Gopiram Agarwalla v. First Addl. ITO, [1959] 37 ITR 493, 494, 498 (Cal); AIR 1959 Cal 420; L.V Veen Chettiar v. STO, [1970] 26 STC 579; AIR 1971 Mad 155 (para. 8). He had also referred to the decisions in S. Narayanappa v. CIT, [1967] 63 ITR 219 (SC) AIR 1967 SC 523; Chhugamal Rajpal v. S.P Chaliha, [1971] 79 ITR 603 (SC); (1971) 1 SCC 453 : AIR 1971 SC 730; Commissioner Of Income Tax, Calcutta v. Burlop Dealers Ltd.† , [1971] 79 ITR 609 (SC); (1971) 1 SCC 462 : AIR 1971 SC 1635; CIT v. Bhanji Lavji, [1971] 79 ITR 582 (SC); Parashuram Pottery Works Co. Ltd. v. ITO, [1977] 106 ITR 1 (SC); (1977) 1 SCC 408 : AIR 1977 SC 429; CIT v. Hemchandra Kar, [1970] 77 ITR 1 (SC); ITO v. Lakhmani Mewal Das, [1976] 103 ITR 437, 447 (SC); ITO v. Madnani Engineering Works Ltd., [1979] 118 ITR 1 (SC); (1979) 2 SCC 455 : AIR 1979 SC 1450; Madhya Pradesh Industries Ltd. v. ITO, [1965] 57 ITR 637 (SC); Madhya Pradesh Industries Ltd. v. ITO, [1970] 77 ITR 268 (SC); (1970) 2 SCC 32 : AIR 1970 SC 1011 (para. 13); Phool Chand Bajrang Lal v. ITO, [1993] 203 ITR 456 (SC); Ganga Saran and Sons P. Ltd. v. ITO, [1981] 130 ITR 1 (SC); (1981) 3 SCC 143 : AIR 1981 SC 1363; Indian Oil Corporation v. ITO, [1986] 159 ITR 956 (SC); Sri Krishna Pvt. Ltd. v. ITO, [1996] 221 ITR 538 (SC); (1996) 9 SCC 534 : AIR 1996 SC 3409; Assam Forest Products (P.) Ltd. v. CIT, [1995] 211 ITR 447 (SC); Coca Cola Export Corporation v. ITO, [1998] 231 ITR 200, 214 (SC); (1998) 4 SCC 166 : AIR 1998 SC 1864; CIT v. Tarajan Tea Co. (P.) Ltd., [1999] 236 ITR 477 (SC); (1999) 2 SCC 455 : AIR 1999 SC 1034; Whirlpool Corporation v. Registrar of Trade Marks, (1998) 8 SCC 1 : AIR 1999 SC 22 (paras. 14 and 15) and Comunidado of Chicalim v. ITO, [2001] 247 ITR 271 (SC).

Submission on behalf of the respondent/Revenue : Section 163 :

8. Mr. S.K Kapoor, learned Addl. Solicitor General, appearing for the respon-dent/Revenue, had confined his argument only with regard to the maintainability of the writ petition and had supported the decision by the learned single judge. According to him, the petitioners/appellants upon receipt of the notice under section 163 had submitted to the jurisdiction of the Deputy CIT, Mumbai, and had participated in the proceedings after which the order under section 163 was passed. The order under section 163 is an appealable order. The mere communication of the order passed under section 163(2) would not take away the jurisdiction of the appellate authority provided under the statute in order to invoke writ jurisdiction of this court. The order was passed at Mumbai in a proceeding initiated and continuing at Mumbai in respect of an assessment within the jurisdiction of the Deputy CIT, Mumbai, where the records are lying. Therefore, the communication thereof at Calcutta would not create jurisdiction for intervention by this court in writ jurisdiction in respect of an order appealable under the statute, particularly, when the CESC had participated in the proceedings. The service of notice under section 163, even if said to be without jurisdiction and even if gives rise to a part of the cause of action, though, according to him, it does not, still this court cannot assume jurisdiction to invoke discretion under article 226 of the Constitution in respect of a matter appealable under the statute after having been participated by the party. According to him, the service of notice under section 163 is not an integral part of the cause of action.

