Madras High Court
Havish Koorapaty vs The Income Tax Officer on 8 September, 2023
Author: C.Saravanan
Bench: C.Saravanan
W.P.Nos.24230 & 24235 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 07.08.2023
PRONOUNCED ON : 08.09.2023
CORAM
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.Nos.24230 & 24235 of 2021
and WMP.Nos.25544, 25546, 25550 & 25553 of 2021
Havish Koorapaty ... Petitioner in
W.P.No.24230/202
1
Sivakumar Koorapati .. Petitioner in
W.P.No.24235/20
21
Vs.
The Income Tax Officer,
International Taxation Ward 1 (2),
No.16, Greams Road,
Chennai 600 006. ... Respondent in both
W.Ps.
Prayer in W.P.No.24230 of 2021 :Writ Petition filed under Article 226 of
the Constitution of India for issuance of a Writ of Certiorari calling foir
the records on the file of the Respondent and quash the impugned
assessment order passed under Section 143(3) of the Income Tax Act,
1961 in ITBA/AST/S/143(3)/2021-22/1035764639(1) dated 21.09.2p21
_____________
https://www.mhc.tn.gov.in/judis
Page No. 1 of 31
W.P.Nos.24230 & 24235 of 2021
for the AY 2019-2020.
Prayer in W.P.No.24235 of 2021 :Writ Petition filed under Article 226 of
the Constitution of India for issuance of a Writ of Certiorari calling foir
the records on the file of the Respondent and quash the impugned
assessment order passed under Section 143(3) of the Income Tax Act,
1961 in ITBA/AST/S/143(3)/2021-22/1035675311(1) dated 17.09.2021
for the AY 2019-2020.
In both cases
For Petitioner : M/s.Vandana Vyas
For Respondent : Mr.Prabhu Mukunth Arunkumar
Junior Standing Counsel &
Mr.B.Ramana Kumar
Senior Standing Counsel
COMMON ORDER
By this common order, all the Writ Petitions are being disposed of.
2. In these Writ Petitions, the respective petitioners who are siblings have challenged the impugned assessment order dated 21.09.2021 (in W.P.No.24230 of 2021) and impugned assessment order dated 17.09.2021 (in W.P.No.24235 of 2021) passed under Section 143(3) of the InTax Act, 1961 for the Assessment year. Both the _____________ https://www.mhc.tn.gov.in/judis Page No. 2 of 31 W.P.Nos.24230 & 24235 of 2021 petitioners are Non- Resident Indians NRI’s).
3. The respective petitioners inherited immovable properties from the death of their father. The respective petitioners have sold these separate properties on the same date on 06.09.2018 as detailed below:-
W.P.No. Property details Date of Registered Value Registration. Document No (in Rs.) W.P.No.24230 Plot no B, Door no 06.09.2018 2902/2018 in the7,87,03,144 of 2021 130, new no 79/2 Sub Registrar's previous door no 6/23 Office Mylapore & 7/23, Dr. Radhakrishnan Salai, Mylapore, Chennai.
W.P.No.24235 Plot no D, Door no 06.09.2018 2903/2018 in the7,83,29,448
of 2021 130, new no 79/4 Sub Registrar's
previous door no 6/23 Office Mylapore
& 7/23, Dr.
Radhakrishnan Salai,
Mylapore, Chennai.
