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M/s. Gamesa Renewable Pvt. Ltd. (Formerly known as Gamesa Wind Turbine Pvt. Ltd.) Versus Dispute Resolution Panel-2, Bangalore, The Assistant Commissioner of Income Tax, The Principal Commissioner of Income Tax-2, The Commissioner of Income Tax-TP

2016 (7) TMI 1090 - MADRAS HIGH COURT

Violation of principles of natural justice - non providing opportunity to place the submissions by assessee - Held that:- The petitioner cannot be blamed for the delay of nine months during which objections were kept pending before the DRP i.e., from 22.04.2015 to 16.12.2015. Therefore, the DRP while considering the request for adjournment could not have disbelieved the same as it is an admitted fact that entire Chennai was flooded and suburban were sub-merged. Hence, a realistic approach should .....

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dies available under law. However, it appears that in a hurried manner, the entire proceedings were closed on 17.12.2015 and orders were passed on 23.12.2015. It may be true that in terms of Section 253(d) of the Act, the petitioner is entitled to canvas the correctness of the order of DRP before the Tribunal while challenging the Assessment Order dated 29.01.2016. However, the order passed by the DRP, if it has been passed in violation of the principles of natural justice, the petitioner would .....

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laced by the petitioner before them had granted certain reliefs to the assessee, but that by itself will not validate the order and to state that the petitioner had been afforded an opportunity by the DRP. The concept of principles of natural justice which has been provided under the scheme of Section 144C of the Act should be an effective opportunity as the direction issued by the DRP binds the Assessing Officer and he would be required to complete the assessment as per the orders of the DRP. T .....

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Promod Kumar Chopra ORDER Heard Mr.V.T.Gopalan, learned Senior Counsel, assisted by Mr.Rajnish Pathiyil, learned counsel appearing for the petitioner and Mr.T.Pramod Kumar Chopra, learned Senior Standing Counsel appearing for the respondents and with their consent, the writ petitions are taken up for disposal. 2. The petitioner is a Private Limited Company, who is an assessee on the file of the second respondent, namely, the Assistant Commissioner of Income Tax, OSD, Corporate Circle 2, Chennai. .....

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Income Tax Act, 1961 (hereinafter referred to as the Act ) and such direction being implemented by the Assessing Officer in terms of Section 144C(13) of the Act and complete the assessment. Therefore, the result of W.P.No.5499 of 2016 would have a direct bearing on W.P.No.9629 of 2016 and therefore the correctness of the proceedings of Dispute Resolution Proceedings (hereinafter referred to as DRP ) is first taken up for consideration. 3. The impugned order has been challenged on the ground of v .....

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r by their letter handed over in person to the DRP mentioning about the floods which had affected their factory premises and as a result of which they are unable to retrieve the records from the factory and in the said communication, the petitioner had requested for 30 days time. However, the DRP did not adjourn the hearing and the assessee had been compelled to appear before the DRP and produce whatever documents which are available with them in the form of additional submission on 16.12.2015 a .....

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n 16.12.2015 and the assessee could very well have kept all the documents ready. But on 16.12.2015 they sought for 30 days time which will go beyond the time limit fixed under Section 144C(12 )of the Act which empowers the DRP to pass orders before nine months before the end of the month in which the draft order is forwarded to the eligible assessee. Therefore, there will be no violation of principles of natural justice, more particularly, when written submissions were made on 16.12.2015 as well .....

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appeal is provided to the Tribunal against such orders under Section 253(1)(d) of the Act. 5. The learned senior counsel appearing for the petitioner contended that it may be true that their representatives had appeared before the DRP and made a request for adjournment and since the same was not being properly entertained, they had submitted their written submissions on 16.12.2015 and 17.12.2015 with the available materials and that does not mean that there is no violation of principles of natu .....

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r the petitioner has placed reliance on the decision of the Hon'ble Supreme Court in the case of Mariamma Roy vs. Indian Bank and others reported in (2009) 16 SCC 187. He has also relied upon the decision of the Division Bench of High Court of Karnataka in the case GE India Technology Centre Pvt. Ltd. by G.V.Ramanna, Chief Financial Officer vs. Dispute Resolution Panel and Assistant Commissioner of Income Tax reported in MANU/KA/0936/2011 to explain the scope of Section 144C of the Act. 6. I .....

