×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
12-07-2019, Yazaki India, Section 144C, 156, 271(1)(c), Tribunal Pune
This appeal by the assessee is directed against the final assessment order passed by the Assessing Officer (AO) u/s. 143(3) r.w.s.144C(3) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the Assessment year 2008-09.
2. The assessee has raised the following additional grounds :
“12. On the facts and in the circumstances of the case and in law, the learned Assessing Officer (Ld. AO) erred in passing the draft assessment order dated 27 December 2011 without following the mandate as laid down under section 144C of the Income-tax Act, 1961 (the Act).
The Appellant prays that the said draft assessment order be held as void-ab-initio, bad in law and illegal and consequently the entire assessment ought to be quashed.
13. On the facts and in the circumstances of the case and in law, the Ld. AO erred in issuing a notice of demand under section 156 and a notice under section 274 read with section 271(1)(c) of the Act along with the said draft assessment order, thereby not following the mandate as laid down under section 144C of the Act.
The Appellant prays that the said draft assessment order be held as void-ab-initio, bad in law and illegal and consequently the entire assessment ought to be quashed.”
3. Having gone through the subject matter of the additional grounds taken by the assessee, it is discernible that the same are legal grounds involving adjudication on questions of law. The Hon’ble Supreme Court in National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) has observed that “the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as
the relevant facts are on record in respect of that item”. Answering the question posed before it in affirmative, their Lordships held that on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee and the Tribunal has jurisdiction to examine the same. We find that the additional grounds raised before the Tribunal involve pure questions of law and no fresh investigation of facts is necessary for their determination. We are, therefore, admitting such additional grounds and espousing them for disposal on merits.
4. Briefly stated the facts of the case are that the assessee is engaged in manufacturing wiring harnesses, high tension cables, connectors, terminals and junctions and fuse boxes to serve passenger cars and commercial vehicles. The assessee filed its return declaring certain international transactions. The Assessing Officer (AO) made a reference to the Transfer Pricing Officer (TPO) for determining the Arm’s Length Price (ALP) of the international transactions. The Transfer Pricing Officer (TPO) passed order u/s. 92CA(3) of the Act on 28-10-2011 proposing certain amount of transfer pricing adjustment. The AO passed an`Assessment order’ on 27-12-2011 u/s.143(3) r.w.s.144C(3) of the Act determining total income at Rs.17,81,56,751/- as against the Nil income declared by the assessee. The additions included transfer pricing addition of Rs.13.19 crore; disallowance u/s.40(a)(ia) amounting to Rs.1.04 crore; and disallowance u/s.40A(2)(a) at Rs.3.57 crore. Pursuant to such an order, a demand notice was issued. In addition, the AO also issued show cause notice u/s.274 for imposition of penalty u/s.271(1)(c) of the Act on all the issues on which the additions were made. Theassessee raised objections before the DRP with reference to the additions in the said order dated 27.12.2011, which were disposed off. Pursuant to the directions given by the DRP on 05-09-2012, the AO passed `Assessment order’ on 29-11-2012 u/s.143(3) r.w.s. 144C(13) of the Act determining total income at Rs.24.15 crore, against which the instant appeal has been filed before the Tribunal.
5. The contention of the assessee is that the impugned assessment order should be set aside because the statutorily prescribed procedure was not followed in as much as the AO issued final assessment order in place of draft assessment order followed by issuing notice of demand and also initiating penalty proceedings u/s.271(1)(c) of the Act. This has been countered by the ld. DR who submitted that albeit the AO inadvertently described it as an `Assessment order’, but in essence it was a draft order, which was also treated by the assessee as such - filing objections before the DRP. He further submitted that although the notice of demand was issued pursuant to such a draft order, but the same was never enforced and further though penalty proceedings were initiated through this draft order, but no penalty order was actually passed. He still further submitted that if the assessee was aggrieved by the nomenclature of draft order, then it should not have agitated the matter before the DRP or should have challenged it by means of a writ petition, which it did not. Crux of his argument was that a draft order was simply wrongly described as an `Assessment order’, which did not prejudice the assessee in any manner.
6. We have heard both the sides and gone through the relevant material on record. Section 144C of the Act has caption “Reference to Dispute Resolution Panel”. Sub-section (1) of section 144C provides that: “The Assessing Officer shall,