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2016 (5) TMI 1151 - DELHI HIGH COURT

2016 (5) TMI 1151 - DELHI HIGH COURT - [2016] 384 ITR 550 - Validity of assessment - whether time period specified under Section 144(C) (4) read with Section 144(C)(3) adhered or not - penalty u/s 271(1)() - Petitioner's specific case is that the final assessment order was not passed on the date mentioned therein, i.e., 22nd April, 2014 and was probably antedated in order to avoid the expiry of the period of limitation as stipulated under Section 144(C)(4) of the Act read with Section 144(C)(3) .....

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d Co. (1991 (9) TMI 71 - SUPREME COURT OF INDIA), in the instant case it was incumbent on the Department to demonstrate that the AO who passed the assessment order ceased to have any control over such order and that it left his hand soon after it was passed. The Department having failed to do so, a presumption has to be drawn that the final assessment order was not passed within the time period specified under Section 144(C) (4) read with Section 144(C)(3) of the Act. - In that view of the m .....

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t: Mr Dileep Shivpuri, Senior Standing Counsel and Mr Sanjay Kumar, Junior Standing Counsel. O R D E R Dr.S. Muralidhar, J.: 1. The challenge in this writ petition by ST Microelectronics Pvt. Ltd. is to: (a) an assessment order dated 22nd April, 2013 passed by the Additional Commissioner of Income Tax ('ACIT') [Assessing Officer ('AO')] (Respondent No. 2 ) on 22nd April, 2013 under Section 143 (3) of the Income Tax Act, 1961 ('Act& .....

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, Tolstoy House, 15, Tolstoy Marg, New Delhi till 1st February, 2010. Thereafter the Petitioner shifted to D-28, South Extension, Part-I, New Delhi. 3. The Petitioner states that new address was updated in the PAN database which was duly recorded. All communications were thereafter received by the Petitioner from the Respondents at the new address. At page 72 of the paper book, the Petitioner has listed out all the communications received by it at the new address beginning with a noti .....

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anged address of the Petitioner. A further notice under Section 143 (2) of the Act was issued on 18th February, 2011 to the Petitioner at its changed address. This included a questionnaire. The AO issued notices on 1st September, 2011 and 30th January, 2013 under Section 143 (2) of the Act to the Petitioner, again at the changed address. 5. The Transfer Pricing Officer ('TPO') passed an order on 28th January, 2013 proposing an adjustment of ₹ 49,62,10,741/- to the income .....

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eafter assessed at ₹ 87,92,52,013/-. This draft assessment order was also sent to the Petitioner at the changed address and was received by the Petitioner on 22nd March, 2013. 7. It is pointed out that under Section 144(C)(2) of the Act, the Assessee has an option of filing an appeal before the Commissioner of Income Tax (Appeals) ['CIT(A)'] against the additions as proposed in the draft order or file objections to the variation with the Disputes Resolution Panel ('D .....

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h the AO has to complete the assessment under Section 144C (3) is indicated as one month 'from the end of the month in which the period of filing the objections under sub section (2) expires.' If an acceptance is received from the Assessee then the final order must be passed within one month from the date on which such acceptance is received. 8. The point involved in this case concerns the passing of the final assessment order by the AO and whether, in fact, it was done within .....

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f the Act with the limitation for filing objections before the DRP having expired on 22nd April, 2013, the AO had to necessarily pass the final assessment order by 31st May, 2013. 10. The Petitioner's case is that it did not receive the final assessment order passed by the AO at the changed address. 11. In the meanwhile, on 19th June 2013, the DCIT issued a notice to the Petitioner under Section 221(1) of the Act seeking to impose penalty under Section 221(1) and recove .....

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ntries in the column titled date of service of demand and due date of payment . This notice dated 22nd April 2014 was also received at the changed address of the Petitioner. 13. On 28th April 2014, the Petitioner wrote to the DCIT pointing out that neither of the orders, i.e., the assessment order under Section 144 C (3) nor the penalty order under Section 271(1)(c) was received by the Petitioner. The Petitioner, accordingly, asked for copies of the said orders along with p .....

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he notice of demand under Section 156 of the Act and the notice dated 26th March, 2014 under Section 221(1) of the Act. 14. In its letter dated 15th May 2014, the Petitioner pointed out to the DCIT that the aforementioned documents were issued only at the old address of the Petitioner even though the change of address was updated and within the knowledge of the department and the fact that after the change of this address every communication had been served on the Petitioner by the D .....

