TaxTMI 
TaxTMI 
2019 (11) TMI 873
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....deo, audio and data as well as web access, infotainment and social applications. It is stated that it was a unique project which is multifarious requiring high skilled manpower with superior R & D efforts were put in, large infrastructure, high vendor development efforts and funding. It was stated that there was no enterprise in India which could provide for such services as were required by the petitioner. In this backdrop, petitioner is an income tax assessee who had filed returns of income on 23.09.2009 for the assessment year 2009-10 declaring loss of Rs. 21,72,53,709/-. Petitioner's return was selected for the purpose of scrutiny and consequently, notice was issued under Section 143(2) of the Income Tax Act, 1961 (for short 'Act 1961') further, followed by another notice under Section 142(4) of the Act. In the process of assessment, a reference was made to the Transfer Presiding Officer (TPO) under Section 92CA of the Act. Certain information were sought from the petitioner in order to meet the assessment process. Petitioner is stated to have completed the requisite material sought by the authorities. Thereafter, several inquiries were made by the Assessing Officer (AO) as wel....
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....ee, the issue had tax implications. Thus, respondent intended to revise order of AO and issued notice under Section 263 of Act 1961. 5. Petitioner feeling aggrieved and dissatisfied of the notice dated 08.02.2016 issued under Section 263 of Act 1961 for the assessment order for the year 2009-10 (Annexure - A), presented this petition. 6. Shri Udaya Holla, learned Senior Counsel for petitioner vehemently contended that Principal Commissioner of Income Tax has no jurisdiction to invoke Section 263 of Act 1961 in issuing notice to the petitioner on 08.02.2016 in respect of Assessment Order for the year 2009-10 which has attained finality by the AO in passing the Final Assessment Order on 31.01.2014. Undisputedly, AO notified Draft Assessment Order while invoking Section 144C on 15.03.2013 for which petitioner had grievance under the provisions of Section 144C(1)(b) read with Section 92CA relates to TPO (international transactions). Accordingly, petitioner is stated to have filed objections for Draft Assessment Order dated 15.03.2013. Consequently, matter was referred to DRP and proceeded to pass order on 31.12.2003. In terms of the DRP decision dated 31.12.2003, the AO proceed....
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....nder the Act as against the original appeal remedy before the Income Tax Appellate Tribunal, we hold that going by the scheme of Act. Thus, once approval is given by the Commissioner in respect of proceedings made before 1.1.1997, the "approval" being an expression indicating application of mind on the part of the higher authority viz., the Commissioner, to the materials seized leading to the block assessment and the approving authority not being lower in rank than that of the revisional Appellate Authority himself and hence an appeal remedy thereupon before the Tribunal alone is provided thereon, we do not find any justifiable ground to accept the plea of the Revenue that the approval on the order passed under Section 158BC would be a mere administrative nod and hence, the assessment is amenable to be proceeded under Section 263 of the Act. As pointed out by the Karnataka High Court in the decision reported in [2012] 204 TAXMAN 158 C.I.T. v. SMT.ANNAPOORNAMMA CHANDRASHEKAR, the act of approval is not for a mere passing of an order under Section 158BC, but an approval which takes note of the subject matter of assessment and there is application of mind before granting the approval.....
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....opposite. 8. Further, the Hon'ble Bombay High Court in Vodafone India Services Pvt. Ltd. vs Union of India and Others (2013) SCC Online Bom 1534 held as under: "The proceeding before the DRP is not an appeal proceeding but a correcting mechanism in the nature of a second look at the proposed assessment order by high functionaries of the revenue keeping in mind the interest of the assessee. It is a continuation of the Assessment proceedings till such time a final order of assessment which is appelable is passed by the Assessing Officer. This also finds support from Section 144C (6) which enables the DRP to collect evidence or cause any enquiry to be made before giving directions to the Assessing Officer under Section 144C (5). The DRP procedure can only be initiated by an assessee objecting to the draft assessment order. This would enable correction in the proposed order (draft assessment order) before a final assessment order is passed. Therefore, we are of the view that in the present facts this issue could be agitated before and rectified by the DRP." 9. It is submitted that the issue to taxability of shares being issued at a premium has already been well settled. The R....
