Andhra Pradesh High Court – Amravati
Divine Chemtec Limited vs Income Tax Department on 25 July, 2025
Author: Ninala Jayasurya
Bench: Ninala Jayasurya
THE HON'BLE SRI JUSTICE NINALA JAYASURYA
AND
THE HON'BLE SRI JUSTICE T. MALLIKARJUNA RAO
I.A.Nos.1 & 2 OF 2023
IN
WRIT PETITION NOs.11604, 11593, 11818,
11596 AND 11923 OF 2022
COMMON ORDER:
(Per the Hon’ble Sri Justice T. Mallikarjuna Rao)
1. These review petitions, filed under Order 47 Rule 1 read with Section
114 and Section 151 of the Civil Procedure Code, 1908, seek review of the
common order dated 14.06.2023 in W.P. Nos. 11604, 11593, 11818, 11596,
and 11923 of 2022. The petitioners specifically challenge the condition
directing payment of 25% of the penalty amount for re-adjudication by the 1st
respondent. As they arise from the common order and involve common
issues, they are being disposed of by this common order.
2. This court allowed the above Writ Petitions and set aside the impugned
penalty orders passed by the 1st respondent holding as under:-
“16. We also considered the argument of learned Standing Counsel
regarding the availability of efficacious alternative remedy in the form of
appeal and non-maintainability of the writ petition on that count. We are
unable to countenance the said argument in view of the fact that, though
an alternative remedy of appeal is available, still, in the instant case, we
have noticed partial violation of principles of natural justice by the
respondent authorities by depriving the petition of personal hearing. In the
cases where the principles of natural justice are on casualty, the
constitutional Courts can entertain the writ petitions despite the availability
of alternative remedy. There are a slew of legal pronouncements in this
regard, of which we can refer to Whirlpool Corporation v. Registrar of
Trade Marks, Mumbai.1 wherein it is held thus:
“15. Under Article 226 of the Constitution, the High Court, having
regard to the facts of the case, has discretion to entertain or not to
entertain a writ petition. But the High Court has imposed upon
itself certain restrictions one of which is that if an effective and
efficacious remedy is available, the High Court would not normally
1
AIR 1999 SC 22 = MANU/SC/0664/1998
2exercise its jurisdiction. But the alternative remedy has been
consistently held by this court not to operate as a bar in at least
three contingencies, namely, where the Writ Petition has been filed
for the enforcement of any of the Fundamental rights or where
there has been a violation of the principle of natural justice or
where the order or proceedings are wholly without jurisdiction or
the vires of an Act is challenged.”
17. Accordingly, the writ petitions are allowed setting aside the impugned
penalty orders dated 16.03.2022 and 21.03.2022 passed by the 1st
respondent and matters are remitted back to the 1st respondent with a
direction to consider the reply notices dated 26.05.2021 and 31.05.2021
submitted by the petitioner and after affording an opportunity of personal
hearing to the petitioner, pass appropriate orders in accordance with
governing law and rules expeditiously on the condition of petitioner
depositing 25% of the penalty amount in each case within six (6) weeks
from the date of receipt of copy of this order, failing which this order shall
stand cancelled. No costs”.
3. The case put forth by the writ petitioners, as articulated in their writ
petitions, is as follows:”
(a) The petitioner is a company duly incorporated and registered under
the provisions of the Companies Act, 2013. On 20.09.2017, search
operations were conducted at the petitioner’s premises under Section
132 of the Income Tax Act. Subsequently, a notice was issued on
30.08.2018 under Section 153A of the Income Tax Act, calling for the
petitioner’s income tax return.
(b) During the search operation, the Managing Director of the petitioner,
upon reviewing the audit and balance sheet of the company,
identified an inadvertent error in the company’s books of account for
the financial year ended 31.03.2009. Specifically, a foreign
investment had been capitalized under plant and machinery, despite
not materializing due to various reasons. Since this error originated in
the financial year ending 31.03.2009, it went unnoticed for several
years and was subsequently corrected in the financial year ending
31.03.2015, corresponding to the assessment year 2015-16.