4. The respective petitioners filed their Return of Income on 30.08.2019 and 31.08.2019 respectively. The assessments were not completed on account of several factors due to inaction of the respective petitioner. Ultimately the petitioners were issued with notices under Section 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') and a show cause notice under Section 143(3)(SCN) of the Act on 23.08.2021. Notices which preceded the _____________ https://www.mhc.tn.gov.in/judis Page No. 3 of 31 W.P.Nos.24230 & 24235 of 2021 impugned orders from the date of Return of income are detailed below:-
Assessment year 2019- 2020 W.P. W.P. No 24235 of 2021Sivakumar No 24230 of 2021 Havish Koorapaty v. IT officer Koorapaty v. IT officer Non-
Resident Non- Resident
S.No Date Event Date Event
1. 30.08.2019 Return of income 31.08.2019 Return of income filed
filed by the petitioner by the petitioner u/s
u/s 139(1) of the IT 139(1) of the IT act
act
2. 31.03.2021 Notice u/s 143(2) 31.03.2021 Notice u/s 143(2)
issued for selection issued for selection of
of the petitioner ROI the petitioner ROI for
for complete scrutiny complete scrutiny
3. 16.04.2021 Acknowledgment to 16.04.2021 Acknowledgment to
the reply of notice the reply of notice u/s
u/s 143(2) by the 143(2) by the
petitioner petitioner
4. 13.07.2021 Notice u/s 142 (1) 13.07.2021 Notice u/s 142 (1)
5. 22.07.2021 Reply to Notice u/s 22.07.2021 Reply to Notice u/s
142 (1) 142 (1)
6. 23.08.2021 Show cause notice 23.08.2021 Show cause notice u/s
u/s 143(3)(SCN) 143(3)(SCN)
7. 28.08.2021 Request for 28.08.2021 Request for obtaining
obtaining copy of copy of notice u/s
notice u/s 133(6) by 133(6) by the Sub
the Sub registrar registrar office
office
8. 08.09.2021 Reply to Show cause 08.09.2021 Reply to Show cause
notice notice
9. 21.09.2021 Impugned order 17.09.2021 Impugned order
passed u/s 143(3) passed u/s 143(3)
5. The specific contention of the respective petitioners is that the Finance Act, 2020 introduced a amendment to Section 144C of the Act _____________ https://www.mhc.tn.gov.in/judis Page No. 4 of 31 W.P.Nos.24230 & 24235 of 2021 w.e.f 01.04.2020. It is submitted that as a result of the amendment, the respective petitioner became “eligible assessee” within the meaning of Section 144C(15)(b)(ii). It is therefore, submitted that the petitioners being “non-residents”, ought to have been served with a Draft Assessment Order in accordance with the provision of Section 144C of the Income Tax Act, 1961 even though the returns filed by the respective petitioners related to the Assessment Year 2019-2020 before the date of assessment.
6. In support of the Writ Petition, the learned counsel for the petitioners has drawn attention to the Memorandum explaining the Finance Bill 2020 wherein, it has been stated that the amendment to section 144C(15)(b)(ii) will take effect from 1st April,2020 if the AO proposes to make any variation after this date and in case of an “eligible assessee,” any variation prejudicial to the interest of the assessee is to be made, under Section 144C of the Income Tax Act, 1961.will be applicable.
_____________ https://www.mhc.tn.gov.in/judis Page No. 5 of 31 W.P.Nos.24230 & 24235 of 2021
7. It is thus submitted that if an Assessing Officer proposed any variations on or after 01.04.2020 to the returns filed by an “eligible assessee”, the procedure under Section 144C of the Act was to be followed. It is submitted that the issuance of a “Draft Assessment Order” preceding to the Assessment Order was mandatory under the Scheme of the Act. By not passing a Draft Assessment Order, the substantive right to take further re-course under Section 144C(2) of the Income Tax Act,1961,against the Draft Assessment Order has been denied to the petitioners. Therefore, it is submitted that the impugned assessment order dated 21.09.2021 and 17.09.2021 were liable to be quashed.
8. In this connection, the learned counsel for the petitioners has drawn attention to the following decisions:-
(i) Honda Cars India Ltd v Deputy Commissioner of Income Tax [2016] 67 taxmann.com 29 (Delhi).
(ii)SHL(India) Private Limited v Deputy Commissioner of Income Tax in WPL 11293 of 2021 .
(iii)Gigabyte Technology Pvt Ltd v CIT 121 taxman 301(Bombay).
