9911796707
TMI Blog2018 (8) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... change and its shares are transferable. 3.In 2012-13, 75% of the shares of the appellant were held by Clayton Dewandre Holdings Ltd., hereinafter referred to as 'Clayton Dewandre' and the balance 25% held by the public. In 2013-14, Clayton Dewandre transferred its entire shareholding to WABCO Asia Private Limited, Singapore, hereinafter referred to as 'WABCO, Singapore'. 4.The consideration for the transfer was settled by WABCO, Singapore, by issuance of its own shares to Clayton Dewandre by execution of a Share Transfer Agreement between Clayton Dewandre and WABCO, Singapore. 5.Mr.R.V.Easwar, learned Senior Counsel appearing on behalf of the appellant, pointed out that the appellant was not a party to the said Share Transfer Agreement, which was between two non-residents. As required, necessary disclosures were made to Securities Exchange Board of India (SEBI). These facts are not in dispute. 6.In the writ petition, it is stated that the Deputy Commissioner of Income Tax, International Taxation 1 (1) being the respondent, has issued a certificate under Section 197 of the IT Act, in respect of the aforesaid transaction to Clayton Dewandre certifying 'Nil' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o challenge the draft assessment order before the Dispute Resolution Panel. 4.The capital gains has directly arisen as a result of the consideration received from you. I therefore propose to treat you, M/s.WABCO India Ltd as the agent of M/s.Clayton Dewandre Holdings Ltd in respect of tax liability that may arise for the AY 2014-15 on account of capital gain taxation. In the event of demand arising in the case of M/s.Clayton Dewandre Holdings Ltd in the assessment proceedings for AY 2014-15, I propose to hold you as an agent under section 163(1)(c) of the I.T. Act, 1961. 5.You may therefore show cause why for the purpose of section 160 to 163 of the I.T. Act, 1961 M/s.WABCO India Ltd should not be treated, as the agent in the terms of the provisions of section 163(1)(c) of I.T. Act 1961. Your reply in writing should reach the undersigned on or before 31.01.2018, failing which it will be presumed that you have no objections to this proposal." 10.On a perusal of the aforesaid show cause notice, it is patently clear that it was accepted that there was transaction between Clayton Dewandre and WABCO, Singapore. In the show cause notice, it was alleged that scrutiny assessment of Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the appellant has filed this intra-court appeal. 14.The short question in this appeal is whether the writ petition ought to have been dismissed on the sole ground that the appellant had a right of reply to the show cause notice. The answer to the aforesaid question has to be in the negative, for the reasons discussed hereinbelow. 15.A show cause notice is not ordinarily interfered with in proceedings under Article 226 of the Constitution of India. However, in exceptional cases, a show cause notice might be interfered with in proceedings under Article 226 of the Constitution of India, for example, when the show cause notice is without jurisdiction and/or that conditions precedent for a show cause notice are absent and/or the acts alleged in the show cause notice do not disclose any case for action against the noticee called upon to show cause, a show cause notice under Section 163(1)(c) of the IT Act would necessarily have to disclose a liability on the part of a noticee. 16.In Raza Textiles Ltd. vs. Income Tax Officer, reported in (1973) 1 SCC 633, the Supreme Court held that no authority, much less a quasi-judicial authority could confer jurisdiction on itself by deciding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, must co-exist before the Income-tax Officer has jurisdiction to start proceedings after the expiry of 4 years. The argument that the Court ought not to investigate the existence of one of these conditions, viz., that the Income-tax Officer has reason to believe that under assessment has resulted from non-disclosure of material facts cannot, therefore, be accepted . The Supreme Court further held that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate orders or directions to prevent such consequences . 19.Where the jurisdiction of the respondent to issue the impugned show cause notice was under challenge, in our considered view, the writ petition ought not to have been dismissed on the ground that the appellant had a right to reply to the show cause notice. The learned Single Bench ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that assessment could not have been made on the assessee. In this case, a draft assessment order has been issued to the non-resident assessee. 23.In Commissioner of Income Tax vs. Alfred Herbert (India) (P.) Ltd., reported in (1986) 26 Taxman 145 (Cal.), a Division Bench of Calcutta High Court held that having assessed a non-resident company, the Income Tax Officer could not assess the agent in India in respect of the same income. 24.In General Electric Co. and another vs. Deputy Director of Income-Tax and Others, reported in (2012) 347 ITR 60 (Del.), the shares of an Indian company were, by a series of transfers, ultimately transferred to a company incorporated in Luxembourg. A show cause notice was issued to the Indian company alleging that the income arising to the foreign company from the sale of its direct/indirect stake in the Indian company was liable to tax in India in view of the deeming provisions in Section 9(1)(i) of the IT Act. It was, thus, proposed to treat the Indian company as an agent and consequently, the representative of the non-resident assessee under the provisions of Section 136 read with Sections 160 and 161 of the IT Act. The Revenue challenged the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
