Uttarakhand High Court
Director Of Income Tax vs Dolphin Drilling Pte Limited on 12 August, 2025
Author: Manoj Kumar Tiwari
Bench: Manoj Kumar Tiwari
2025:UHC:7097-DB
HIGH COURT OF UTTARAKHAND AT NAINITAL
HON'BLE JUSTICE SRI MANOJ KUMAR TIWARI AND
HON'BLE JUSTICE SRI SUBHASH UPADHYAY
Special Appeal No. 285 of 2015
Director of Income Tax, and others --Appellants
Versus
Dolphin Drilling PTE Limited --Respondent
--------------------------------------------------------------------
Advocates:-
Mr. Hari Mohan Bhatia, Advocate for the appellants
Mr. Pulak Raj Mullick, Advocate for the respondent
--------------------------------------------------------------------
The Court made the following:
JUDGMENT:
(per Hon’ble Justice Sri Manoj Kumar Tiwari)
1. This intra-Court appeal is filed by Director of
Income Tax, International Taxation, challenging
judgment dated 03.04.2015 rendered by learned Single
Judge in Writ Petition (M/S) No. 200 of 2011. By the
said judgment, notice issued to respondent under
Section 147 read with Section 148 of Income Tax Act,
1961 was set aside. Operative portion of the impugned
judgment is extracted below:
“The judgment of Appellate Authority dated
16.02.2010 was assailed before I.T.A.T., however, same was
also decided in favour of the assessee. Since, question of
ownership and depreciation thereon was accepted twice by
the C.I.T. (A) in Assessment Year 2004-05 and 2005-06,
therefore, same cannot be allowed to be reopened in the
garb of reassessment. Likewise second ground of opinion
was also subject matter of the appeal before C.I.T. (A),
therefore, same is also not permitted to be reopened in the
name of reassessment.
Consequently, writ petition succeeds and is hereby
allowed. Impugned notices for re-assessment are hereby
quashed.”
2. Appellant has challenged the impugned judgment
on the ground that respondent, who filed writ petition,
wrongly claimed depreciation to the tune of Rs.
1
2025:UHC:7097-DB
3,05,73,40,212/- by claiming to be owner of a Drilling
Ship/Rig, named ‘Bellford Dolphin’ and the Assessing
Officer allowed depreciation amounting to Rs.
1,31,71,89,885/- to respondent under the belief that
he is the owner of Drilling Ship/Rig, but it was later
revealed that Drilling Ship/Rig named as ‘Bellford
Dolphin’ belonged to another entity, which also claimed
depreciation thereupon.
3. Learned counsel for the appellant submits that
while passing assessment order in case of another
entity, namely, M/s Dolphin Drilling Limited for the
Assessment Year 2005-06, it was revealed that drilling
ship ‘Bellford Dolphin’ is owned by Fred Olsen Drilling
A.S., who had executed MOU with Dolphin Drilling
Limited for making available the above mentioned
drilling ship for the purpose of ONGC’s deep water
tender. Learned counsel for the appellant submits that
respondent never disclosed this vital information that
drilling ship belongs to some other entity to Income Tax
authorities.
4. He further submits that Fred Olsen Drilling A.S.
had also written a letter to ONGC that in case Dolphin
Drilling Limited gets the contract, Fred Olsen Drilling
A.S. will make the vessel available to Dolphin Drilling
Limited for use in deep sea prospecting /extraction. He
submits that these evidences were received by Income
Tax Department from ONGC.
5. Learned counsel for the appellant submits that
respondent filed objection to the notice issued to him
under Section 148 of Income Tax Act and the Assistant
2
2025:UHC:7097-DB
Director of Income Tax rejected the objection by giving
valid reasons vide order dated 20.12.2010. He thus
submits that interference with the notice and the order
dated 20.12.2010 is unwarranted.
6. It is contended on behalf of the appellant that bar
of proviso to Section 147 of Income Tax Act, 1961 is
not attracted to the case in hand as before the
Appellate Forum, only quantum of depreciation
allowable to the assessee was in issue and his eligibility
to claim depreciation was not in issue at all. Thus it is
contended that the reason given in the impugned
judgment for setting aside the notice under Section 148
of Income Tax Act and order dated 20.12.2010 is
unsustainable.
7. Learned counsel for the appellant submits that the
question of ownership of drilling ship/rig came to be
examined in assessment proceedings under Section
143(3)/254 in the case of respondent’s related entity
namely M/s Dolphin Drilling Limited, where it was found
that series of transactions purporting to transfer of
ownership of the Rig amongst various closely related
entities were supported by proper documentation.
8. Learned counsel for the appellant further submits
that respondent wrongly received the benefit of
depreciation by making false claim that he was owner
of the asset/drillship and when this fact came to the
notice of the competent authority, he was justified in
forming a belief regarding escapement of income and in
issuing notice to the respondent. Thus he submits that
interference with the notice made by learned Single
3
2025:UHC:7097-DB
Judge was uncalled for.
9. Per contra, learned counsel for the respondent
supported the judgment rendered by learned Single
Judge by contending that the notice issued to
respondent was barred by second proviso to Section
147 of Income Tax Act, as inserted by Finance Act,
2008, therefore learned Single Judge was justified in
interfering with the notice issued to the respondent.