Section 148 :

9. He then contends that the service of notice under section 148 is not an integral part of the cause of action having regard to the facts and circumstances of the present case. In support of his contention he relied on the decisions in State of Rajasthan v. Swaika Properties, (1985) 3 SCC 217 : AIR 1985 SC 1289; Oil and Natural Gas Commission v. Utpal Kumar Basu, (1994) 4 SCC 711; East India. TPT Agency India Ltd. v. Union of India, [2001] 1 CLJ 605; Rabindra Nath Mukherjee v. Union of India, [1997] 1 CLJ 561; Union of India v. Adani Exports Ltd., (2002) 1 SCC 567 : AIR 2002 SC 126; Jeypore Sugar Co. Ltd. v. ITO, [1980] 124 ITR 518 (Mad). He then contended that assuming that part of the cause of action arose within the jurisdiction of this court even then this court should dismiss the writ petition on the ground that the territorial nexus and grievances of the petitioners are entirely related to Mumbai. On the totality of the facts, it is the High Court at Bombay, which has the jurisdiction and not this court. He then contends that pursuant to the notice under section 148, the CESC had furnished the return as representative assessee of the non-resident and that the CESC had already been declared agent/representative assessee of the nonresident. At the same time, the assessment is limited to the non-resident, which is undertaken by the Deputy CIT, Mumbai, and, therefore, the territorial jurisdiction of the income-tax authority is at Mumbai. The jurisdiction of the income-tax authority at Calcutta in respect of the assessment of CESC is wholly immaterial for the present purpose.

Jurisdiction :

10. He next contended that admittedly the notice under section 148 recorded some reasons. At this stage, the court cannot go into the question of sufficiency or adequacy of the materials on which the reasons have been recorded. The court cannot at this stage examine the sufficiency or correctness or incorrectness of the reasons given. Therefore, it cannot be said that the notice under section 148 was without jurisdiction so as to invoke the discretion for assuming jurisdiction under article 226 by this court. In support of his above contention, he relied on Raymond Woollen Mills Ltd. v. ITO, [1999] 236 ITR 34 (SC); Phool Chand Bajrang Lal v. ITO, [1993] 203 ITR 456 (SC); GKN Drive-shafts (India) Ltd. v. ITO, [2003] 259 ITR 19 (SC); (2003) 1 SCC 72; Swaraj Engine Ltd. v. Asst. CIT, [2003] 260 ITR 202 (P&H) and Noshirwan v. WTO, [1996] 222 ITR 302 (MP). His next contention was that the Income-tax Act, 1961, is a complete code in itself. It provides for a hierarchy of alternative remedies, which are adequate and efficacious. It is already a settled principle of law that where the statute provides an alternative remedy, the writ petition should not be entertained. He contended that the order under section 163 is appealable under section 246(1)(d) of the Act. Instead of challenging the order in appeal, the petitioners had sought to invoke the writ jurisdiction of this court. The availability of alternative efficacious remedy having regard to the facts and circumstances of this case would debar the jurisdiction of this court to entertain the writ petition. In support of his contention he relied on Bhag-want Kishore Sud v. ITAT, [1999] 236 ITR 305 (SC); (1998) 8 SCC 512; Gita Devi Aggarwal v. CIT, [1970] 76 ITR 496 (SC); C.A Abraham v. ITO, [1961] 41 ITR 425 (SC); AIR 1961 SC 609; GKN Driveshafts (India) Ltd. v. ITO, [2003] 259 ITR 19 (SC); (2003) 1 SCC 72; CIT v. Ramendra Nath Ghosh, [1971] 82 ITR 888 (SC) and Titaghur Paper Mills Co. Ltd. v. State of Orissa, [1983] 142 ITR 663 (SC). He lastly contended that the petitioner having participated in the proceedings is estopped from challenging the same, which are pending and on this ground alone, this court should refuse to exercise its jurisdiction.