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....(2A)) cities the reason being minimization of litigation to be the reason for omission. 15. Further, the law on the proposition that 'what cannot be done directly cannot be done indirectly' is well settled. As explained hereinabove, a separate ADR mechanism was created for resolving the disputes relating to Transfer Pricing in International Transactions. Further vide the 2016 amendment, the right to appeal was specifically taken away in order to minimize these disputes. 16. Once the DRP has exercised its power under Section 144C of the Act, the Commissioner loses his jurisdiction to exercise power under Section 263 of the Act. Consequently, the Commissioner cannot issue a show cause notice under Section 263 exercising his revisionary powers, especially when the legislature has specifically (a) created a separate mechanism of DRP; and (b) has barred any statutory appeal against the order. Therefore, by virtue of issuing a notice under Section 263, the Respondent is attempting to assume jurisdiction, when it has done and is trying to have a re-look at the final DRP order, when the jurisdiction to do so is barred under the Act. (Reliance in this regard is placed on the unreported ....
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....cited decision on behalf of the petitioner has no application to the present case for the reasons that there is no bar in respect of invoking Section 263 of Act 1961 by the Principal Commissioner even in the event of examination of Draft Assessment Order by the DRP. The respondent is prohibited in invoking Section 263 of Act 1961 only under one circumstance which is stated in Sub-clause (c) of Explanation (1) to Section 263 of Act 1961 cited supra. Thus, petitioner has not made out a case in respect of issue relation to, "Jurisdiction of the respondent in invoking Section 263 of Act 1961". Consequently, if there is any shortcoming in the impugned notice, petitioner has other remedy of furnishing explanation and appraising the respondent. Thus, writ petition is not maintainable and it is to be rejected at threshold. 13. Heard learned counsel for the parties. 14. The questions for consideration in the present petition is: (1) Whether respondent could invoke Section 263 of Act 1961 in respect of an assessment order of the AO pursuant to DRP decision or not? (2) Impugned notice dated 08.02.2016 is in terms of the Section 263 of Act 1961 or not? 15. Petitioner who is an assessee ....
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....d domestic transaction) in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the (Principal Commissioner or) Commissioner, refer the computation of the arm's length price in relation to the said international transaction (or specified domestic transaction) under section 92C to the Transfer Pricing Officer. (2) Where a reference is made under sub-section (1), the Transfer Pricing Officer shall serve a notice on the assessee requiring him to produce or cause to be produced on a date to be specified therein, any evidence on which the assessee may rely in support of the computation made by him of the arm's length price in relation to the international transaction (or specified domestic transaction) referred to in sub-section (1). ((2A) Where any other international transaction (other than an international transaction referred under sub-section (1), comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply as if such other international transaction is an international transaction referred to him under sub-section (1)). ....
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....tion (3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of section 92C in conformity with the arm's length price as so determined by the Transfer Pricing Officer.) 5. With a view to rectifying any mistake apparent from the record, the Transfer Pricing Officer may amend any order passed by him under sub-section (3), and the provisions of section 154, shall so far as may be, apply accordingly. 6. Where any amendment is made by the Transfer Pricing Officer under sub-section (5), he shall send a copy of his order to the Assessing Officer who shall thereafter proceed to amend the order of assessment in conformity with such order of the Transfer Pricing Officer. 7. The Transfer Pricing Officer may, for the purposes of determining the arm's length price under this section, exercise all or any of the powers specified in clauses (a) to (d) of sub-section (1) of section 131 or sub-section (6) of section 133 (or Section 133A). Explanation:- For the purposes of this section, "Transfer Pricing Officer" means a Joint Commissioner or Deputy Commissioner or Assistant Commissioner authorized by the Board to perform all or any of the fu....
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....the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner- (a) the order is passed without making inquiries or verification which should have been made (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance by the jurisdiction High Court or Supreme Court in the case of the assessee or any other person. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the Financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2) an order in revision under this action may be passed at any time in the case of an order which has been passed in consequence of or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, (National Tax Tribunal), the High Court or the Supreme Court. Explanation - In computing the period of limit....