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ere not served, whether the envelope came back 'unserved '. vi) If yes, kindly provide copy of the envelope b) Permission to inspect your files for assessment proceedings, penalty proceedings, recovery proceedings etc c) Copies of all records placed in your file including note sheet entry 15. It is stated thereafter several attempts made by the Petitioner to inspect the file and obtain the information were unsuccessful. It is in these circumst .....

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f address and that the orders, alleged to have been made on the basis of the draft assessment orders, are without jurisdiction since no intimation was received, thus depriving the petitioner of the right to approach the CIT (A). Counsel contends that, likewise, the penalty order too was sought to be finalized under Section 271 without notice at the new address. Respondents are directed to produce Assessing Officer's records on the next date of hearing. In the meanwhile, the demand .....

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was constrained, on the previous date, i.e., 9th February 2016 to close the opportunity of filing a reply and required the records to be kept ready for perusal by the Court. 18. At this stage, it is required to note that the Petitioner's specific case is that the final assessment order was not passed on the date mentioned therein, i.e., 22nd April, 2014 and was probably antedated in order to avoid the expiry of the period of limitation as stipulated under Section 144(C)(4) of the .....

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urrent address of the company. The said documents were never received by the Petitioner. The Petitioner also filed affidavit stating that the said documents were never received by the company. It was specifically pleaded that the Assessment order passed is verbatim copy of the draft assessment order and when the draft assessment order was issued at current address, it is difficult to believe as to how the final Assessment order is issued at old address. Under these circumstances it was pleaded t .....

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nder section 221 on the ground that the same has been passed beyond the period of limitation as prescribed in section 144C(4) of the Act interpolating dates and intentionally issuing it at the old address of the Petitioner company in order to cover up the limitation. The Respondents are not providing the proof of dispatch and service of the said orders and notices, in spite of asking for the same specifically. Thus the impugned orders and notice deserved to be quashed on this ground a .....

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ations were addressed to the current address of the Petitioner which clearly evidences that the said orders were not passed within the limitation prescribed and now have been interpolated to cover the deficiency by purportedly sending it to the old address. The Petitioner has specifically asked for the proof of dispatch of the service of the said impugned orders and notice but the Respondents not provided the same. There is a presumption against the Respondents that the said impugned orders and .....

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the Petitioner. This gross misuse of administrative powers cannot be condoned and is not an appealable Act. 19. The fact of the matter is that no counter affidavit has been filed to rebut any of the above averments, but even the record that has been produced does not reveal any proof of despatch of the assessment order soon after it was passed, i.e., on or after 22nd April, 2013. This is, as noted earlier, despite several opportunities given to the Respondent. 20. The onl .....

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e date only in one place and that date is written by hand. Interestingly, the notice issued to the Petitioner on the same date under Section 274 of the Act has the date typed. In the circumstances it was absolutely essential for the Respondents to have made the effort of demonstrating that the final assessment order was in fact passed on 22nd April, 2013. However, the Respondents have failed to do so and therefore strengthens the doubts as to whether, in fact, the final assessment order was pass .....

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ust, 2010 were sent to the changed address. This further raises doubt as to whether the final assessment order was, in fact, passed on 22nd April 2013. Further, when the draft assessment order was sent to the changed address of the Petitioner, there was no reason why the final assessment order should mention the old address and not the changed address. 23. In the above circumstances, the inescapable conclusion is that the Department has failed to prove even on a preponderance of prob .....

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i, relies on the decisions in Commissioner of Income-tax, Kolkatta- X v. Subrata Roy [2014] 45 taxmann.com 513 (Cal); Commissioner of Income-tax v Binani Industries Ltd. [2015] 59 taxmann.com 389 (Cal) to support the proposition that the assessment order should be taken to have been finally passed on the date it is signed by the officer and not on the date of despatch or service of such order on the Assessee. 25. Mr Vohra does not dispute the general proposition that an assessment ord .....

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upreme Court in Collector of Central Excise, Madras v M.M. Rubber and Co. (supra) regarding the officer who passed the order ceasing to have any authority to change it or vary it. This can be ensured only when such order leaves the hand of the officer making the order. In para 12 of the judgment after discussing the earlier case law the Supreme Court observed as under: It may be seen therefore, that, if an authority is authorised to exercise a power or do an act affecting the rights o .....

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