The area :

11. It is an admitted proposition that the jurisdiction for assessment of nonresidents has been conferred only upon the authorities at Mumbai. All nonresidents are assessed at Mumbai. The jurisdiction relating to such assessment by the Deputy CIT, Mumbai, cannot be questioned. The said proceeding cannot be taken up anywhere else in India. In connection with such proceedings, the Deputy CIT, Mumbai, had authority to summon or ask for information from any person throughout India in connection with such proceedings. Now it is to be considered whether issue of a notice in connection with a proceeding pending before the Deputy CIT, Mumbai, would give rise to a cause of action to such an extent enabling the High Court having territorial jurisdiction where such notices were served to exercise its discretion to assume jurisdiction even if such service of notice is an integral part of the cause of action or even if it prima facie appears to be without jurisdiction.

12. The question seems not so easy to answer. A question of law is always dependent on the given facts. Without the facts, no proposition of law can be founded. The proposition may be an abstract one but when it comes to application, it has to be applied on the facts and the facts are the factors on which the application of the abstract law would depend. To what extent it would apply and to what extent it would not, is a question determinable by courts. When it is a question of discretion, the court has every liberty to exercise or not to exercise the discretion. Normally a court would be slow to exercise its discretion, in a given fact, unless it appears that it is necessary for the ends of justice and that the absence or lack of jurisdiction is glaring and is capable of being decided conclusively. If the question is dependent on determination of question of facts, normally the court should be very slow in interfering.

Section 163 : Lack of jurisdiction :

13. A non-resident within the meaning of section 6(1) is liable to tax on account of income specified in section 9(1) subject to assessment at the hands of the agent of the non-resident under section 160(1)(i). The agent is deemed to be the representative assessee as defined in section 160(1). The liability of the representative assessee is specified in section 161. The agent or representative assessee defined in section 160 includes an agent within the meaning of section 163. Under section 163(1)(b) a person with whom the non-resident had any business connection is deemed to be an agent of the non-resident. The definition is inclusive. It also includes a person from whom the non-resident receives any income directly or indirectly.

14. In the present case, CESC had engaged L & P as its lawyers in respect of some of its deals. In respect of such deals, the CESC had made payment to L & P. CESC had also deducted tax under section 195, before making payment to L & P. Such deduction was made with the approval of the Assessing Officer of the CESC having jurisdiction to assess the income of CESC, as well as with the approval of the Reserve Bank of India. The L & P had received income from the CESC. Therefore, under section 163(1)(b) and (c), the CESC is a deemed agent of L & P. As such agent, it is sought to be treated as “representative assessee” of the non-resident. From the scheme of the Act, it does not appear that there are any preconditions for treating a person falling within the definition of agent under section 163. Therefore, it does not appear that the notice under section 163, sub-section (2) could be said to be without jurisdiction when issued to CESC on the satisfaction of the ingredients contained in clauses (b) and (c) of section 163(1). Admittedly, the assessment of the nonresident was being made at the hands of the non-resident before the Deputy CIT, Mumbai, who had jurisdiction to deal with the assessment. Therefore, it cannot be said that the Deputy CIT, Mumbai, could not assume jurisdiction under section 163 for issuing the notice.

15. Upon receipt of the notice, the CESC had submitted to the jurisdiction and had contested the case. Section 163(2) requires giving an opportunity to an agent of being heard as to his liability to be treated as such agent. Pursuant to such notice, the CESC had submitted its reply and had participated in the proceedings. After such process in the said proceedings under section 163, the CESC was treated as agent. The extent of its liability is a finding dependent on determination of certain facts and not a pure question of law. Therefore, the notice containing the information relating to the order passed under section 163(1) could not be said to be without jurisdiction. Therefore, when such notice is served upon a representative assessee by an officer having jurisdiction over the non-resident it cannot be said to be without jurisdiction.