(iv)Vijay Television Pvt Ltd v Dispute _____________ https://www.mhc.tn.gov.in/judis Page No. 6 of 31 W.P.Nos.24230 & 24235 of 2021 Resolution Panel 369 ITR 113 (Madras)
(v) ACIT v Vijay Televisions Pvt Ltd in WA No 1327 to 1329 of 2014 (Madras High Court)
(vi)GR Oil India Pvt Ltd v ACIT in WP No 1575 of 2020 (Madras High Court)
(vii)PCIT and Others v SISCO systems Capital India Private Limited in ITA No 128 od 2021 (Karnataka High Court)
(viii)Durr India Pvt Ltd v ACIT in 436 ITR 111 (Madras) “
9. The learned counsel for the respective petitioner has alluded to Circular No.5 of 2010 dated 03.06.2010 and Circular No.9 of 2013 dated 19.11.2013, Circular No.5 of 2010 dated 03.06.2010 was issued after Section 144C was first introduced to the Income Tax Act, 1961 vide Finance (No.2) Act, 2009.
10. It is submitted that by Circular No.5 of 2010 it was clarified that the amended Section 144C of the Income Tax Act, 1961 will apply only in relation to the Assessment Year 2010-2011 and for subsequent years. However, the position was later changed vide Circular No.9 of 2013 dated 19.11.2013 by stating that section 144C is applicable to any _____________ https://www.mhc.tn.gov.in/judis Page No. 7 of 31 W.P.Nos.24230 & 24235 of 2021 order which proposes to make variation in income or loss returned by an “eligible assessee”, on or after 1stOctober, 2009 irrespective of the assessment year to which it pertains. It is submitted that same principle is applicable to the facts of the case.
11. The learned counsel for the respondent on the other hand would submit that Section 144C of the Act was prospective in nature and therefore question of making it applicable for Returns filed earlier retrospectively for the period prior to assessment year 2021-2022 (Financial Year 2020-2021) does not arise. He also submits that the issue is also covered by a decision of a learned Single Judge of this Court in Vedanta Ltd v Assistant Commissioner of Income Tax rendered on 22.10.2019 in W.P. No 1729 of 2011, [2020] 422 ITR 262 (MAD).
12. The timeline for completing the assessment in response to a return filed under Section 139 of the Act is specified in Section 153(1) and 1A of the Income Tax Act,1961. Section 153(1) and 1A of the Act are as under : -
SECTION 153 (1)No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-
_____________ https://www.mhc.tn.gov.in/judis Page No. 8 of 31 W.P.Nos.24230 & 24235 of 2021 one months from the end of the assessment year in which the income was first assessable:
1st Provided that in respect of an order of assessment Provis relating to the assessment year commencing on o the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted:
2nd proviso Provided further that in respect of an order of assessment relating to the assessment year commencing on —
(i)the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted;
(ii)the 1st day of April, 2020, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted:] 3rd proviso Provided also that in respect of an order of assessment relating to the assessment year commencing on 38[***] the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "nine months" had been substituted:] 4th proviso Provided also that in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April, 2022, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted.
Sub-section Notwithstanding anything contained in sub- 1A section (1), where a return under sub-section (8A) of section 139 is furnished, an order of assessment under section 143 or section 144 may _____________ https://www.mhc.tn.gov.in/judis Page No. 9 of 31 W.P.Nos.24230 & 24235 of 2021 be made at any time before the expiry of 41[twelve] months from the end of the financial year in which such return was furnished.
13. As per Section 153(1), no order of assessment shall be madeafter the expiry of twenty-one months from the end of the assessment year in which the income was first assessable.
14. However, exceptions have been provided in the case of some of the Assessment Years. As per 2nd proviso to Section 153(1) in respect of an assessment order relating to the Assessment Year commencing on 01.04.2019, the assessment order has to be completed within a period of 12 months from the end of the assessment year in which the income was first assessable.
15. In other words, no assessment order can be passed after the expiry of 12 months of the assessment year in which the income was first assessable.
