TaxTMI 
TaxTMI 
2016 (9) TMI 601
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....ion in the State. 4. The petitioner filed its return of income on 30-9-2008 for the Assessment Year 2008-09 declaring a loss of Rs. 23,71,90,124/- after claiming exemption of an amount of Rs. 84,87,05,352/- under Section 10B. The petitioner was liable to pay taxes under Section 115JB on its book profits. 5. The case of the petitioner was taken up for scrutiny and after considering the documents, an order under Section 143(3) was passed on 25-01-2012. By this order, the Joint Commissioner of Income Tax allowed deduction under Section 10B to a lesser extent than what was claimed in the original return of income. 6. Aggrieved by the order dated 25-01-2012 passed under Section 143(3), the petitioner filed an appeal on 29-02-2012 before the Commissioner of Income Tax (Appeals). The appeal is stated to be pending for the past more than four years. 7. In the meantime a notice dated 21-3-2013 was issued under Section 148, calling upon the petitioner to file its return of income. The petitioner submitted a letter dated 16-4-2013 requesting the Department to treat the return of income filed on 30-9-2008 as the return. Thereupon, the Assessing Officer sent a communication dated 31-7....
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....date on which the draft assessment order was passed, (2) that when the Disputes Resolution Panel, Hyderabad forwarded the papers to the Disputes Resolution Panel, Bengaluru, they themselves indicated that the time limit available for Disputes Resolution Panel, Bengaluru to issue directions under sub-section (5), was up to June 2015, but the Disputes Resolution Panel, Bengaluru, wrongly thought that the time limit expired on 31-12-2014, (3) that the Disputes Resolution Panels order to the effect that Form 35A was not filed, was factually incorrect, (4) that the Assessing Officer complicated matters by presuming the order of the Disputes Resolution Panel dated 22-6-2015 to be a direction under sub-section (5), and (5) that if the petitioner had not filed their objections to the draft assessment order within time, the Assessing Officer could have passed the final assessment order under sub-section (3), immediately after the expiry of 30 days available for filing the appeal and the very fact that the Assessing Officer did not do so, makes it clear that the Assessing Officer waited for a direction from the Disputes Resolution Panel. 16. We have carefully considered the above submis....
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.... 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. (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. Explanation.For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. (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....
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....lternative dispute resolution mechanism within the Income Tax Department and accordingly Section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism. 19. It appears that from the time Section 144-C was inserted, there have been some misgivings and misunderstandings. The Government notified the Dispute Resolution Panel Rules by S.O. No.2958 (E), dated 20-11-2009. Thereafter, an Explanatory Circular for Finance (No.2) Act, 2009 was issued in Circular No.5/2010, dated 03-6-2010. Paragraph 45 of the said Circular explained the new Section 144-C and the consequential amendments made in the other Sections of the Act. While doing so, the Circular dated 03-6-2010 wrongly indicated that the amendments, made applicable with effect from 01-10-2009, will apply in relation to assessment year 2010-11 and subsequent assessment years. 20. In order to set right the above mistake, another Circular bearing No.9/2013 was issued on 19-11-2013. By this Circular it was clarified that Section 144-C is applicable to any order which proposed to make variation in income or loss returned by an ....
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....tter of fact, the Central Board of Direct Taxes had already issued a set of rules known as Income Tax (Dispute Resolution Panel) Rules, 2009, in exercise of the powers conferred by Section 144-C (14). Under these Rules, provisions are made for the constitution of Dispute Resolution Panels, the method of filling up vacancies arising in the Panels, the establishment of a Secretariat attached to each Panel etc. Rule 4(1) of these Rules stipulates that the objections to a draft assessment order should be filed in Form No.35A. The objections are to be accompanied by the evidence relied upon by the assessee. As per Rule 5 of these Rules, the Panel should issue a notice of hearing to the assessee, as per Rule 6 the Panel should call for the records and as per Rule 7 the Panel should hear both parties and thereafter pass an order. Rule 9 empowers the Panel to call for or permit any additional evidence. 24. Interestingly Rule 8 of these Rules stipulates that if the eligible assessee dies or adjudicated as insolvent or wound up (in the case of a limited company) after the filing of objections, the proceedings before the Panel shall not abate. 25. With regard to the power of the Panel....
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....sub-section (2) which speaks of the entitlement of the assessee, uses the phrase on receipt of the draft order. The word receipt is used twice in sub-section (2). Sub-section (2) begins with the words on receipt of the draft order, the eligible assessee shall, within 30 days of the receipt by him of the draft order. 32. Therefore the word forward appearing in sub-section (1) cannot have a meaning that is completely contrary to the words and expressions found in sub-section (2). Unless the word forward is understood to mean actual service of the copy of the draft assessment order on the assessee, the word receipt found in sub-section (2) would lose its meaning. 33. Therefore it is clear that the obligation on the part of the Assessing Officer under sub-section (1) is to serve the draft assessment order on the assessee. It is not enough for the Assessing Officer merely to pass a draft assessment order and keep it in his almirah. It is necessary for him to send the same in a manner known to law and serve the same on the assessee. The period of 30 days available to the assessee to file objections, would start running only from the date on which the assessee receives the draft a....
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....ts impugned communication that the jurisdiction to pass orders lapsed on 31-12-2014 was completely contrary to facts as well as law. 38. Once it is found that the order of the DRP dated 22-6-2015 rejecting the objections as incapable of being considered, to be contrary to law, then the next question that arises for consideration is as to what would follow logically as a consequence of the same. 39. On first principles of law, if the rejection of an appeal or a set of objections by the Appellate or the Original Authority, on pure technicalities (and not on merits) is found to be not in accordance with law, then the normal course to be adopted by a Court would be to send the matter back to the same Authority for a consideration on merits. Therefore once we find that the DRP, Bengaluru had wrongly rejected the objections of the petitioner without going into the merits, the logical consequence of such a finding would be to set aside the order of rejection of the DRP and to send the matter back to the DRP for a consideration of the objections on merits and in accordance with law. 40. But in this case, sub-section (12) of Section 144C, on the face of it, appears to pose an obstacle. U....
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....urt itself has understood Section 144C to be of such nature. In Additional CIT v. HCL Technologies Ltd., decided on 07-9-2009 and reported in (2010) 188 Taxmann 303, the Supreme Court disposed of an appeal filed by the Revenue, directing the authorities to take recourse to the alternative dispute resolution mechanism suggested under Section 144C. Though the said order of the Supreme Court is a brief order, which did not lay down any ratio, the same gives an indication as to how to understand the purport of Section 144C. The order of the Supreme Court in the said case reads as follows: 3. We are of the view that in the peculiar facts and circumstances of this case, particularly when the High Court has remitted the matter to the Transfer Pricing Officer from whose order an appeal is pending before the CIT (A), it would be in the interest of both sides to resort to alternative dispute resolution mechanism suggested in the budget of 2009 (see Section 144C of the Income Tax Act, 1961). It is made clear that the competent authority will not reject the application herein made by the assessee on the ground that the proposal has come after the cut-off date. 45. Therefore we are of the con....