Double assessment: Liability of the agent :

16. The liability of the representative assessee is envisaged in section 161. It provides that the representative assessee is liable for the income in relation to the non-resident to the extent the representative assessee is related to such income. In respect of such income, the representative assessee is liable. His liability is confined only to that extent and such assessment is made as against the representative assessee only in his capacity as a representative of the nonresident. Subject to the provisions of Chapter XV, the tax can be levied and recovered from the representative assessee in like manner and to the same extent as would be leviable and recoverable from the principal. Under subsection (2) of section 161, the “representative assessee” shall not be assessable in another capacity in respect of the income for which he is treated as a representative assessee. Therefore, an assessment at the hands of the representative assessee is not an independent assessment. It is the assessment of the same income at the hands of the non-resident principal received from the representative assessee. Therefore, the assessment is of the income of the non-resident and not an assessment of the income of the “representative assessee”. The assessment made at the hands of the representative assessee is in the capacity of the representative of the principal. Therefore, the mischief of double assessment has no manner of application. The liability being confined only to the extent of the income arising out of the transaction between the representative and the principal in respect of which the agent cannot be assessed in its individual capacity, the question of double assessment cannot be attracted.

No pre-condition :

17. Section 161 does not prescribe, any precondition for making assessment of the principal in the hands of the representative assessee. Nowhere is it prescribed that an assessment can be made against a representative assessee only when the principal is not available. Chapter XV creates a fiction for the purpose of assessment of certain categories of persons. In respect of assessment of income of a non-resident, the person having transactions with the non-resi-dent is treated as representative assessee or agent of the non-resident. Section 161 creates a fiction for assessment of the income of the non-resident principal in the hands of the agent or representative assessee in the capacity of a representative in the like manner and to the same extent as it would have been made against the principal non-resident. There being no precondition for treating a person as a representative assessee under section 160 read with section 163 and assessing him for the principal in the capacity of representative under section 161, the question of issuing notice or holding a person as representative assessee liable to assessment for the principal cannot be said to be lacking jurisdiction. It may be a case of erroneous decision, but it cannot be a case of absence of jurisdiction. It is an erroneous decision within the jurisdiction, not without the jurisdiction. Therefore, even if the communication of the order passed under section 163(2) is treated as an integral part of the cause of action in respect of an order treating the CESC as a representative assessee and making him liable to assessment, the same would not confer jurisdiction upon this court to decide the question of validity of the order.

18. In our view, the Deputy CIT, Mumbai, was well within his jurisdiction to pass an order in the matter right or wrong. An order within the jurisdiction even if erroneous may invalidate the order subject to appeal. But it cannot be said to be without jurisdiction to an extent without relevance to facts, which can best be decided by the Tribunal or authority created under the statute. The High Court cannot assume jurisdiction for exercising its discretion in relation to such an order. The notice of communication of the order even though be an integral part is related to an order passed under section 163, which is appealable under section 246(1)(d). Therefore, in such a case the writ court cannot exercise its jurisdiction in respect of a notice so issued and interfere with an order otherwise appealable.

Participation : Submission to jurisdiction : Estoppel :

19. That apart the CESC had participated in the proceedings by submitting its reply and representing itself in the hearing. The order might have been passed in its absence and the communication might give it the knowledge of the order, but that would not make the notice such part of a cause of action, which would enable this court to invoke its writ jurisdiction to deal with the order passed under section 163 subject to an appeal. At the same time, in view of section 163, sub-section (2), no order can be passed treating a person as representative assessee without giving an opportunity of being heard. Therefore, the notice offering opportunity of being heard could be treated to be such an integral part in respect of which the writ court could exercise its discretion if the issuance of the notice lacked jurisdiction. But once it is within jurisdiction and after the opportunity is given, an order is passed, the communication of such order would not entail any further opportunity against such order except for the purpose of preferring appeal under section 246(1)(d). The communication of the order would make the order complete for the purpose of preferring an appeal. Unless it can be conclusively shown that the order is wholly without jurisdiction, the communication of the order would not be said to be such an integral part of the cause of action to afford a right to the CESC to invoke writ jurisdiction in this High Court only on the ground that the order was communicated within the territorial limits of this court, when this High Court otherwise lacks jurisdiction.

