Section 293 puts absolute bars to filing suit in Civil Courts with regard to any proceedings held under the Income Tax Act – Allahabad High Court.
ABCAUS Case Law Citation:
ABCAUS 3202 (2019) (12) HC
Important case law relied upon by the parties:
Commissioner of Income Tax and another. Vs. Parmeshwari Devi Sultania and others) (1998) Vol.230 ITR 745;
Arvivandandam. Vs. T.V. Satyapal and another: 1977 (4) SCC 467
I.T.C. Limited. Vs. Debts Recovery Appellate Tribunal and others: 1998 (2) SCC 70
In the instant case, before the Hon’ble High Court a civil revision was filed by the revenue against the order passed by the Court of Civil Judge against rejecting the application questioning the maintainability of the suit filed by the respondent assessee.
The respondent in the instant revision was the legal heir of his father (the deceased assessee) who was doing business which were covered under Income Tax Act, 1961 (the Act).
The father of the respondent had defaulted in payment of Income Tax. Therefore, the Income Tax Department served a notice of demand which was challenged by the father of respondent before the CIT (Appeal).
After the death of the father, the order of CIT (A) was challenged/contested by the respondent son before the learned Tribunal and the Tribunal which by order modified the tax liability.
Section 159 of the Act provides that the legal representative is liable to pay an amount which the deceased would have been liable to pay if he had not expired. Accordingly after the judgment of the Tribunal, a modified fresh demand notice under Section 221 was served upon the respondent.
However, the respondent thereafter filed a Regular Suit for injunction and declaration against the Department. The Department raised a preliminary objection against the maintainability of the suit as per provision of Section 293 of the Act, by filing Application No.A-38 under CPC Rules.
However, the Civil Judge rejected the said application ignoring the specific bar on the suits in the Civil Courts with regard to Income Tax proceedings under Section 293 of the Income Tax Act.
Before the Hon’ble High Court, the Revenue submitted that in view of specific provisions under Section 293 of the Act, the suit was not maintainable. He further submitted that against any order impugned by the respondent under Section 246A he had an alternative remedy of filing an appeal before the CIT (Appeals).
Section 293 bars Civil Court suits against any Income Tax Act proceedings
The Hon’ble High Court noted that the Hon’ble Supreme Court had observed that when Section 293 originally stood, it provided that “no suit shall be brought in any civil court to set aside or modify any assessment or order made under this Act”. However, the word “assessment” was omitted and the words “proceeding taken” were inserted in its place making the section more comprehensive in nature.
The Hon’ble High Court had observed that the scope of Section 293 of the Act was widened even to include any proceeding under the Act and it is not merely confined to set aside or modify any order.
The Hon’ble High Court stated that it is not the form of the suit which is relevant, but it is the substance which is to be seen. When the statute prescribed certain procedure and proceedings thereunder are held and an order passed, it is difficult to accept a contention that proceeding and order can be modified or set aside in a civil suit filed by a third party. Section 293 is specific and does not admit filing of a suit which has the effect of even indirectly setting aside or modifying any proceeding taken under the Act or order made thereunder.
The Hon’ble High Court opined that apparently, the respondent plaintiff was trying to challenge the order passed by the Income Tax authorities under the Income Tax Act. The Income Tax in itself is a complete code providing remedies with regard to orders passed under the same. The plaintiff respondent had remedy of filing appeal under Section 246A with regard to orders of the Income Tax authorities, in case he felt injured from the same.
The Hon’ble High Court held that the suit itself was not maintainable and the Civil Court had wrongly rejected the application of the Revenue under Order 7 Rule 11 of CPC when section 293 makes an absolute bar to suit filed in Civil Courts with regard to any proceedings held under the Income Tax Act.
Accordingly, the revision was allowed. The impugned order passed by the Civil Court was set aside.
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