TMI Blog2023 (4) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, the Dispute Resolution Panel shall have to provide an opportunity of hearing to the assessee if such directions are prejudicial to the interest of the assessee. As we have seen, the Dispute Resolution Panel is a high powered body comprising of three very senior officers of the Income Tax Department. The Dispute Resolution Panel is constituted by the Central Board of Direct Taxes. The eligible assessee, in this case the petitioner, has an effective remedy provided by the statute itself for ventilation of its grievance. Power of the High Court under Article 226 of the Constitution of India cannot be fettered by any statutory limitation, it being a constitutional power. The exceptions carved out are absent. Contentions raised by the first respondent that petitioner did not disclose fully and truly all material facts necessary for assessment and as a result, there is escapement of income from assessment for the assessment year 2011-2012, cannot simply be brushed aside. In such a case, it would be just and proper if the procedure prescribed under the statute is followed, in which event, petitioner would have all the opportunities and remedies to present its case. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax (International Taxation and Transfer Pricing), Hyderabad. 4. The second impugned notice dated 24.10.2018 has been issued by the Deputy Commissioner of Income Tax I, International Taxation, i.e., first respondent under Section 142(1) of the Act, whereby petitioner has been called upon to furnish the information/details as well as documents in connection with the assessment proceedings for the assessment year 2011-12. 5. In response to the impugned notice dated 27.03.2018 issued under Section 148 of the Act, petitioner had filed return of income on 17.04.2018 and vide its letter dated 18.04.2018 requested first respondent to provide the reasons recorded for reopening the assessment proceeding which were provided to the petitioner on 26.04.2018 following the guidelines laid down by the Supreme Court in GKN Drive Shafts (India) Limited v. ITO [259 ITR 19] . Thereafter petitioner filed objections on 02.08.2018 and 05.11.2018. By the impugned order dated 17.11.2018, first respondent rejected the objections raised by the petitioner. 6. The aforesaid challenge has been made on the following factual matrix. Petitioner, which is represented by its authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted a detailed response to the notice under Section 142(1) of the Act on 17.12.2015 whereafter it was called for a hearing on 20.02.2016. By its letter dated 26.02.2016 petitioner explained the nature of software club charges as being allocation of costs and therefore claimed it as not chargeable to tax. After hearing the petitioner and considering its response, first respondent passed an order under Section 143(3) read with Section 147 of the Act on 31.03.2016 accepting the submissions of the petitioner. 12.1. However, because of certain mistakes which occurred in the order dated 31.03.2016 petitioner filed an application for rectification under Section 154 of the Act on 27.04.2016. First respondent thereafter issued a rectification order on 13.04.2017 carrying out the corrections pointed out by the petitioner. 13. It is stated that assessment proceedings of the petitioner for the assessment year 2013-14 were under process, at the same time when reassessment proceedings were being conducted for the assessment year 2011-12. In the course of the assessment proceedings for the assessment year 2013-14, first respondent vide his notice dated 26.11.2015 called upon the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before this Court seeking the reliefs as indicated above. 16. The challenge has been made on the ground that petitioner had disclosed fully and truly all material facts necessary for completion of assessment. Therefore, the assessing officer could not have assumed jurisdiction to reopen a concluded assessment and reassessment. The impugned notices and order have also been assailed on the ground that those are based on change of opinion of the same assessing officer. Contention of the petitioner is that reopening has taken place because of the view taken or the opinion formed by the assessing officer in the assessment proceedings of the petitioner for subsequent assessment year, namely, assessment year 2014-15. In addition to the above, the reopening has been questioned on various other grounds. 17. This Court, by order dated 20.08.2019 had issued notice and granted interim stay as prayed for by the petitioner which order has since been continued. 18. Counter affidavit has been filed by the first respondent. At the outset, a preliminary objection has been raised as to the maintainability of the writ petition. It is stated that the first respondent had passed a draft a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that petitioner being a non-resident foreign company had declared income of Rs.32,35,27,521.00 earned in India during assessment year 2011-12 claiming refund of Rs.4,05,88,568.00 only upon being called to file return of income vide notice dated 21.11.2012. The return was processed under Section 143(1) of the Act and was not selected for scrutiny. Subsequently, it was found that there were discrepancies in the receipts reflected as per Form 26AS and the return of income. Assessment proceedings under Section 147 of the Act were initiated. Petitioner was required to reconcile the differences. In its letter dated 26.02.2016, petitioner had claimed that amounts shown as software club charges were reimbursement of expenses. The proceedings were completed under Section 143(3) read with Section 147 of the Act vide the order dated 31.03.2016. 18.5. In its return of income for the assessment year 2011-12, petitioner did not explain the software club charges in a manner that reflected the true nature of such transactions. Petitioner s submissions and documents furnished pursuant to notice dated 21.11.2012 were coloured in such a way that the true nature of the receipts in the hands of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt seeks dismissal of the writ petition. 19. In its rejoinder affidavit, petitioner has reiterated the contentions made in the writ affidavit. It is stated that it was only when the first respondent had called upon the petitioner to explain the nature of software club charges, that the same were furnished by the petitioner. Details of amounts received on account of software club charges and the reasons as to why such receipts could not be charged to tax were furnished by the petitioner to the first respondent. Petitioner would not have had any occasion to furnish the details if the same were not called for by the first respondent. First respondent had specifically asked the petitioner to reconcile the receipts as per Form 26AS from which taxes were deducted at source and the income tax return wherein such receipts were not offered to tax. Complete information was made available to the first respondent as regards nature of software club charges on the basis of which the first respondent had formed an opinion that the amounts were not taxable in India and therefore, the reassessment proceedings are based on a change of opinion. 