Taxing jurisdiction of the agent : Irrelevant:

20. Admittedly, the Deputy CIT, Mumbai, had the jurisdiction to undertake the assessment of a non-resident. A representative assessee can be assessed only by the Deputy CIT, Mumbai, and none else. In its individual capacity the representative may be subject to assessment of the authorities under the statute at Calcutta. But when it is not being assessed in its individual capacity but in the capacity of representative of the non-resident, who is being assessed by the Deputy CIT, Mumbai, the jurisdiction of the taxing authority is within the territorial limits of the High Court at Bombay. In such circumstances, the communication of the order, which does not entail any further opportunity but a point for calculation of limitation for exercising its right of appeal provided under section 246(1)(d) cannot form such an integral part of the cause of action so as to confer jurisdiction upon this court to exercise its discretion in a case where there is adequate alternative efficacious remedy. Where the party had participated in the proceedings on the outcome of which it feels aggrieved, the High Court is not supposed to interfere and must be very slow to invoke its discretion.

Non-availability of non-resident : Completion of assessment : Escapement of assessment not a pre-condition :

21. There is nothing in the scheme of Chapter XV to indicate that a person can be treated as a representative assessee only when the principal is not available or only when the assessment against the principal is complete or when there is an escapement of income. In the absence of any restrictions provided within the scheme of Chapter XV, the court is not supposed to read something, which is otherwise not permissible. While interpreting a provision, the High Court is not supposed to legislate indirectly. When the Legislature has used clear and unambiguous expressions with simple grammatical meaning and leaves no scope for any doubt and there is only one meaning available and no two views can be possible even by stretching the meaning of the expression used in the statute, if anything else is read in the statute, it would be an indirect legislation, which is otherwise impermissible. The court has to read the statute, as it is when the statute is capable of conveying clear and unambiguous simple grammatical meaning.

22. Having regard to the expression used in Chapter XV, we are unable to find out anything, which indicates that a person can be treated as representative assessee only when the principal is not available and only after the assessment is complete and that any income has escaped. Therefore, we are unable to accept the contention as advanced by Dr. Pal in this regard. In the circumstances, we do not think that the communication of the order is preceded by lack of jurisdiction enabling this court to invoke its writ jurisdiction. Therefore, we are not inclined to interfere with the notice dated March 8, 2001, communicating the order under section 163(2) which is otherwise appealable. Therefore, it would be open to CESC to prefer an appeal against the said order before the appellate authority or to challenge the said notice before the Bombay High Court as may be advised and for which it would be open to it to take aid of section 14 of the Limitation Act, as the case may be, and if such application is made, it is expected that the authorities concerned would condone the delay, if there be any. Our finding is confined to the question of maintainabilty of the writ petition. With regard to the merits, our finding is tentative.

Notice under section 148 : Integral part of the cause of action :

23. Section 147 postulates the reopening of assessment but only upon a notice, under section 148. Thus, a notice under section 148 is a precondition for assuming jurisdiction under section 147. Therefore, issue of a notice under section 148 is an integral part of the cause of action in relation to a grievance for assumption of jurisdiction under section 147, seeking to reopen assessment. Therefore, such a notice is so integral a part of the cause of action that it would give jurisdiction to this court to deal with such notice in an appropriate case.