_____________ https://www.mhc.tn.gov.in/judis Page No. 10 of 31 W.P.Nos.24230 & 24235 of 2021
16. The dispute in these cases, relates to Assessment Year 2019- 2020. Thus, the last date for passing the assessment order for the Assessment Year 2019-20 would be 31.03.2021. However, in these cases order were passed on 22.10.2021 & 22.10.2021 respectively.
17. The delay in passing the impugned Assessment order was due to the outbreak of Pandemic and savings under and Taxation and Other law (Relaxation and Amendment of Certain Provisions) Ordinance 2020 promulgated and Taxation and Other law (Relaxation and Amendment of Certain Provisions) Act,2020. In these writ petitions, the impugned Assessment Orders were passed on 17.09.2021 and 21.09.2021 respectively.
18. The real issue to be decided in the case of these petitioners is whether the amendment to Section 144C(15)(b)(ii) with effect from 01.04.2020 will apply to the respective petitioners or not. _____________ https://www.mhc.tn.gov.in/judis Page No. 11 of 31 W.P.Nos.24230 & 24235 of 2021
19. In Vedanta Ltd v Assistant Commissioner of Income Tax decision was rendered in the context of the below mentioned circulars issued after Section 144C was incorporated into the Income Tax Act, 1961 in the year 2009. Relevant portion of the Circulars read as under
and are reproduced below: -
Circular No.5 of 2010 dated Circular No. 09/2013 dated 03.06.2010 19.11.2013 “45.5Applicability: These “45.5. Applicability: Section 144C amendments have been made has been inserted with effect from applicable with effect from 1 st 1st April, 2009. Accordingly, the October, 2009 and will accordingly Assessing Officer is required to apply in relation to assessment year forward a draft assessment order to 2010-11 and subsequent assessment the eligible assessee, if he proposes years. The Dispute Resolution Panel to make, on or after the 1 st day of Rules have been notified by S.O. No. October, 2009, any variation in the 2958 (E) dated 20 th November, income or loss returned which is 2009.” prejudicial to the interest of such In the above extracted Para 45.5 assessee. In other words section there has been an inadvertent error in 144C is applicable to any order stating the applicability of the which proposes to make variation provisions of section 144C inserted in income or loss returned by an st vide Finance (No.2) Act, 2009 that eligible assessee, on or after 1 amendments will apply in relation to October, 2009 irrespective of the the assessment year 2010- 11 and assessment year to which it subsequent assessment years. pertains. Amendments to other Accordingly, para 45.5 is replaced sections of the Income-tax Act with the following: referred to in para 45.3 of the circular 5/2010 dated 3 rd June, 2010 shall also apply from 1st October, 2009” _____________ https://www.mhc.tn.gov.in/judis Page No. 12 of 31 W.P.Nos.24230 & 24235 of 2021
20. It was in the context of the above circular, the Court in Vedanta Ltd v Assistant Commissioner of Income Tax held as under:-
“The right that has enured to the parties in 2009 cannot be modified by a Clarification issued by the Board, three years thereafter. It appears to me quite possible that the long silence of the Board followed by the sudden Clarification issued in 2013 might itself be inspired by challenges similar to the one before me now, perhaps, even the present one. Though the Clarificatory Circular has not been challenged, in the light of the detailed discussion as above, I am of the view that this Circular will not bind the Assessing Officer, particularly when it does not lay down the correct position of law.”
21. The Bombay High Court in SHL (India) Private Limited Vs. Deputy Commissioner of Income-tax, WPL.No.11293 of 2021, held as under:
“25. In our view, the following principles emerge from the above discussion :-
(i) that the procedure prescribed under Section 144C of the IT Act is a mandatory procedure _____________ https://www.mhc.tn.gov.in/judis Page No. 13 of 31 W.P.Nos.24230 & 24235 of 2021 and not directory.
(ii) failure to follow the procedure under Section 144C(1) would be a jurisdictional error and not merely procedural error or irregularity.
(iii) therefore, Section 292B of the IT Act cannot save an order passed in breach of the provisions of Section 144C(1), the same being an incurable illegality.” The dispute in the above case pertained to the assessment year 2017-
2018.
