Karnataka H.C : Whether even if alternative remedy is available for challenging draft assessment order before dispute resolution panel under section 144C

High Court Of Karnataka

Toyota Kirloskar Motor (P.) Ltd. Vs. ACIT, Large Tax Payers Unit, Bangalore

Section : 144C

B.V. Nagarathna, J.

Wp No. 41439 Of 2010 (T.It)

January 7, 2011


1. In this writ petition, the petitioner has sought quashing of the order dated 24-9-2010 produced at Annexure ‘H’ by contending that sufficient opportunity was not given to the petitioner to put forth its case before the Additional Commissioner of Income-tax [Transfer Pricing]-II, Bangalore-Respondent No. 2 herein.

2. According to the petitioner, the second respondent issued a notice dated 15-2-2008 calling upon it to produce certain documents relating to transactions with associate enterprises during the financial year 2006-07, which were required to be furnished by 3-3-2008 and that the requisite documents were produced. Subsequently, notice dated 15-2-2010 was sent to the petitioner seeking various additional documents and information from the petitioner, which was to be complied by 3-3-2010.

3. According to the petitioner, the documents required were voluminous and since it was engaged in finalisation of the accounts for the year ending 31-3-2010. A letter was addressed to second respondent on 2-3-2010 seeking extension of time till the end of April, 2010 to provide the documents sought by the second respondent. The letter was acknow- ledged by the second respondent and time was extended till 10-3-2010 only. However, on 10-3-2003, a representation was submitted by the petitioner stating that substantial number of documents were to be produced and that the Company’s officials were engaged in audit work and therefore extension of time and accommodation till the end of April 2010 was sought.

4. It is the case of the petitioner that though time was sought till the end of April, 2010, the order dated 24-9-2010, which is impugned in this writ petition states that though sufficient opportunity was given for filing documents and to file the documents request for further time by the petitioner was not acceded to and that the order was passed on the submission and the details were available in the file and that as a result the second respondent has not considered the material which was available on record in its proper perspective since there was no hearing given and also the documents which were to be produced and for which time was sought was also not granted and as a result there has been grave prejudice caused to the petitioner on account of the impugned order. Hence, the order dated 24-9-2010 is challenged by contending that an opportunity to be given to the petitioner to put forth its case before the second respondent-Additional Commissioner of Income -tax [Transfer Pricing]-II, Bangalore.

5. I have heard the learned Senior Counsel appearing for the petitioner and learned Standing Counsel for the Income-tax Department and perused the material on record.

6. The principle submission of the learned Senior Counsel appearing for the petitioner is that having regard to the fact that time was sought to produce the requisite documents and also a prayer was made to give a personal hearing, the order dated 24-9-2010, categorically states that sufficient opportunity was given till 10-3-2010 but not till April, 2010, but the order does not make it apparent as to why thereafter time was not granted when in fact the order itself was passed in September 2010. He also submits that the documents which were produced in March, 2010 have not been considered in their proper perspective and hence, the matter may be remanded back to the concerned authority for re-consideration of the entire issue by giving an opportunity to the petitioner.

7. Learned Counsel for the Department however objects to the remand of the matter by contending that pursuant to the order on 24-9-2010 there has been a draft order made by the concerned Assessing Officer and if the petitioner is aggrieved by the same then the matter has to be taken up before the another authority, i.e., a reference has to be made to the dispute resolution panel under section 144C of the Income-tax Act. Therefore, the petitioner has an alternative remedy for challenging the same before the said authority and hence, the writ petition is devoid of merit and the same may be dismissed.

8. Having considered the rival contentions of the parties and on perusal of the order dated 24-9-2010, it is apparent that only part information was made available to the concerned authority i.e., the second respondent by the petitioner and also time was sought for furnishing the rest of the documents. It is seen that the said accommodation was sought till April 2010 but extension of time was not granted and neither was an opportunity for personal hearing granted. But however, till September 2010 no order was passed by the authority. It is noticed that the authority has no doubt recorded a finding that sufficient opportunity has been given to the petitioner but having regard to the submission of the Counsel for the petitioner that neither a prayer for personal hearing was considered and also the fact that the documents which were already on record were also not taken into consideration or appreciated in their proper perspective, it is just and necessary that the petitioner be given an opportunity to put forth its case before the concerned authority. Moreover, the statute in the instant case i.e., the Income-tax Act does not bar personal hearing being granted and therefore the request made by the petitioner in that regard ought to have been considered by the second respondent, in which event the petitioner could have put forth its case and explained the documents on record. Though learned Counsel for the respondent-Department has submitted that in view of there being an alternative remedy, this writ petition is not maintainable, nevertheless, what has to be taken into consideration is the fact that there has been violation of principles of natural justice and therefore this is a fit case for interference by this Court within the scope of the writ jurisdiction. Therefore, the order dated 24-9-2010 is set aside.

9. The second respondent is directed to re-consider the matter by giving an opportunity to the petitioner to submit the documents on which it places reliance and also give a personal hearing to a petitioner. Since the parties are represented by their respective Counsel, the matter could be taken up by the concerned authority on 27-1-2011, the petitioner has to appear before the second respondent on the said date. The second respondent is at liberty to fix the date for furnishing of the documents if not submitted by the petitioner by then as well as to fix the date for hearing the petitioner and, accordingly pass orders within a period of one month from 27-1-2011.

10. In view of this order, the draft assessment order dated 2-12-2010, which is filed along with a memo today made pursuant to the order impugned in this writ petition dated 24-9-2010 is also set aside. The concerned Assessing Officer would consider the passing of the draft assessment order based on the order to be passed by the second respondent. The time for making of the draft assessment order based on the order to be passed by the second respondent is accordingly extended. Writ Petition is disposed of in the aforesaid terms.

[Citation : 348 ITR 201]

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