Is the notice under section 148 without jurisdiction? :

24. But the question is that this court would exercise its discretion only if it appears to this court that the notice is wholly without jurisdiction and otherwise invalid. In order to assume jurisdiction under section 147, the authority has to record its reason leading to its belief that income had escaped assessment. Admittedly, the Deputy CIT, Mumbai, had recorded some reasons. At the notice stage, this court is not supposed to consider the question of sufficiency or adequacy or correctness of the reasons or the sufficiency or the adequacy of the materials on which the authority had reason to believe. We are not supposed to look into those questions at this stage. Admittedly, the Deputy CIT, Mumbai, dealing with assessment of the non-resident has jurisdiction to deal with the same and issue a notice under section 147 in an appropriate case. We are now to examine whether the jurisdiction could be assumed in the given facts.

Application of the proviso to section 147 :

25. The contention of Dr. Pal that only upon fulfilment of the preconditions provided in the proviso to section 147 reopening of assessment could be made, does not seem to be of any substance. These pre-conditions would be necessary only when section 147 is resorted to after the expiry of four years. The proviso to section 147 becomes applicable when the reopening is sought to be made after the expiry of four years from the end of the relevant assessment year. It can be so done only upon fulfilment of the condition provided in section 147 without the proviso, if made within four years from the end of the assessment year. Admittedly, the assessment is for the year 1998-99. The reopening is sought to be made in 2001, which is less than two years from March 31, 1999. Therefore, those actions, inactions, failure on the part of the principal or the representative assessee would be immaterial.

Whether reopening can be made during the course of assessment?

26. Now it is to be examined whether the notice under section 148 could be said to be without jurisdiction because the notices were issued on March 20, 2001, when the assessment was completed on March 30, 2001, viz., before the assessment was complete. Dr. Pal had contended, and rightly, that there cannot be any question of escapement of assessment until there is an assessment made. There cannot be any escapement of the assessment at the hands of the representative assessee when the principal assessee is being assessed-and is available before the Assessing Officer. Sections 160,161 and 163 create a legal fiction by reason whereof an agent within the meaning of sections 160 and 163 are liable to be assessed in the like manner and to the same extent as the principal under section 161. Therefore, escapement of assessment is related to the principal assessee and by fiction, the agent or representative assessee is treated as principal assessee for the purpose of Chapter XV.

27. Section 147 can be initiated only when the authority has reason to believe that income has escaped assessment. Assessment cannot be reopened on the basis of mere suspicion (Indian Oil Corporation v. ITO, [1986] 159 ITR 956 (SC)). Therefore, before the assessment is complete, it is not possible to ascertain whether that income has escaped assessment. Until the assessment is complete, there is no scope for finding any reason to believe that income had escaped assessment yet to be made. If a valid return of income is submitted by an assessee within the period fixed under section 139(4) for submission of returns, section 147 will not apply during the pendency of the return (State of Assam v. Deva Prasad Barua, [1970] 75 ITR 18 (SC); Commissioner Of Income Tax, Madras v. S. Raman Chettiar , [1965] 55 ITR 630 (SC)). During the pendency of the return, there is no question of escapement of income. The Assessing Officer cannot ignore a valid return and any notice under section 148 ignoring such return is invalid (CIT v. Ranchhoddas Karsondas, [1959] 36 ITR 569 (SC)). Even if the return is incomplete or partial or defective, even then the same is liable to deal with by the Income-tax Officer. Therefore, during the pendency of such return, notice under section 148 for reopening assessment under section 147 cannot be validly issued. No notice under section 148 can be issued against an assessee so long as a return validly filed remains pending and undisposed of (Estate of the Late A.M.K.M Karuppan Chettiar v. CIT, [1969] 72 ITR 403 (SC)). Until and unless the return filed is held to be invalid, no action under section 147 can be taken until the assessment is complete pursuant to such return. It is only when a return is invalid or non est, this jurisdiction can be exercised (CIT v. K. Adinarayana Murty, [1967] 65 ITR 607 (SC)).