22. In Vijay Television (P) Ltd., vs. Dispute Resolution Panel &Ors, (2014) 369 ITR 113 which was affirmed by the Hon’ble Division Bench of this Court in Assistant Commissioner of Income Tax, Media Circle-11, Chennai v. Vijay Television (P) Ltd Assessment Order came to be passed on 26.03.2013. There the last date for completing the assessment expired on 31.03.2013.
23. The learned Single of this Court in Vijay Television (P) Ltd., vs. Dispute Resolution Panel &Ors, (2014) 369 ITR 113 followed the views of the Andhra Pradesh High Court in Zuari Cements V ACIT Circle- 2(1) Vide order dated 21.02.2013 in W.P No 5557 of 2012 and _____________ https://www.mhc.tn.gov.in/judis Page No. 14 of 31 W.P.Nos.24230 & 24235 of 2021 held as under:-
“31. ……….The decision of the Division Bench of the Andhra Pradesh High Court deals with an identical issue as that of the present case. In this case, against the order passed by the second respondent on March 26, 2013, the petitioner filed objections before the Dispute Resolution Panel, the first respondent herein and the first respondent refused to entertain it by stating that the order passed by the second respondent is a final order and it had jurisdiction to entertain objections only if it is a draft assessment order. While so, the order dated March 26, 2013, of the second respondent can only be termed as a final order and in such event it is contrary to section 144C of the Act. As mentioned supra, in and by the order dated March 26, 2013, the second respondent determined the taxable amount and also imposed penalty payable by the petitioner. According to the learned senior counsel for the petitioners, even as on this date, the website of the Department indicate the amount determined by the second respondent payable by the company in spite of issuance of the corrigendum on April 15, 2013, as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even withdraw the taxable amount determined by him or updated the status in the website. In any event, such an order dated March 26, 2013, passed by the second respondent can only be construed as a final order passed in violation of the statutory provisions of the Act. The corrigendum dated April 15, 2013, is also beyond the period prescribed for limitation. Such a defect or _____________ https://www.mhc.tn.gov.in/judis Page No. 15 of 31 W.P.Nos.24230 & 24235 of 2021 failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the corrigendum dated April 15, 2013. By issuing the corrigendum, the respondents cannot be allowed to develop their own case. Therefore, following the order passed by the Division Bench of the Andhra Pradesh High Court, which was also affirmed by the honourable Supreme Court by dismissing the special leave petition filed thereof, on September 27, 2013, the orders, which are impugned in these writ petitions are liable to be set aside.”
24. The learned Single Judge of this Court Vijay Television (P) Ltd., vs. Dispute Resolution Panel &Ors, had concluded that there was a violation of Section 144(C) of the Act, while passing final order of assessment and therefore such order cannot be corrected by way of corrigendum dated 15.04.2013.
25. The Court in Vijay Television (P) Ltd., vs. Dispute Resolution Panel &Ors, has referred to the decision of the Allahabad High Court in Commissioner of Income Tax vs. Shital Prasad Kharag Prasad, 280 ITR 541. The Court was influenced by Memorandum explaining the Finance Bill, 2009 which preceded to Finance (No.2) Act, _____________ https://www.mhc.tn.gov.in/judis Page No. 16 of 31 W.P.Nos.24230 & 24235 of 2021 2009, wherein it was stated that Section 144C of the Act would take effect from 01.10.2009 and therefore it was held Circular No.5/10 issued by CBDT stating that Section 144C would apply only from the assessment year 2010-11 and subsequent years and not for the assessment year 2008-09 was held contrary to the express language in Section 144C(1) and therefore found the view of the Revenue unacceptable.
26. In Vijay Television (P) Ltd., an order was passed by the Dispute Resolution Panel. The Dispute Resolution Panel declined to entertain the objections under Section 144C (2)(b) of the Income Tax Act against Assessment Order dated 23.12.2011 and therefore this Court took a view that corrigendum dated 15.04.2023 was issued beyond the time limit for completing the assessment under Section 153 of the Income Tax Act, 1961.
