Bekaert Mukand Wire Industries Pvt. Ltd. Vs Additional/Joint/Deputy/ACIT/ITO (Bombay High Court)
Summary: Bombay High Court quashed the assessment order dated 19 April, 2021 after finding admitted non-compliance with the mandatory procedure prescribed under Section 144B of the Income Tax Act, 1961. The petitioner was admittedly an “eligible assessee” within the meaning assigned through Section 144B Explanation (m) read with Section 144C(15)(b). The Court accepted the petitioner’s contention that, in the case of an eligible assessee, the mandatory provisions contained in clauses (xxvii) to (xxxii) of Section 144B(1) had to be strictly complied with. It also relied upon SHL (India) Private Limited vs. Deputy Commissioner of Income Tax and others for the proposition that the requirements of Section 144C are mandatory.
The Revenue’s affidavit did not deny non-compliance and instead sought remand to the Assessing Officer for fresh adjudication. The High Court referred to Section 144B(9), which at the relevant time expressly provided that an assessment would be non-est if it was not made in accordance with the procedure laid down under Section 144B. Since non-compliance was admitted, the Court held that the assessment order dated 19 April, 2021 was non-est and quashed it. The consequential demand notice and penalty notice of the same date were also quashed and set aside. The Department was left free to take such steps as advised in accordance with law. The Court expressly clarified that it had made no observation on the merits of the case.
Cases Discussed
- SHL (India) Private Limited vs. Deputy Commissioner of Income Tax and others, Writ Petition (L) No.11293/2021, dated 28/7/2021 — relied upon for the proposition that the provisions of Section 144C of the Income Tax Act are mandatory in nature.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
This petition is impugning an assessment order dated 19 April, 2021 on the ground that the order has been passed without strictly complying with mandatory provisions prescribed under Section 144B of the Income Tax Act, 1961 (the said Act) and therefore, the order dated 19th April, 2021 impugned in this Petition is non-est.
2. Admittedly petitioner is an eligible assessee. Eligible assessee as per Explanation (m) to Section 144B says that it shall have the same meaning as assigned to in Clause (B) of sub- section (15) of Section 144C. Clause (B) of sub-section (15) of Section 144C defnes an “eligible assessee” as under:-
“(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 non-resident not being a company, or any foreign company.”
3. Mr. Pardiwala submitted that in the case of an eligible assessee the mandatory provisions provided under Clause (xxvii) to (xxxii) of sub-section (1) of Section 144B of the said Act has to be strictly complied with. We agree with him. As held in SHL (India) Private Limited vs. Deputy Commissioner of 1 Income Tax and others even provisions of Section 144C of the said Act are mandatory in nature. As we could understand fromth the afdavit-in-reply of one Bhushan Patil, DCIT, afrmed on 13 September, 2021, non compliance with these provisions have not been denied. What is stated is that the matter be remanded to the fle of Assessing Ofcer for fresh aduudication.
4. Sub-section (9) of Section 144B provides that notwithstanding anything contained in any other provision of this Act, assessment made shall be non-est if such assessment is not made in accordance with the procedure laid down under Section 144B. It is an admitted position that the procedure laid down under Section 144B of the said Act has not been followed while passing the assessment order impugned in this Petition. Therefore, the assessment order dated 19th April, 2021 shall be non-est.
5. In the circumstances, the assessment order dated 19th April, 2021 impugned in this Petition is quashed and set aside. Theth consequential demand notice and penalty notice also dated 19 April, 2021 are also hereby quashed and set aside.
6. The Department may take such steps as advised in accordance with law.
7. We have not made any observation on the merits of the case.
8. Petition disposed.
1 Writ Petition (L) No.11293/2021 dated 28/7/2021 (unreported).