19.1. Petitioner has stated that the first respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.12.2015 in response to a specific requisition by the first respondent. Therefore, it would be incorrect to say that the said agreements were not furnished or that those were not available with the first respondent. The assessing officer for the two assessment years i.e., 2011-12 and 2013-14 being the same he could have very well used the agreements submitted in one proceedings in the other proceedings. In these circumstances, Mr. Seth submits that the jurisdictional condition in the first proviso to Section 147 of the Act, namely that there should be a failure to disclose fully and truly all material facts is not fulfilled in the present case. 21.2. On the question as to whether the agreements furnished during assessment proceedings for the assessment year 2013-14 would constitute a sufficient disclosure, Mr. Seth has placed reliance on the decision of the Supreme Court in the case of NDTV v. DCIT [116taxmann.com 151] wherein it has been held that availability of the relevant documents before the assessing officer albeit in different proceedings would nevertheless be sufficient disclosure. He has also placed reliance on the earlier decision of the Supreme Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the royalty income in the hands of the petitioner was concealed and misrepresented as reimbursement of expenditure. According to her, there was no reference or disclosure whatsoever in the petitioner s explanation dated 26.02.2016 that such payments were made pursuant to any agreement(s). On the limited information on software club charges made available by the petitioner claiming those to be reimbursements, first respondent could not have known or suspected that such charges were in fact in the nature of royalty payments. Existence of the agreements was suppressed during the assessment proceedings for the assessment year 2011-12. Even the petitioner admits that there was no disclosure of the agreements in the assessment proceedings for the assessment year 2011-12 but relies upon tendering of such documents in a different assessment proceeding. She submits that each assessment year is a separate and distinct proceeding. Information obtained incidentally during a subsequent assessment year cannot be deemed to mean that the first respondent was in knowledge of such information for the purpose of earlier assessment years. Once there is reason to believe that there is escapement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents have failed to show or substantiate even a prima facie case for valid initiation of reassessment proceedings. Therefore, the writ petition should be allowed quashing the impugned notices and order. 24. Submissions made by learned counsel for the parties have received the due consideration of the Court. 25. Pursuant to the notice dated 27.03.2018 issued by the first respondent under Section 148 of the Act, petitioner filed its return of income on 17.04.2018 and thereafter requested to provide it the reasons recorded for reopening the assessment proceedings under Section 147 of the Act. Reasons to believe recorded by the assessing officer for initiating reassessment proceedings were provided to the petitioner on 26.04.2018. Petitioner filed objections on 02.08.2018 and 05.11.2018. Objections were dealt with and rejected by the first respondent vide the order dated 17.11.2018. It is not necessary to enter into the details of the order dated 17.11.2018. Suffice it to say first respondent asserted that there was failure on the part of the petitioner to fully and truly disclose all material facts necessary for assessment for the assessment year 2011-12. According to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing officer shall notwithstanding anything to the contrary contained in the Act, in the instance, forward a draft of the proposed order of assessment (briefly, the order ) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. Thus, sub-section (1) makes it clear that provisions of Section 144C shall have over-riding effect over other provisions of the Act, having used the expression notwithstanding anything to the contrary contained in this Act . 28.1. Sub-section (2) says that on receipt of the draft order, the eligible assessee shall within thirty days of the receipt by him of the order (a) file his acceptance of the variations to the assessing officer, or (b) file his objections, if any, to such variation with the Dispute Resolution Panel and the assessing officer. 28.2. Sub-section (3) contemplates a situation where the assessee intimates to the assessing officer acceptance of the variation or no objections are received within the period specified in sub-section (2). In such a situation, the assessing officer shall complete the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such direction under sub-section (12). 28.8. Sub-section (13) says that upon receipt of the directions issued under sub-section (5), the assessing officer shall, in conformity with the directions, complete the assessment notwithstanding anything to the contrary contained in Section 153 or Section 153B. However, at this stage, the assessing officer is not required to provide any further opportunity of being heard to the assessee. 28.9. Sub-sections (14) to (14C) are not relevant for the present discourse. However, as per the proviso to subsection (14C), no direction shall be issued after 31.03.2024. 28.10. Sub-section (15)(a) defines Dispute Resolution Panel to mean a collegiums comprising of three Principal Commissioner or Commissioners of Income Tax constituted by the Central Board of Direct Taxes. Eligible assessee is defined in sub-section (15)(b) to mean, any person in whose case the variation referred to in subsection (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of Section 92CA; and any foreign company. 29. From the above, it is evident that an elaborate procedure is laid down in Section 144C of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions raised by the first respondent that petitioner did not disclose fully and truly all material facts necessary for assessment and as a result, there is escapement of income from assessment for the assessment year 2011-2012, cannot simply be brushed aside. In such a case, it would be just and proper if the procedure prescribed under the statute is followed, in which event, petitioner would have all the opportunities and remedies to present its case. 34. That being the position, we are of the considered opinion that the present is not a fit case for invoking the writ jurisdiction under Article 226 of the Constitution of India and interdict the reassessment proceedings without allowing it to be proceeded as per procedure laid down under the law. However, since we have refused to entertain the writ petition on the point of statutory remedy available to the petitioner, we refrain from expressing any opinion on merit. Therefore, any observations made while coming to the aforesaid conclusion are only in the context of the present decision. Accordingly, all contentions are kept open. 35. Subject to the above, writ petition is dismissed. 36. Interim order passed earlier st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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