3
(c) Pursuant to the notice under Section 153A, the petitioner filed its
return on 23.09.2018, declaring a loss of Rs.5,50,06,514/-. This
return was assessed under Section 143(3) read with Section 153A of
the Income Tax Act by an order dated 30.12.2019, which accepted
the income declared in the return. Although the Assessing Officer
recorded satisfaction with the return, penalty proceedings were
initiated under Section 271(1)(c) read with Explanation 5A for
furnishing inaccurate particulars of income, relying on the original
return filed under Section 139(1) of the Income Tax Act.
(d) Accordingly, a show cause notice dated 03.01.2020 was issued
under Section 274 of the Income Tax Act, to which the petitioner
submitted a reply dated 03.02.2020, denying all allegations. The
petitioner specifically drew attention to the Assessing Officer’s
satisfaction, which is a sine qua non for imposing a penalty for
furnishing inaccurate particulars of income. However, the show-cause
notice was issued on the grounds of concealment of income, thereby
rendering the notice baseless. On 19.02.2020, the petitioner filed an
additional reply to the show cause notice dated 03.01.2020. However,
the first respondent failed to take cognizance of both submissions.
(e) Pursuant to the notification dated 12.01.2021, the Central Board of
Direct Taxes notified the Faceless Penalty Scheme-2021.
Accordingly, a show-cause notice was issued to the petitioner on
24.05.2021 by the National Faceless Assessment Centre. The
petitioner submitted a reply on 26.05.2021, followed by a
supplemental reply dated 31.05.2021. Subsequently, the petitioner
did not receive any further communication until a penalty order dated
21.03.2022 was issued without granting an opportunity for a personal
hearing, despite a specific request for the same in the supplemental
reply of 31.05.2021.
4
(f) The imposition of the penalty is in complete violation of Sub-Clause
XV of Clause I of Paragraph 5 of the Faceless Assessment Scheme.
The petitioner submitted its grievance on the portal maintained by
Respondent No. 2 on 26.03.2022. However, the grievance remains
unanswered.
4. The respondents in the writ petitions filed their counter affidavits and
opposed the writ petitions, inter alia, contending as follows:
(a) The petitioner has an adequate alternative remedy of filing an appeal
before the Commissioner of Income Tax (Appeals) against the
impugned order passed under Section 271(1)(c) of the Income Tax
Act. Therefore, the writ petition is not maintainable.
(b) During the search under Section 132 of the IT Act on 20.09.2017,
the assessee admitted claiming bogus depreciation of ₹1,80,99,062
for AY 2015-16. In response to the Section 153A notice, the
assessee withdrew the excess depreciation, filed a revised return,
and the assessment was completed on the revised income.
However, since inaccurate particulars were furnished, the AO
initiated penalty proceedings under Section 271(1)(c) vide a notice
dated 03.01.2020, which mistakenly cited “concealment of
particulars of income.” Upon realizing this error, the AO cancelled
the notice and issued a fresh one on 31.01.2020 correctly citing
“furnishing inaccurate particulars of income,” which was served to
the assessee. The penalty proceedings were finalized based on this
second notice. The petitioner has ignored the fresh notice and relied
on the withdrawn first notice; consequently, the reply dated
03.02.2020 to the first notice is now redundant.
(c) The petitioner’s claim that the penalty order was passed without
adhering to the Faceless Penalty Scheme is incorrect. The penalty
under Section 271(1)(c) was issued by the National Faceless
Assessment Centre, not the National Faceless Penalty Centre.
5
(d) The petitioner’s claim that the order violates principles of natural
justice is untenable. The assessee was duly notified before penalty
imposition through notices dated 03.01.2021, 31.01.2021, and
24.05.2021, and submitted detailed explanations in response. These
submissions were considered by the National Faceless Assessment
Centre, which imposed the penalty for furnishing inaccurate
particulars. The penalty order is free of any defects.