27. In Vijay Television (P) Ltd., the assessment order came to be passed on 26.03.2013. Thereafter, a corrigendum was subsequently _____________ https://www.mhc.tn.gov.in/judis Page No. 17 of 31 W.P.Nos.24230 & 24235 of 2021 issued on 15.04.2013 to assessment order dated 26.03.2013. The assessee had also filed application before the Dispute Resolution Panel. However, the Dispute Resolution Panel questioned the validity of the corrigendum dated 15.04.2013 issued beyond the period of limitation under section 153 of the Income Tax Act, 1961 and thus viewed it without jurisdiction.
28. The Division Bench of this Court upheld the order of the Single Judge of this Court by merely stating that the limitation under the Act came to an end and therefore this defect was incurable.
29. A Division Bench of this Court in the case of Commissioner of Income Tax vs. Roca Bathroom Products (P)Ltd., (2022)140 Taxmann.com 304, has considered a similar dispute arising out of Transfer Pricing Officer under Section 92CA of the Income Tax Act and has concluded as follows:-
27. For the reasons set out herein before, we conclude as under:
_____________ https://www.mhc.tn.gov.in/judis Page No. 18 of 31 W.P.Nos.24230 & 24235 of 2021
(a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders.
(b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP within 9 months as contemplated under Section 144C (12) of the Income Tax Act,
(c) Irrespective of whether the DRP concludes the proceedings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time,
(d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the https://www.mhc.tn.gov.in/judis WA No. 1517 of 2021 etc. batch extended period, as otherwise the extension becomes meaningless.
(e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be _____________ https://www.mhc.tn.gov.in/judis Page No. 19 of 31 W.P.Nos.24230 & 24235 of 2021 concluded within the time limits prescribed,
(f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act,
(g) When no period of limitation is prescribed, orders are to be passed within a reasonable time, which in any case cannot be beyond 3 years. However, when the statute prescribes a particular period within which orders are to be passed, then such period, irrespective of whether it is short or long, shall be applicable.
31. There the dispute pertained to the assessment years 2009-10 and 2010-11 and the matter went up to DRP and the orders came to be passed by DRP on 30.03.2013 & 24.03.2014.
32. Relevant para Nos. 20, 21 and 25 of the said order in Commissioner of Income Tax vs. Roca Bathroom Products (P)Ltd., (2022)140 Taxmann.com 304,are reproduced below:-
_____________ https://www.mhc.tn.gov.in/judis Page No. 20 of 31 W.P.Nos.24230 & 24235 of 2021
20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending.
The TPO has to pass orders before 60 days prior to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the appellants/ revenue that the time period of 33 months, provided initially is for the draft order not for the final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument is that in the present cases, no fresh draft order was passed, but the DRP had issued the notices. If the contention of the appellants / revenue was to hold some water, they must have passed the draft assessment order immediately on receipt of the order from the Tribunal, but instead, notice was issued by _____________ https://www.mhc.tn.gov.in/judis Page No. 21 of 31 W.P.Nos.24230 & 24235 of 2021 the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years.
21. As held above, the assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter-dependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal’s order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the _____________ https://www.mhc.tn.gov.in/judis Page No. 22 of 31 W.P.Nos.24230 & 24235 of 2021 files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assessee.
25. As regards the relief sought in other appeals viz., W.A.No.1517/2021 etc. batch, the findings rendered above are equally applicable. In these cases, for the assessment year 2009-10, the order of remand to the Assessing officer was passed on 18.12.2015 and insofar as the assessment year 2010-11 is concerned, for one issue, it was passed on 18.12.2015 and for other two issues, it was passed on 23.09.2016 after the amendment, by which time, the time limit was brought down to 9 months. As such, fresh orders ought to have been passed before 31.03.2017 for the assessment year 2009-10 and for one issue relating to the assessment year 2010-11 reckoning the 12 months from the financial year 2015-16 and on or before 31.12.2017 reckoning 9 months from the financial year 2016-17. Therefore, the Assessing officer ought to have passed a draft assessment order immediately and asked the assessee to file their objections with the DRP. For the mistake and the lapse of the Assessing officer, the vested Assessee cannot be taken away. WA No. 1517 of 2021 etc. batch Assessee cannot be taken away.