10. The interference by learned Single Judge with the
notice issued to respondent under Section 148 of
Income Tax Act is based on the premise that question
of ownership of Drilling Ship/Rig was accepted twice by
C.I.T. (Appeal) in Assessment Year 2004-05 and 2005-
2006, therefore, the same issue cannot be allowed to
be reopened under the garb of reassessment.
11. We asked learned counsel for the respondent to
place the relevant portion of the order passed by C.I.T.
(Appeals) or I.T.A.T which indicates that question of
ownership of the Drilling Ship/Rig was also in issue
before the C.I.T. (Appeals) or I.T.A.T. Learned counsel
for the respondent, however, was not able to show
anything in the judgment rendered by C.I.T. (Appeals)
or Income Tax Appellate Tribunal (I.T.A.T.) which may
support the observation made in the impugned
judgment that the question of ownership of Drilling
Ship/Rig was also decided by C.I.T. (Appeals) or I.T.A.T.
12. Thus, we find substance in the submission made
by learned counsel for the appellant that in the Appeal
decided by C.I.T. (Appeal) and I.T.A.T., only quantum of
4
2025:UHC:7097-DB
depreciation allowable to the respondent was in issue
and the question of his eligibility to claim depreciation
or question of ownership of drilling ship, was not in
issue at all.
13. The allegation against the respondent is that he
wrongly claimed benefit of depreciation, although he
knew that he is not eligible for such benefit which can
be claimed only by owner of an asset. Since benefit of
depreciation was given to respondent and when
subsequently it was found that depreciation was
wrongly given to him, in such circumstances, notice
issued to respondent under Section 148 of Income Tax
Act cannot be said to be illegal.
14. This Court finds substance in the submission made
by learned counsel for the appellant that respondent
should have waited for the assessment proceedings to
conclude and he should not have rushed to file a
petition under Article 226 of the Constitution,
challenging a notice when he had full opportunity to
come clean of the allegation by giving reply to the
notice, issued to him.
15. Whether respondent is owner of the drilling ship
‘Bellford Dolphin’ or not, cannot be decided in a writ
petition and such disputed question of fact can best be
decided by the authorities under Income Tax Act.
Despite having statutory remedy, which was more
effective, filing of writ petition by respondent cannot be
approved of.
5
2025:UHC:7097-DB
16. Hon’ble Supreme Court in the case
Commissioner of Income Tax and others v.
Chhabil Dass Agarwal, reported in (2014) 1 SCC
603 has held as under:
“14. In Union of India v. Guwahati Carbon Ltd. [(2012) 11
SCC 651] this Court has reiterated the aforesaid principle
and observed : (SCC p. 653, para 8)
“8. Before we discuss the correctness of the
impugned order, we intend to remind ourselves the
observations made by this Court in Munshi
Ram v. Municipal Committee, Chheharta [(1979) 3
SCC 83 : 1979 SCC (Tax) 205] . In the said decision,
this Court was pleased to observe that : (SCC p. 88,
para 23)
’23. … [when] a revenue statute provides for a
person aggrieved by an assessment thereunder, a
particular remedy to be sought in a particular forum,
in a particular way, it must be sought in that forum
and in that manner, and all the other forums and
modes of seeking [remedy] are excluded.'”
15. Thus, while it can be said that this Court has
recognised some exceptions to the rule of alternative
remedy i.e. where the statutory authority has not acted in
accordance with the provisions of the enactment in
question, or in defiance of the fundamental principles of
judicial procedure, or has resorted to invoke the provisions
which are repealed, or when an order has been passed in
total violation of the principles of natural justice, the
proposition laid down in Thansingh Nathmal case [AIR
1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper
Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983
SCC (Tax) 131] and other similar judgments that the High
Court will not entertain a petition under Article 226 of the
Constitution if an effective alternative remedy is available
to the aggrieved person or the statute under which the
action complained of has been taken itself contains a
mechanism for redressal of grievance still holds the field.
Therefore, when a statutory forum is created by law for
redressal of grievances, a writ petition should not be
entertained ignoring the statutory dispensation.
16. In the instant case, the Act provides complete
machinery for the assessment/reassessment of tax,
imposition of penalty and for obtaining relief in respect of
any improper orders passed by the Revenue Authorities,
and the assessee could not be permitted to abandon that
machinery and to invoke the jurisdiction of the High Court
under Article 226 of the Constitution when he had
adequate remedy open to him by an appeal to the
Commissioner of Income Tax (Appeals). The remedy under
6
2025:UHC:7097-DB
the statute, however, must be effective and not a mere
formality with no substantial relief. In Ram and Shyam
Co. v. State of Haryana [(1985) 3 SCC 267] this Court has
noticed that if an appeal is from “Caesar to Caesar’s wife”
the existence of alternative remedy would be a mirage and
an exercise in futility.