28. Thus, until the assessment is complete, the officer cannot assume jurisdiction to issue a notice under section 148 for reopening a case under section 147. Therefore, in this case, the notice under section 148 before the assessment against the principal was complete is wholly without jurisdiction. As already observed, the issuing of notice under section 148 is an integral part of the cause of action affecting the agent. Therefore, when such notice is without jurisdiction, the same can be questioned before a court having territorial jurisdiction over the place where such notice is served on the assessee and where it normally resides or carried on business. In the present case, the assessee has come at the notice stage. The question of alternative remedy would be relevant only when an order is passed finally in the proceeding under section 147. At the notice stage, there is no question of having any alternative remedy except contesting the proceedings before the authority concerned. The question of jurisdiction can very well be raised in the proceeding itself, but that does not mean that one has to go to the whole hog or ordeal of the proceedings, even though on the face of it, the assumption of jurisdiction is void or invalid. We had occasion to deal with such a question in Vijay Mallya v. Assistant CIT, [2003] 263 ITR 41 (Cal)—APOT No. 733 of 2002, disposed of on May 12, 2003—where we had occasion to take the view that if on the face of the notice it appears to be without jurisdiction or illegal, then the assessee cannot be made to wait till a decision in the proceeding itself debarring him from challenging the notice, excluding the jurisdiction of the writ court. Therefore, it would be necessary to examine the facts of this case in a little detail as to whether the notice is without jurisdiction or ex facie bad or illegal. If it is so found, then the writ petition can be maintained despite alternative remedy.

29. In T.S Balaram, ITO v. Volkart Bros., [1971] 82 ITR 50, 53 (SC), the apex court had held that a debatable point of law is not a mistake apparent from the record correctable under section 154. In such a case, the writ petition could be maintained, challenging the notice. The decision in Volkart Bros.' case, [1971] 82 ITR 50 (SC) was followed by this court in Harbans Lal Malhotra and Sons Pvt. Ltd. v. ITO, [1972] 83 ITR 848 (Cal). In ITO v. India Foils Ltd., [1973] 91 ITR 72 (Cal), this court had taken a view that if the notice was not, in fact, justified, the notice itself was bad and there was no reason why the assessee should wait till the assessment was made pursuant to the notice before going to court for a writ and after having held the notice to be bad initially. It had held that the proceeding was also bad and entertained the writ petition. This view was reiterated by this court in Coates of India Ltd. v. Deputy CIT (No. 1), [1995] 214 ITR 498 and Bata India Ltd. v. IAC of IT, [2001] 249 ITR 491. Having regard to the facts and circumstances of the case, we hold that the notice having been issued during pendency of the return-submitted by the principal, issuance of the notice under section 148 for reopening of the assessment against the principal under section 147 upon the agent is wholly without jurisdiction. This service of notice upon the agent is an integral part of the cause of action as against the agent. Therefore, the said notice is amenable to the jurisdiction of this court on account of its service upon the agent within the territorial limits of this court.