33. The issues is said to be pending before the Hon’ble Supreme Court. The Revenue has filed before the Hon’ble Supreme Court with a _____________ https://www.mhc.tn.gov.in/judis Page No. 23 of 31 W.P.Nos.24230 & 24235 of 2021 delay. The Hon’ble Supreme Court has condoned as is reported in (2023) 291 Taxman.com 529(SC) and the case tagged along with C.A.No.6755/2018 between the Deputy Commissioner of Income Tax and Nokia India Private Limited in W.P.No.1773 of 2016.
34. If the impugned Assessment Orders are treated as “draft assessment the orders” u/s.144C(1) the time for passing the assessment order would get extended the time line would be slightly different due to outbreak of Covid-19 and intervening and Taxation and Other law (Relaxation and Amendment of Certain Provisions) Ordinance, 2020 promulgated by the Central Government and passing of the Taxation and Other law (Relaxation and Amendment of Certain Provisions) Act,2020.
35. There is a saving of limitation under the provisions of Taxation and Other law (Relaxation and Amendment of Certain Provisions), Ordinance 2020 promulgated by the Central Government and in view of enactment of Taxation and Other law (Relaxation and Amendment of Certain Provisions) Act,2020 read with notification issued therein. _____________ https://www.mhc.tn.gov.in/judis Page No. 24 of 31 W.P.Nos.24230 & 24235 of 2021
36. The Andhra Pradesh High Court in Zuari Cements V ACIT Circle- 2(1) merely held that Assessment Order dated 23.12.2011 [also referred to as 22.12.2011] in discussion and demand notice dated 23.12.2011 were unsustainable and unenforceable. The Court has however not hold that the assessment proceedings will abate, if the order itself was passed within the period of limitation for completion of assessment mentioned under Section 153 of the Income Tax Act, 1961.
37. The impugned order would indicate that the respective petitioners were issued notices under Section 143(3) of the Act. They were also issued notices under Section 142(1) of the Act. They also issued with show cause notices dated 28.08.2021. The respective petitioners have also replied to the respective notices by their reply dated 22.07.2021 and reply dated 08.09.2021.
38. Infact, an assessment can neither abate nor be kept in a state of flux. It has to be completed one way or the other. Indeed assessment _____________ https://www.mhc.tn.gov.in/judis Page No. 25 of 31 W.P.Nos.24230 & 24235 of 2021 proceedings cannot abate, if an erroneous order is passed within the period of limitation. Such order can be set aside and cases can be remitted back to the authority to pass a correct order.
39. Therefore, the impugned Orders passed on 21.09.2021 and 17.09.2021 at best could be treated as Draft Assessment Order although computation of the Tax liability under Section 156 of the Income Tax Act, 1956 accompanied than. These mistakes however are to attributable formatting of the orders in the system as assessment are partly system driven.
40. Merely because, there is a procedural infraction in formatting of the impugned orders as the impugned assessment orders under Section 143(3) of the Act, ipso facto will not mean that the assessment will have to abate on account of wrong formatting.
41. Therefore, merely because on the same day, the respondent had also issued notice of demand to the respective petitioner under Section 156 the Income Tax Act, 1961, ipso facto will not mean that the _____________ https://www.mhc.tn.gov.in/judis Page No. 26 of 31 W.P.Nos.24230 & 24235 of 2021 assessment proceedings will have to abate.
42. If the impugned orders were treated as draft assessment orders, the petitioners have an option to approach the Dispute Resolution Panel (DRP). Assessments will have to be completed within a period of one month from the end of the month in which such directions are issued in accordance with Section 144C(13) of the Income Tax Act, 1961.