5. Heard Sri B. Adinarayana Rao, learned Senior Counsel appearing for
the petitioner, representing Sri Javvaji Sarath Chandra and Sri B. Ravi Kiran
Singh, and Sri Anup Koushik Karavadi, learned Senior Standing Counsel,
appearing on behalf of the respondents/Income Tax Department.
6. Sri B. Adinarayana Rao, learned Senior Counsel for the petitioner,
submits that the common order dated 14.06.2023 contains an error. He
argues that once the penalty order dated 21.03.2022 is declared illegal and
void, it stands effaced, and no penalty deposit should be insisted upon. He
further contends that any remand must be treated as de novo, without
requiring payment under an order deemed non-existent.
7. Sri Anup Koushik Karavadi, learned Senior Standing Counsel for the
Respondents/Income Tax Department, opposed the contention, asserting that
the common order passed by this court is free from illegality. He further
argued that the petitioner has suffered no prejudice, and therefore, no
interference is warranted in these review petitions.
8. Before proceeding further, it is proper to address the scope of the
Review Application filed under Order 47 Rule 1 of CPC.
9. In A. Prabhavathi V. State of Andhra Pradesh and others2, the
Division Bench of this Court has elaborated on the principles relating to
review. After referring to the order in T.D. Dayal V. Madupu Harinarayana,
2
2020 (2) ALD 557
6
Hari Babu3 and Mohammadiya Educational Society V. Union of India4, the
court held as under:
“17. Summoning up the principles, as discussed in the above two cases of
the Division Bench, after undertaking the exercise of detailed survey of law on the
scope of review, the essence of the observations made in the above two cases
may be stated in a condensed version as follows:
“Review, literally and judicially, means re-examination or reconsideration.
The basic philosophy inherent in it is the universal acceptance of human fallibility.
Yet, in the realm of law, Courts lean strongly in favour of the finality of a decision
legally and properly made. Exceptions have been carved out to correct accidental
mistakes or to prevent miscarriage of justice or to avoid abuse of process. So, the
power of review would be exercised only to remove the error and not to disturb
the finality. There are definitive limits to exercise the power of review. The same
can be exercised on the discovery of a new and important matter or evidence
which, after the exercise of due diligence, was not within the knowledge of the
person seeking the review or could not be produced by him at the time when the
order was made. It can also be exercised where some mistake or error apparent
on the face of the record is found. But, it may not be exercised on the ground that
a decision was erroneous on merits. That would be the province of a Court of
Appeal. A power of review is not to be confused with the appellate power which
may enable an appellate Court to correct all manner of errors committed by the
subordinate court. The review proceeding cannot be equated with the original
hearing of the case, and the finality of the judgment delivered by the court will not
be reconsidered except “where a glaring omission or patent mistake or like grave
error has crept in earlier by judicial fallibility.
18. Thus, as per the law enunciated in the aforesaid judgments, and as per
the principles culled out from the above observations made by the Division Bench
after considering all the earlier precedents on the subject, the legal position
relating to the scope of interference in review proceedings, which are extremely
limited, can be summarised as follows:-
(1) A review proceeding cannot be equated with the original hearing of the
case, and the finality of the judgment delivered by the court will not be
reconsidered except “where a glaring omission or patent mistake or like
grave error has crept in earlier by judicial fallibility”.
(2) When a new or important matter or evidence is discovered which was not
within the knowledge of the person seeking review at the time of hearing
the case earlier or which could not be produced by him when the order was
made.
(3) The normal principle is that a judgment pronounced by the court is final, and
departure from the principle is justified only when circumstances, of a
substantial and compelling character, make it necessary to do so.
(4) Review is not a rehearing of an original matter. The power of review cannot
be confused with the appellate power, which enables the appellate court to
correct all errors committed by a subordinate Court.
(5) A review petition has a limited purpose and cannot be allowed to be “an
appeal in disguise”.
3
2013 (6) ALD 734 (DB)
4
2016 (4) ALD 464 (DB)
7
(6) An error which is not self-evident, and has to be detected by a process of
reasoning, can hardly be said to be an error apparent on the face of the
record justifying exercise of the power of review.
