TaxTMI 
TaxTMI 
2019 (11) TMI 873
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....minals through a portfolio of services including streaming of video, 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, ....
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....x demands and with a questionable going concern status of the assessee, 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 3....
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....t an appeal remedy to the Commissioner of Income Tax (Appeal) thereon is provided under 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 ....
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....and put an end to the disputes. In the present case, the Respondent by issuing the Impugned Notice has done the exact 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....
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.... is an independent mechanism within the framework of Income Tax Department separate from the Revenue. Also, the 2016 amendment which omitted the appeal to ITAT provision (253(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 jurisdic....
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....roceedings or else, if he is not satisfied, in such an event he shall proceed in accordance with the provisions of Section 263 of Act 1961 while providing ample opportunity to the petitioner. 12. The 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 ....
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....articipate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise. 92CA. (1) Where any person, being the assessee, has entered into an international transaction (or specified 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-sect....
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....to in clause (ii) or clause (x) of Explanation 1 to section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, such remaining period shall be deemed to have been extended accordingly.) (4. On receipt of the order under sub-section (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 sp....
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....ad been the subject matter of any appeal (filed on or before or after the 1st day of June, 1988), the powers of the (Principal Commissioner or) Commissioner under this sub-section shall extend (and shall be deemed always to have extended) to such matters as had not been considered and decided in such appeal. (Explanation 2.- For the purposes of this section, it is hereby declared that an order passed by 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 y....
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....t 1961, unless and until Section 263 of Act 1961 prohibits to examine the Final Assessment order, pursuant to the DRP decision. One cannot go beyond the statutory provision and so also 'read' or 'add' words by the Courts while interpreting a statutory provision. Time and again, Supreme Court and other Courts have held that in a matter of interpretation of statutory provisions, Court cannot 'add any words or sentence'. Even if there is any ambiguity, at the best Court 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 othe....
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....the case of ASSISTANT COMMERCIAL TAXES OFFICER VS. MAKKAD PLASTIC AGENCIES reported in (2011) 4 SCC 750, para 15, it is held as under:- 15. In CIT v. Ralson Industries Ltd. [(2007) 2 SCC 326] a similar situation arose for the interpretation of this Court regarding the scope and ambit of Section 154 of the Income Tax Act, 1961 vesting the power of rectification as against the power vested under Section 263 of the Income Tax Act, which is a power of revision. While examining the scope of 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 exerci....
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....sed by an Income Tax Officer, therefore, should not be interfered with only because another view is possible. 41. The scope of provisions of Section 263 of the Act is no longer res integra. The power to exercise suo motu revision in terms of Section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein viz. (1) the order is erroneous; (2) by virtue of the order being erroneous prejudice has been caused to the interest of the Revenue, exist. 52. In 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, ....
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....ot in the course of investigation record a confession except in the manner laid down in Section 164. The power to record the confession had obviously been given so that the confession might be proved by the record of it made in the manner laid down". 23. Supreme Court in the case of Director General, ESI and another vs. T. Abdul Razak reported in (1996) 4 SCC 708 in para no. 14 held as under:- "14. The law is well settled that in accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer in whom it has 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 wh....
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....he said authority has to exercise it only in the manner provided in the statute itself. (See also in this connection Dhanajaya Reddy v. State of Karnataka [(2001) 4 SCC 9 : 2001 SCC (Cri) 652] .) The statute in question requires the authority to act in accordance with the rules for variation of the conditions attached to the permit. In our view, it is not permissible to the State Government to purport to alter these conditions by issuing a notification under Section 67(1)(d) read with sub-clause (i) thereof. In view of the aforesaid decisions at 22 to 25 respondent alone is entitled to revive the Assessment 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, t....