43. If the impugned Assessment Orders dated 17.09.2021 and 21.09.2021 are treated as draft assessment orders under Section 144C(1) the Income Tax Act, 1961, the assessment will not abate. Only if the impugned assessment orders dated 17.09.2021 and 21.09.2021 were passed beyond the ordinary period prescribed under Section 153 of the Income Tax Act, 1961, assessment proceedings will abate.
44. The time for passing the assessment orders will get extend. Limitation for passing of the assessment order is explained below in the following table:-
_____________ https://www.mhc.tn.gov.in/judis Page No. 27 of 31 W.P.Nos.24230 & 24235 of 2021 Covid Period W.P. No 24235 of 2021 W.P No 24230 of 2021 Filed on Filed on Date of Filing of Writ 22.10.2021 22.10.2021 Petition.
Date of Impugned Orders. 17.09.2021 21.09.2021 30 Daystime for accepting Where there Time for filing Where there Time for filing the Draft assessment Order/ are no Objections are no Objections Time for filing objections objections to before the objections to before the the Order. DRP. the Order. DRP.
before the DRP to the Draft Assessment under Section 144C(2) 17.10.2021 17.10.2021 21.10.2021 21.10.2021 Assessing officer had to 30.11.2021 N.A 30.11.2021 N.A pass order of assessment within 30 days from the end of the month in which the acceptance is received or period for filing objection u/s 144C(2) expires.
DRP had to give directions N.A 30.06.2022 N.A 30.06.2022 to the Assessee u/s 144C(5) r.w.s 144C(12) within a period of 9 months from the end of the month in which the Draft Assessment Order was issued .
Assessing officer to pass N.A 30.07.2022 N.A 30.07.2022 assessment order within 30 days of the direction of the DRP.
45. Time taken from the date of impugned order till the date of disposal of the writ petition and its receipt shall stand excluded for the purpose of computing limitation under section 153 of the Income tax Act, _____________ https://www.mhc.tn.gov.in/judis Page No. 28 of 31 W.P.Nos.24230 & 24235 of 2021 1961.
46. There is elasticity in time for passing the impugned assessment order notwithstanding the timelines under Section 153 & Section 153(B) of the Income Tax Act, 1961.
47. The respective petitioners can be given right to agitate before the Dispute Resolution Panel in terms of Section 144C(2) r/w 3 to (13) of Section 144C of the Income Tax Act, 1961.
48. In my view, the respective petitioners are therefore entitled to redress their respective greivance before the Dispute Resolution Panel (DRP) under the framework of Section 144C of the Income Tax Act, 1961.
49. The impugned orders are therefore set aside and the cases are remitted back to the respondent to reformate the impugned orders as Draft Assessment Orders to facilitate the petitioner to work out remedy against the Draft Assessment Order in the manner known to law under _____________ https://www.mhc.tn.gov.in/judis Page No. 29 of 31 W.P.Nos.24230 & 24235 of 2021 the provisions of the Income Tax Act, 1961. Since the proceedings are partly system driven, this exercise of issuance of re-formatted Draft Assessment Order shall be made within 30 days of receipt of a copy of this order.
50. In the light of the above discussion, the impugned orders and the connected notice of demand issued to the respective petitioners under Section 156 of the Income Tax Act, 1961 are quashed.
51. These writ petitions stand disposed of with the above observations. No costs. Consequently, connected miscellaneous petitions are closed.
08.09.2023
Index : Yes/No
Neutral Citation : Yes/No
kkd
To
The Income Tax Officer,
International Taxation Ward 1 (2),
_____________
https://www.mhc.tn.gov.in/judis
Page No. 30 of 31
W.P.Nos.24230 & 24235 of 2021
No.16, Greams Road,
Chennai 600 006.
C.SARAVANAN,J.
kkd
Pre-delivery Common Order in
W.P.Nos.24230 & 24235 of 2021
08.09.2023
_____________
https://www.mhc.tn.gov.in/judis
Page No. 31 of 31