(7) There is a clear distinction between an “erroneous decision” and “an error
apparent on the face of the record”. While the first can be corrected by the
higher forum, the latter only can be corrected by exercise of the review
jurisdiction. So, the earlier order cannot be reviewed unless the court is
satisfied that material error, manifest on the face of the order, undermines
its soundness or results in miscarriage of justice.
(8) If the judgment is vitiated by an error apparent on the face of the record, in
the sense that it is evident on a mere look at the record without a long-
drawn process of reasoning, a review application is maintainable. If there is
a serious irregularity in the proceeding, such as violation of the principles of
natural justice, a review application can be entertained.
10. In Sow Chandra Kante and others V. Sheikh Habib5, the Hon’ble
Supreme Court observed as under:
“May be, we were not right in refusing special leave in the first round; but,
once an order has been passed by this court, a review thereof must be subject to
the rules of the game and cannot be lightly entertained. A review of a judgment is
a serious step, and reluctant resort to it is proper only where a glaring omission or
patent mistake or like grave error has crept in earlier by judicial fallibility. A mere
repetition, through different counsel, of old and over-ruled arguments, a second
trip over ineffectually covered ground or minor mistakes of inconsequential import
are obviously insufficient. The very strict need for compliance with these factors is
the rationale behind the insistence of counsel’s certificate, which should “not be a
routine affair or a habitual step. It is neither fairness to the court which has
decided nor awareness of the precious public time lost what with a huge back-log
of dockets waiting in the queue for disposal, for counsel to issue easy certificates
for entertainment of review and fight over again the same battle which has been
fought and lost. The Bench and the Bar, we are sure, are jointly concerned in the
conservation of judicial time for maximum use. We regret to say that this case is
typical of the unfortunate but frequent phenomenon of repeat performance with
the review label as passport. Nothing which we did not hear then has been heard
now, except a couple of rulings on points earlier put forward. May be, as counsel
now urges and then pressed, our order refusing special leave was capable of a
different course. The present stage is not a virgin ground but review of an earlier
order which has the normal feature of finality.”
11. In Ram Sahu (Dead) Through LRs and others, V. Vinod Kumar
Rawat and others6, the Hon’ble Supreme Court observed as under:
“35. The principles which can be culled out from the above-noted judgments are:
(i) The power of the Tribunal to review its order/decision under Section 22(3)(f)
of the Act is akin/analogous to the power of a civil court under Section 114
read with Order 47 Rule 1 CPC.
5
(1975) 1 SCC 674
6
2020 SCC Online SC 896
8
(ii) The Tribunal can review its decision on either of the grounds enumerated in
Order 47 Rule 1 and not otherwise.
(iii) The expression “any other sufficient reason” appearing in Order 47 Rule 1
has to be interpreted in the light of other specified grounds.
(iv) An error which is not self-evident and which can be discovered by a long
process of reasoning, cannot be treated as an error apparent on the face
of record justifying exercise of power under Section 22(3)(f).
(v) An erroneous order/decision cannot be corrected in the guise of exercise of
power of review.
(vi) A decision/order cannot be reviewed under Section 22(3)(f) on the basis of
subsequent decision/judgment of a coordinate or larger Bench of the
tribunal or of a superior court.
(vii) While considering an application for review, the tribunal must confine its
adjudication with reference to material which was available at the time of
initial decision. The happening of some subsequent event or development
cannot be taken note of for declaring the initial order/decision as vitiated
by an error apparent.
(viii) Mere discovery of new or important matter or evidence is not sufficient
ground for review. The party seeking review has also to show that such
matter or evidence was not within its knowledge and even after the
exercise of due diligence, the same could not be produced before the
court/tribunal earlier.”
12. Keeping in view the ratio laid down in the judgments referred to above,
we shall proceed to address the case at hand.