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....ourt can read down or struck down such statutory provision. In the present case, reading of Section 263 of Act 1961, it is crystal clear that there is no bar for the Principal Commissioner to invoke Section 263 of Act 1961 to examine the Final Assessment Order passed by the AO pursuant to the DRP decision. 19. Supreme Court in the following decision examined 'jurisdiction of an officer with reference to relevant provisions' in the case of GUJARAT URJA VIKAS NIGAM LTD. Vs ESSAR POWER LTD. reported in (2008)4 SCC 755 and has held at paras. 35, 39 and 61 as under: 35: It is well settled that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner [vide Chandra Kishore Jha v. Mahavir Prasad [(1999) 8 SCC 266 : AIR 1999 SC 3558] (SCC para 17 : AIR para 12), Dhanajaya Reddy v. State of Karnataka [(2001) 4 SCC 9 : 2001 SCC (Cri) 652 : AIR 2001 SC 1512] (SCC para 23 : AIR para 22), etc.]. Section 86(1)(f) provides a special manner of making references to an arbitrator in disputes between a licensee and a generating company. Hence by implication all other methods are barred. 39. It may be mentione....
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.... the power of rectification under Section 154 as against the power of revision vested under Section 263 of the Income Tax Act, it was held by this Court as follows at SCC para 8: (SCC p. 330) "8. The scope and ambit of a proceeding for rectification of an order under Section 154 and a proceeding for revision under Section 263 are distinct and different. Order of rectification can be passed in certain contingencies. It does not confer a power of review. If an order of assessment is rectified by the assessing officer in terms of Section 154 of the Act, the same itself may be a subject-matter of a proceeding under Section 263 of the Act. The power of revision under Section 263 is exercised by a higher authority. It is a special provision. The revisional jurisdiction is vested in the Commissioner. An order thereunder can be passed if it is found that the order of assessment is prejudicial to the Revenue. In such a proceeding, he may not only pass an appropriate order in exercise of the said jurisdiction but in order to enable him to do it, he may make such inquiry as he deems necessary in this behalf." In para 12 of the said judgment it was also held that when different jurisdiction....
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....Rajinder Nath [(1979) 4 SCC 282 : (1979) 120 ITR 14] , this Court held: (SCC pp. 286-87, para 11) "11. The expressions 'finding' and 'direction' are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of, (A) a finding in respect of B may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else, a finding that it belongs to B or does not belong to B would be determinative of the issue whether it can be taxed as A's income. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. It is not a find....
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....as been confided, unless sub-delegation of the power is authorised by express words or necessary implication." 24. Supreme Court in the case of Sidhartha Sarawgi Vs. Board of Trustees for the Port of Kolkata and others reported in (2014) 16 SCC 248, in para nos 4, 9 and 10 held as under:- 4. There is a subtle distinction between delegation of legislative powers and delegation of non-legislative/administrative powers. As far as delegation of power to legislate is concerned, the law is well settled: the said power cannot be sub-delegated. The legislature cannot delegate essential legislative functions which consist in the determination or choosing of the legislative policy and formally enacting that policy into a binding rule of conduct. Subordinate legislation which is generally in the realm of rules and regulations dealing with the procedure on implementation of plenary legislation is generally a task entrusted to a specified authority. Since the legislature need not spend its time for working out the details on implementation of the law, it has thought it fit to entrust the said task to an agency. That agency cannot entrust such task to its subordinates; it would be a breach of....
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....ssessment Order under Section 263 of Act 1961. The cited decisions and contents of brief note on behalf of the petitioner do not assist in the matter and are distinguishable in view of language employed in Section 263 of Act 1961. 26. In view of Section 263 of Act 1961 read with the aforesaid principles laid down by the Apex Court in various decisions, the cited decision on behalf of the petitioner would not aid or support the contention of the petitioner that Principal Commissioner/respondent has no jurisdiction to invoke Section 263 of Act 1961, is not appreciable. Consequently, the contention of the petitioner that Principal Commissioner has no jurisdiction to invoke Section 263 of Act 1961 is hereby rejected. 27. The other contention is that impugned notice dated 08.02.2016 do not contain the ingredients and notice is liable to be set-aside. Petitioner has a remedy before the Principal Commissioner if there is any shortcoming in respect of ingredients stated in Section 263 of Act 1961. Writ Court cannot examine the validity of notice on merit. Petitioner has a remedy before the very same authority by submitting explanation to the notice. Writ Court can interfere in respect of....