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cases is whether there is violation of principles of natural justice in the proceedings before the DRP and whether the petitioner was afforded fair and reasonable opportunity before the DRP? Undoubtedly, as the name indicates the Panel is a Dispute Resolution Panel, a special mechanism created under the Act by Finance (No.2) Act, 2009 with retrospective effect from 01.04.2009. In GE India Technology Centre Pvt. Ltd.(supra), the learned senior counsel who had appeared for the appellant before the .....

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takes very long time with the existing appellate structure. Therefore, with a view to provide speedy disposal it is proposed to amend the Income Tax Act so as to create an alternative 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 mechanism. Thus going behind the object with which the aforementioned provision has been introduced, it has .....

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of Section 144C or file their objection to such variations with the Dispute Resolution Panel and the Assessing Officer in terms of Clause (b)-(i) and (ii) of sub-section (2) of Section 144C of the Act. The Assessee in the instant case opted for the second option under Clause (b) and filed their objections before the Dispute Resolution Panel and the Assessing Officer on 17.04.2015. At this stage we may note that in terms of sub-section (12) of Section 144C, no direction under sub-section (5) shal .....

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that the time limit commences from 30.05.2015, no order could have been passed beyond 31.12.2015 by the DRP in view of the embargo under sub-section (12) of Section 144C of the Act. However, this aspect was within the knowledge of the DRP. Nevertheless, for nine months, the DRP did not fix the date for hearing the objections of the petitioner. But only on 16.12.2015 the petitioner was directed to appear. It is not in dispute that on 16.12.2015 the petitioner appeared and submitted a letter, in .....

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by the incessant rains, our Corporate Office on the Old Mahabalipuram Road, Chennai, went out of action for nearly a week, and had to be without power as well as communication lines. The server located at Spain could not be accessed and there were no other modalities of any data retrieval. It was equally unfortunate that our record room at Mamandur, 60 KMs away from Chennai, where our records are kept, had also been inundated and we could not retrieve some of the important files required in thi .....

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me to make effective submissions. In the above referred communication, the petitioner had clearly indicated that the Draft Assessment Order was served on them on 04.04.2015 and the reference before the DRP was filed on 22.04.2015. Therefore, the DRP was well aware as to when the period of nine months would expire. If such is the case, the DRP ought to have taken a realistic view in the matter. But nevertheless the petitioner is stated to have been made to participate in the proceedings and there .....

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r jurisdiction to accept the same in the interest of justice and fair play and to decide the issues on merits. The Company respectfully submits that the DRP proceedings has been inserted in Chapter XIV of the Income Tax Act, 1961 which relates to assessment proceedings. Therefore, the DRP is a part of the assessment machinery and the proceedings before the DRP are a mere extension and part of the assessment proceedings. These are neither appellate nor settlement nor arbitration process. Hence, b .....

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er the Act could have dealt with the matter in the manner done in the instant case. The petitioner cannot be blamed for the delay of nine months during which objections were kept pending before the DRP i.e., from 22.04.2015 to 16.12.2015. Therefore, the DRP while considering the request for adjournment could not have disbelieved the same as it is an admitted fact that entire Chennai was flooded and suburban were sub-merged. Hence, a realistic approach should have been taken on the petitioner' .....

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it appears that in a hurried manner, the entire proceedings were closed on 17.12.2015 and orders were passed on 23.12.2015. It may be true that in terms of Section 253(d) of the Act, the petitioner is entitled to canvas the correctness of the order of DRP before the Tribunal while challenging the Assessment Order dated 29.01.2016. However, the order passed by the DRP, if it has been passed in violation of the principles of natural justice, the petitioner would be entitled to question the same b .....

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de and for certain reasons they have either accepted or refused to accept such request. This is a pre-requisite before the DRP could have passed an order on merits affecting the rights of the assessee. Furthermore, the object for constituting the DRP would stand defeated if the matters are to be given a summary disposal. The transaction done by the petitioner having international ramification, the interest of revenue would require careful scrutiny of the objections and the same dealt with in acc .....

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