13. As previously noted, the principal grievance of the learned senior
counsel for the petitioners is that once this court set aside the impugned
penalty order dated 21.03.2022 and remitted the matter to the first respondent
with a direction to consider the reply notices dated 26.05.2021 and
31.05.2021, the setting aside of the penalty order creates a legal fiction that
the said order never existed. Consequently, any direction to deposit the
penalty amount based on an order that has been rendered non-existent by
this court’s decision would not arise.
14. We have carefully considered the order passed by this court in light of
the submissions advanced. The order is unequivocal, as it expressly stipulates
that the penalty order shall be set aside only upon the petitioners’ deposit of
25% of the penalty amount. Accordingly, it follows that unless the petitioners
fulfill this condition, the order setting aside the penalty shall not take effect.
9
Therefore, the argument put forth by the learned senior counsel for the
petitioners, although seemingly persuasive, lacks legal merit and is
unsustainable in law.
15. It is well settled that the High Court in exercise of its jurisdiction under
Article 226 of the Constitution can take cognizance of the entire facts and
circumstances of the case and pass appropriate orders to give the parties
complete and substantial justice. This jurisdiction of the High Court, being
extraordinary, is normally exercisable in accordance with the principles of
equity and justice.
16. A Division Bench of the Hon’ble Supreme Court, in the case of Ramesh
Chandra Sankla V. Vikram Cement7, considered, affirmed, and reiterated
several judgments, as discussed in paragraph No.98 that:
98. From the above cases, it clearly transpires that powers under Articles
226 and 227 are discretionary and equitable and are required to be
exercised in the larger interest of justice. While granting relief in favour of
the applicant, the court must take into account the balancing of interests
and equities. It can mould relief considering the facts of the case. It can
pass an appropriate order which justice may demand and equities may
project. As observed by this Court in Shiv Shankar Dal Mills v. State of
Haryana [(1980) 2 SCC 437 : (1980) 1 SCR 1170], courts of equity
should go much further both to give and refuse relief in furtherance of
public interest. Granting or withholding of relief may properly be
dependent upon considerations of justice, equity and good conscience.
17. In light of the settled legal position, it cannot be contended that any
apparent error of law vitiates the judgment under review. This court’s
approach is entirely consistent with well-established legal principles,
considering all relevant facts to ensure equitable justice.
18. As held by the Hon’ble Supreme Court, the grounds for review of
judgment or order would be only (a) when a new and important matter or
evidence is discovered, which was not within the knowledge of the person
seeking review at the time of hearing the case earlier or which could not be
7
(2008) 14 SCC 58
10
produced by him when the order was made; (b) the power of review is
available only when there is an error apparent on the face of the record and
not on an erroneous decision.
19. Concerning the scope of review, it has repeatedly been held that in the
exercise of review jurisdiction, neither the court can sit in appeal nor is it open
for the petitioners to re-agitate and reargue questions that have already been
addressed and decided by the writ Court. It is not permissible to allow the
review petitions to be reheard and decided as an appeal in disguise. We are
of the view that the power of review can be exercised to correct a mistake, but
not to substitute one view for another.
20. The petitioners have neither claimed the discovery of any new and
important matter that, despite due diligence, was unknown or could not have
been brought to the court’s attention at the time of judgment, nor have they
demonstrated any apparent error on the face of the record or any other
sufficient ground to justify a review; therefore, we find no basis to review the
orders under challenge.
21. In the result, the Review Petitions are dismissed. There shall be no
order as to costs.
Miscellaneous applications pending, if any, shall stand closed.
___________________________
JUSTICE NINALA JAYASURYA
_____________________________
JUSTICE T. MALLIKARJUNA RAO
Date: 25.07.2025.
MS / SAK
11
THE HONOURABLE SRI JUSTICE NINALA JAYASURYA
AND
THE HONOURABLE SRI JUSTICE T. MALLIKARJUNA RAO
I.A.Nos.1 & 2 of 2023
in
W.P.Nos.11604, 11593, 11818, 11596 and 11923 of 2022
(Per Hon’ble Sri Justice T. Mallikarjuna Rao)
Date: 25.07.2025
SAK