30. We may find support for the view we have taken from the decisions discussed hereafter. In CIT v. Ranchhoddas Karsondas, [1959] 36 ITR 569, 576 (SC); AIR 1959 SC 1154 (para. 17), it was held that unless the condition precedent for assumption of jurisdiction under section 147 exists, the notice under section 148 is without jurisdiction. The same view was taken in Commissioner Of Income Tax, Madras v. M.K.K.R Muthukaruppan Chettiar , [1970] 78 ITR 69, 73 (SC); Estate of the Late A.M.K.M Karuppan Chettiar v. CIT, [1969] 72 ITR 403, 407 (SC); Bidhu Bhusan Sarcar (Deceased) v. Commissioner Of Income-Tax, Calcutta., [1966] 59 ITR 531, 546-547 (Cal). In CIT v. Murlidhar Jhawar and Puma Ginning and Pressing Factory, [1966] 60 ITR 95, 97 (SC); AIR 1966 SC 1536 (para. 3); Jyotendrasinhji v. S.I Tripathi, [1993] 201 ITR 611, 632 (SC); 1993 Supp (3) SCC 389 : AIR 1993 SC 1991 (para. 36), it was held that the same income cannot be assessed at the hands of the agent of the non-resident (representative assessee) and the non-resident hitting at the mischief of double assessment rendering the notice under section 148 invalid and without jurisdiction. But this principle will not apply when the escaped income not assessed at the hands of the non-resident principal is sought to be assessed at the hands of the agent/representative assessee. In Calcutta Discount Co. Ltd. v. ITO, [1961] 41 ITR 191, 207 (SC); AIR 1961 SC 372 (para. 27), it was held that if the notice under section 148 is patently without jurisdiction and the Income-tax Officer has no competence or jurisdiction to reopen the proceeding, as no income of the non-resident can be said to have escaped assessment, the question of not allowing the relief on account of existence of alternative remedy is not sustainable in law. Lack of jurisdiction would invite the court to invoke its discretion to interfere with such notice in writ jurisdiction. The existence of alternative remedy is not, however, always a sufficient reason for refusing a party quick relief by a writ and order prohibiting an authority acting without jurisdiction from continuing such action. This decision of the five judge Bench was followed in Madhya Pradesh Industries Ltd. v. ITO, [1965] 57 ITR 637 (SC); Madhya Pradesh Industries Ltd. v. ITO, [1970] 77 ITR 268 (SC); (1970) 2 SCC 32 : AIR 1970 SC 1011 (para. 15), holding that three contingencies may invite the court to exercise its discretion for invoking the writ jurisdiction, viz., (1) for the enforcement of any of the fundamental rights, (2) where there has been a violation of the principle of natural justice, (3) where the order of proceedings are wholly without jurisdiction or vires of an Act is challenged. The same view was taken in Shivram Poddar v. ITO, [1964] 51 ITR 823, 839 (SC) in a matter relating to tax. In Mohindra Mohan Sirkar v. ITO, [1978] 112 ITR 47, 53-57 (Cal), it was held that at the stage of notice under section 148, there is no alternative remedy. In Y. Nara-yana Chetty v. ITO, [1959] 35 ITR 388, 392 (SC); AIR 1959 SC 213 (para. 5) the apex court had held that the notice prescribed by section 34 (now 148) cannot be regarded as a mere procedural requirement, it is only if the said notice is served upon the assessee, as required, then the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice is issued, is shown to be invalid then the validity of the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice then the proceedings would be illegal and void. The same view was taken in CIT v. Thayaballi Mulla Jeevaji Kapasi, [1967] 66 ITR 147, 150 (SC); Gopiram Agarwalla v. First Addl. ITO, [1959] 37 ITR 493, 494-498 (Cal);, AIR 1959 Cal 420; L.V Veeri Chettiar v. STO, [1970] 26 STC 579; AIR 1971 Mad 155 (para. 8). Dr. Pal had relied on various other decisions. We do not think that it would be necessary for us to refer to all those decisions since the principle is now well settled and the reference to those decisions would result into unnecessary reiteration of the principle already enunciated by the decisions with which we have dealt with. The principle laid down above has since been followed in the decisions cited by Dr. Pal. Therefore, we need not repeat the same.

Order :

31. In the result, this appeal succeeds in part only with regard to the notice under section 148 relating to reopening of the assessment under section 147 on the ground that this notice was issued on March 20, 2001, when the return submitted by the principal was pending and the assessment whereof was not completed till March 30, 2001. The notice, dated March 20, 2001, issued under section 148 impugned in the writ petition is, therefore, hereby quashed and the writ petition succeeds to that extent and is accordingly made absolute only with regard thereto. However, this will not prevent the authorities to issue a fresh notice if circumstances so warrant and it is otherwise permissible in law. The writ petition so far as it relates to the notice under section 163 stands dismissed.

32. The appeal thus succeeds in part and is allowed to the extent indicated above. The order, dated September 10, 2001, passed by the learned single judge in W.P No. 598 of 2001 is modified to that extent. All parties are to act on a signed xerox copy of this order on the usual undertaking.

R.N Sinha, J.:— I agree.