17. In the instant case, neither has the writ petitioner
assessee described the available alternate remedy under
the Act as ineffectual and non-efficacious while invoking
the writ jurisdiction of the High Court nor has the High
Court ascribed cogent and satisfactory reasons to have
exercised its jurisdiction in the facts of the instant case. In
light of the same, we are of the considered opinion that
the writ court ought not to have entertained the writ
petition filed by the assessee, wherein he has only
questioned the correctness or otherwise of the notices
issued under Section 148 of the Act, the reassessment
orders passed and the consequential demand notices
issued thereon.”
17. Similar view was taken by Hon’ble Supreme Court
in the case of Commissioner of Income Tax,
Gujarat Vs. Vijaybhai Chandrani, reported in
(2013) 14 SCC 661. Para 11, 12, 13 and 14 of the
said judgment are extracted below:-
“11. In the instant case, it transpires from the record that
the jurisdictional assessing authority, upon having a
reason to believe that the documents seized indicate
escapement of income, has issued show-cause notices
under Section 153-C to the assessee for reassessment of
his income during Assessment Years 2001-2002 to 2006-
2007. Thereafter, upon request of the assessee, the
assessing authority has furnished him with the copies of
documents seized under Section 132-A. The assessee
being dissatisfied with the said documents instead of filing
his explanation/reply to the show-cause notices, has filed a
writ petition before the High Court impugning the said
notices.
12. In our considered view, at the said stage of issuance
of the notices under Section 153-C, the assessee could
have addressed his grievances and explained his stand to
the assessing authority by filing an appropriate reply to the
said notices instead of filing the writ petition impugning
the said notices. It is settled law that when an alternate
remedy is available to the aggrieved party, it must exhaust
the same before approaching the writ court. In Bellary
Steels & Alloys Ltd. v. CCT [(2009) 17 SCC 547] , this
Court had allowed the assessee therein to withdraw the
original writ petition filed before the High Court as the said7
2025:UHC:7097-DB
proceedings came to be filed against the show-cause
notice and observed that the High Court should not have
interfered in the matter as the writ petition was filed
without even reply to the show-cause notice. This Court
further observed as follows: (SCC p. 548, para 3)
“3. … In the circumstances, we could have dismissed
these civil appeals only on the ground of failure to exhaust
statutory remedy, but for the fact that huge investments
involving the large number of industries is in issue.”
13. We are fortified by the decision of this Court in Indo
Asahi Glass Co. Ltd. v. ITO [(2002) 10 SCC 444] wherein
the assessee had approached this Court against the
judgment and order of the High Court which had dismissed
the writ petition filed by the assessee wherein challenge
was made to the show-cause notice issued by the
assessing authority on the ground that alternative remedy
was available to the assessee. This Court concurred with
the findings and conclusions reached by the High Court
and dismissed the said appeal with the following
observations: (SCC p. 445, para 5)
“5. This and the other facts cannot be taken up for
consideration by this Court for the first time. In our
opinion, the High Court was right in coming to the
conclusion that it is appropriate for the appellants to file a
reply to the show-cause notice and take whatever defence
is open to them.”
14. In the present case, the assessee has invoked the writ
jurisdiction of the High Court at the first instance without
first exhausting the alternate remedies provided under the
Act. In our considered opinion, at the said stage of
proceedings, the High Court ought not have entertained
the writ petition and instead should have directed the
assessee to file reply to the said notices and upon receipt
of a decision from the assessing authority, if for any
reason it is aggrieved by the said decision, to question the
same before the forum provided under the Act.”
18. In the present case, the dispute is whether
respondent has wrongly claimed depreciation in respect
of an asset, which was owned by some other entity.
The notice under Section 148 was also issued to
respondent to ascertain the fact, whether respondent is
owner of drilling ship ‘Bellford Dolphin’. Although C.I.T.
(Appeals) and I.T.A.T. had decided the appeals in which
quantum of depreciation allowable to the respondent
was in issue, however, the question whether
8
2025:UHC:7097-DB
respondent is entitled for depreciation or whether he is
owner of the drilling ship, was not considered at all.
The question of ownership of drilling ship is a question
of fact which could best have been decided by the
authorities under Income Tax Act, therefore, we are of
the considered opinion that interference made by
learned Single Judge in the matter was uncalled for.
19. For the aforesaid reasons, the impugned judgment
cannot be sustained in the eyes of law. We allow the
appeal and set aside the impugned judgment rendered
by learned Single Judge in Writ Petition (M/S) 200 of
2011.
_______________________________
MANOJ KUMAR TIWARI, J.
____________________________
SUBHASH UPADHYAY, J.
Dt: 12th August, 2025
Mahinder
Digitally signed by MAHINDER SINGH
MAHINDER SINGH
DN: c=IN, o=HIGH COURT OF UTTARAKHAND, ou=HIGH COURT OF UTTARAKHAND,
2.5.4.20=da6212e6e78d94ed3134842bc6a8d6ca168979ca7b8c2f031a92d1a18b08923c,
postalCode=263001, st=UTTARAKHAND,
serialNumber=AB77B7C5B240908B392BE84F5CDD4C2AF35DC4626D305B1BC9EA4BABA43D2B8F,
cn=MAHINDER SINGH
Date: 2025.08.28 17:18:20 +05’30’
9
[ad_1]
Source link