Case Law Details
High Court held that The failure by the AO to adhere to the mandatory requirement of Section 144C (1) of the Act and first pass a draft assessment order would result in invalidation of the final assessment order and the consequent demand notices and penalty proceedings.
Full Text of the High Court Judgment / Order is as follows:-
1. These are three writ petitions by JCB India Ltd. seeking quashing of an order dated 30th March 2016 passed by the Transfer Pricing Officer (‘TPO’) and the Final Assessment Order dated 31st March 2016 passed by the Assessing Officer (‘AO) under Section 254 read with Section 143(3) of the Income Tax Act, 1961 (‘Act) for three Assessment Years (‘AYs’), 2006-07, 2007-08 and 2008-09 respectively.
2. The Petitioner is a wholly owned subsidiary of JC Bamford Excavators Ltd., U. K. (‘JCB, U.K.’). It is engaged in the business of manufacture of earth-moving/construction equipments. It commenced its operations in India in the year 1979.
AY 2006-07
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ADD-on
For another attempt made with a view to underlining the essence of the otherwise avoidable confusion and controversy, suggest to look up the personal Google Blog @ swamilook titled, – DISPUTE RESOLUTION (IT Regime) – LAW v case law !
To reshare (the common sense inspired reaction vide post on Linkedin) but differently:
Granting that the avowed objective is to try and provide a mechanism for a fast track resolution of the specified tax disputes (sub-sec (15) (b)), in a seamless and hassle- free manner, could the ‘legislative intent’ ever be mistaken / imagined to make it more cumbersome than before – thereby render the remedy worse than the evil?
Look through the enactment the dispute in the instant case – reproduced below:
Q
Reference to dispute resolution panel
Sec 144C. (1) The Assessing Officer SHALL, notwithstanding anything to the contrary contained in this Act, in the first instance, FORWARD A DRAFT OF THE PROPOSED ORDER of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.
(2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,— (a) file his acceptance of the variations to the Assessing Officer; or (b) FILE HIS OBJECTIONS, if any, to such variation with,— (i) the Dispute Resolution Panel; AND (ii) the Assessing Officer.
(3) The Assessing Officer shall complete the assessment on the basis of the draft order, if— (a) the assessee INTIMATES TO THE ASSESSING OFFICER THE ACCEPTANCE OF THE VARIATION; or (b) NO OBJECTIONS ARE RECEIVED WITHIN the period specified in sub-section (2).
(4) The Assessing Officer SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 153, PASS THE ASSESSMENT ORDER UNDER SUB-SECTION (3) WITHIN one month from the end of the month in which, — (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires.
(5) The Dispute Resolution Panel SHALL, IN A CASE WHERE ANY OBJECTION IS RECEIVED UNDER SUB-SECTION (2), issue such directions, as it thinks fit, FOR THE GUIDANCE OF THE ASSESSING OFFICER TO ENABLE HIM TO COMPLETE THE ASSESSMENT.
(6) The Dispute Resolution Panel shall issue the directions referred to in subsection (5), after considering the following, namely:— (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (D) REPORT, IF ANY, OF THE ASSESSING OFFICER, VALUATION OFFICER OR TRANSFER PRICING OFFICER OR ANY OTHER AUTHORITY; (e) records relating to the draft order; (F) EVIDENCE COLLECTED BY, OR CAUSED TO BE COLLECTED BY, IT; and (g) result of any enquiry made by, or caused to be made by, it.
(7) The Dispute Resolution Panel MAY, before issuing any directions referred to in sub-section (5),— (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it.
Inserted by the Finance (No. 2) Act, 2009, w.r.e.f. 1-4-2009. S. 144C I.T. ACT, 1961
(8) The Dispute Resolution Panel MAY CONFIRM, REDUCE OR ENHANCE THE VARIATIONS PROPOSED IN THE DRAFT ORDER SO, HOWEVER, THAT IT SHALL NOT SET ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIRECTION UNDER SUB-SECTION (5) FOR FURTHER ENQUIRY AND PASSING OF THE ASSESSMENT ORDER.
(9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members.
(10) EVERY DIRECTION ISSUED BY THE DISPUTE RESOLUTION PANEL SHALL BE BINDING ON THE ASSESSING OFFICER.
(11) No direction under sub-section (5) SHALL be issued UNLESS AN OPPORTUNITY of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively.
(12) NO DIRECTION UNDER SUB-SECTION (5) SHALL BE ISSUED AFTER NINE MONTHS FROM THE END OF THE MONTH IN WHICH THE DRAFT ORDER IS FORWARDED TO THE ELIGIBLE ASSESSEE.
(13) UPON RECEIPT OF THE DIRECTIONS ISSUED UNDER SUB-SECTION (5), THE ASSESSING OFFICER SHALL, IN CONFORMITY WITH THE DIRECTIONS, COMPLETE, notwithstanding anything to the contrary contained in section 153, THE ASSESSMENT WITHOUT PROVIDING ANY FURTHER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH SUCH DIRECTION IS RECEIVED.
(14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee.
(15) For the purposes of this section,—
(a) “Dispute Resolution Panel” means a collegium comprising of three Commissioners of Income-tax constituted by the Board for this purpose;
(b) “eligible assessee” means,—
(I) ANY PERSON IN WHOSE CASE THE VARIATION REFERRED TO IN SUB-SECTION (1) ARISES AS A CONSEQUENCE OF THE ORDER OF THE TRANSFER PRICING OFFICER PASSED UNDER SUB-SECTION (3) OF SECTION 92CA; and
(ii) ANY FOREIGN COMPANY.
UQ
FONT supplied, – Does that help, to enable anyone to ‘see (not miss) the wood for the tree’!