Kalyan Jyoti Sengupta, J.
1. This writ petition is directed against the proceedings initiated by the assessing authority which was started with the impugned notices dated June 10, 1997, May 21, 1997, June 6, 1997, June 25, 1997, February 19, 1998 and the impugned order dated March 24, 1998.
2. It appears that the assessing authority has assessed the income as well as tax to be paid by the writ petitioner. In view of the default, the aforesaid authority has directed to initiate a penalty proceeding under Sections 271B and 271(1)(c). It appears from the impugned order which was passed in the aforesaid impugned proceedings that it has been held amongst others that the writ petitioner is obliged to pay income-tax on the income which fetched from consultancy services rendered to Larsen and Toubro. This case has a slightly long history.
3. The writ petitioner-company upon an agreement in writing rendered technical know-how and consultancy services to the Indian company, Larsen and Toubro. Admittedly, the writ petitioner-company is a foreign company. The petitioner earned a substantial amount on account of the fees paid by Larsen and Toubro being the Indian company. The writ petitioner on protest paid a sum of Rs. 7,87,72,407 on account of advance taxon or about August 23, 1994. It is stated in the petition that the aforesaid advance tax was paid in view of a refusal to issue no objection certificate for remittance of 85 per cent. of the total income, from India to Austria. Immediately thereafter the petitioner made an application in Form No. 30 under Section 237 of the said Act and Rule 41(2) of the Income-tax Rules, 1962, accompanied by a return claiming refund of the aforesaid as fees earned by the petitioner are not taxable in India under the Double Taxation Avoidance Agreement between the Indian Government and the Austrian Government. By an order dated December 11, 1996, the Income-tax Officer concerned held that the said income is taxable. So the return filed was held to be invalid. So, on April 16, 1997, an appeal was preferred before the concerned Income-tax Commissioner. On May 19, 1997, the appeal was allowed holding that the aforesaid amount is refundable and to treat the return to be valid.
4. The Department thereafter took this matter up to the Tribunal. The concerned Tribunal not only upheld the findings and the order of the appellate authority but also held, amongst others, that the aforesaid income fetched from consultancy fees, derived by the petitioner, is not taxable. It appears from the judgment which is full of reasons, both on fact and law, that the learned Tribunal has gone into the factual aspect in great detail. The learned Tribunal considered the agreement and other materials. While doing so it was held by the Tribunal that the writ petitioner being a foreign company and having no place of business in India, the income fetched from the aforesaid transaction is not taxable.
5. Mr. Murarka, learned counsel appearing for the writ petitioner, submits that the proceedings initiated by the assessing authority and the order passed by him is wholly an act without jurisdiction. He argues that when the Tribunal on the self-same facts and circumstances and considering all the materials has held that the petitioner is not obliged to pay any tax and, further, the tax which has already been paid is liable to be refunded, it was not open for the assessing authority to upset the judgment of the Tribunal. Such act is a gross breach of quasi-judicial discipline.
6. Mr. Murarka wants to cite a number of decisions of the apex court on this point. He argues that the Department concerned tried unsuccessfully to upset this decision of the Tribunal by applying for reference and correction. The Department made an application for reference to this court. This application too has been rejected. He has drawn my attention to the Division Bench judgment of this court dismissing the reference of the Department. So, the findings of the Tribunal have reached finality. It was, he contends, the duty of the Income-tax Officer concerned to accept and implement the decision of the Tribunal which is superior in hierarchy.
7. In the teeth of the aforesaid facts and circumstances, the impugned order as well as the proceedings are not liable to be sustained.
8. Mr. Joydeb Saha, learned counsel appearing for the Department, submits that the Department has not accepted the above decision of the Tribunal and this court and it has right to approach the apex court ; so, the assessing authority apprehending that the case might be barred by the laws of limitation has proceeded lawfully. He argues that the Tribunal has not considered the agreement between Larsen and Toubro and the writ petitioner. If it is considered properly, then it would appear that the writ petitioner has control over Larsen and Toubro and, in a sense, it has a place of business in India. This aspect has not been addressed by the learned Tribunal. So, it was a new fact and it was open to the assessing authority to consider the same. Moreover, the writ petitioner should have preferred appeal against the impugned order.
9. Mr. Murarka has drawn my attention to a portion of the judgment of the learned Tribunal and contends that the agreement and all other materials had been considered and while dwelling upon all aspects, the learned Tribunal had come to the aforesaid finding.
10. Having heard the respective submissions of learned counsel, two points emerge from the bone of contentions of the parties :
1. Whether the concerned Income-tax Officer had assessed tax on the same income fetched from the consultancy services or not
2. Whether the concerned Income-tax Officer could do so in spite of the findings of the learned Tribunal on the self-same subject
11. Before I deal with this application on the merits, the point raised as to alternative remedy needs foremost attention of this court. In this case, one of the grounds is the jurisdiction of the Income-tax Officer concerned. So, this court is bound to examine this point. Moreover, when the allegation of defiance of the order and a decision of the superior incumbent by a junior, then it is useless to ask the litigant to go to the same authority whose order has been differed.
12. Therefore, in the peculiar facts and circumstances, this court, in exercise of the writ jurisdiction, is one of the courts to correct the jurisdictional error and/or curb the tendency of destabilising hierarchial system. So, I hold the alternative remedy provided for is totally ineffective.
13. I have gone through the impugned notices as well as the impugned order passed by the Income-tax Officer concerned. I have no manner of doubt that the Income-tax Officer concerned had assessed income-tax on the same income which was fetched from the consultancy services.
14. I find the specific finding of the learned Tribunal that this income is riot taxable and I also find from the finding of the learned Tribunal that the amount which was paid by way of advance tax is liable to be refunded. The learned Tribunal painstakingly considered all the points advanced before him on behalf of the Department.
15. Since the reference has been refused by the court so also previously by the Tribunal, at the present moment the findings of the learned Tribunal have reached finality. In my view, the venture which has been undertaken by the Income-tax Officer for making an assessment is absolutely an act of hierarchial indiscipline. This exercise is nothing short of setting the Tribunal's judgment at naught. It is a well-settled principle of law that the junior incumbent is supposed to obey and carry out the order and/or observations made by the superior authority, be it a judicial forum or a quasi-judicial forum or even in any administrative field.
16. Therefore, I hold that the impugned order passed by the Income-tax Officer is wholly without jurisdiction and the same is liable to be set aside and I hereby do so.
17. Mr. Sana, of course, tries to convince me that this order is liable to be appealed against. To this point I am of the view that when the question of jurisdiction is involved, the alternative remedy cannot stand in the way of it being scrutinized in the exercise of power of judicial review by this court under Article 226 of the Constitution of India. So, I am unable to accept the contention of Mr. Saha, that the petitioner should approach before the alternative forum.
18. Accordingly, the writ petition succeeds. Therefore, the demand notices for payment of penalty and other charges are, accordingly, set aside.
19. There will be an order in terms of prayer (c) of the petition also.
20. I am told that the bank guarantee has not been renewed and the same is lying with the Department concerned as having lapsed. So, I direct the Department concerned to return the original bank guarantee within a period of a fortnight from the date of the communication of this order.
21. The respondent is directed to pay costs assessed at 100 G. Ms.
22. Since the principal amount has already been refunded, so the question of refund of the principal amount does not arise. However, the interest on the aforesaid amount, to be calculated as per the provision of the law so also the rate, it shall be paid within a period of eight weeks from the date of the communication of this order.
23. All parties concerned are to act on a xeroxed signed copy of this dictated order on the usual undertaking.