Chitra Venkataraman, J.@mdashThe petitioner challenges the order u/s 92CA(3) of the Income Tax Act, 1961 on the ground that the order passed is in violation of the provisions of the Act in not granting the personal hearing to the petitioner herein.
2. The petitioner is an assessee on the file of the second respondent. The company is a fully owned subsidiary of three companies, by name, MAS Capital Pvt. Ltd., Sri Lanka, Triumph International Overseas Ltd., Liechtenstein and MAST Industries Inc. USA. MAS Capital Pvt. Ltd. is a Sri Lanka based investment, company. The affidavit filed before this Court gives the role of the three associated enterprises.
3. The petitioner herein filed its return of income for the assessment year 2006-07 before the second respondent. By letter dated December 16, 2008, the first respondent, to whom a reference u/s 92CA of the Act was made on December 5, 2008, called upon the petitioner to furnish the details in terms of Sections 92D to 92E of the Act by January 16, 2009. The petitioner, by letter dated January 19, 2009, sought for time till January 28, 2009. The petitioner filed its details on February 25, 2009. The petitioner states that the intimation was received on May 25, 2009, from the first respondent posting the case for hearing on June 4, 2009. An adjournment was sought for, thereafter, an intimation dated June 18, 2009, was received from the first respondent fixing the date of hearing on July 2, 2009. The letter dated July 6, 2009, intimating the posting of the case on July 20, 2009, was received by the petitioner on July 13, 2009. The petitioner appeared before the first respondent with their authorized representative. On August 25, 2009, the first respondent sought for clarification, which was to be filed on or before September 4, 2009. The petitioner sought for time under letter dated September 2, 2009 for a period of 15 days and on September 16, 2009 the petitioner submitted its clarification. However, on October 22, 2009, the petitioner received the order now under challenge dated October 14, 2009. The petitioner states that the said order passed is in violation of the provisions of the Act and contrary to the decision reported in
4. On notice, the respondents have filed a counter, wherein it is stated that the petitioner was granted time till September 15, 2009, on which date personal hearing on the issues raised was also notified to be conducted. None appeared on September 15, 2009, nor any letter seeking adjournment was filed. Yet, on September 16, 2009, the petitioner filed a reply to the show-cause notice. On that day, except to the written statement filed on September 16, 2009, the petitioner did not avail of the opportunity of personal hearing. In the circumstances, there is no violation of the provisions of the Act.
5. Learned standing counsel appearing for the respondents pointed out that having regard to the Dispute Resolution Board constituted as per the Income Tax Dispute Resolution Panel, if the petitioner has a grievance, the proper course would be for the petitioner to agitate the assessment either before the appellate authority or before the Dispute Resolution Panel.
6. Per contra, learned Counsel appearing for the petitioner pointed out that having regard to the terms of Section 92CA of the Income Tax Act, which contemplates personal hearing to the petitioner and when the petitioner had sought for time to file its reply and filed its reply, the respondent should have intimated the date of hearing of the matter, to enable the petitioner to clarify on the issues required by the respondents. Considering the fact that the order passed by the transfer pricing authority concerned has a binding effect on the Assessing Officer and that the Transfer Pricing Officer had acted without giving an opportunity of personal hearing, the proceedings are violative of the provisions of the Act. Hence, the present writ petition has to be allowed.
7. Heard the learned Counsel appearing for the petitioner and the learned standing counsel appearing for the respondents.
8. It is no doubt true that as per Section 92CA of the Income Tax Act, when the assessee goes before the authority concerned on transfer pricing, an opportunity of personal hearing should be granted to the assessee. As far as the present case is concerned, the notice dated August 25, 2009 was sent by the Transfer Pricing Officer intimating the date of personal hearing on September 4, 2009, on which date the petitioner was to file its reply. Admittedly, the petitioner sought for an adjournment by 15 days. The petitioner was intimated that the case was posted on September 15, 2009, which means, the petitioner should have filed its reply along with availing of the personal hearing on September 15, 2009. Although the petitioner had filed its objections on September 16, 2009, nothing further happened from the side of the petitioner seeking personal hearing or for that matter, the Department intimated later on that the petitioner had not availed of the opportunity of personal hearing. However, as seen from the endorsement in the letter seeking adjournment that the proceedings posted on November 15, 2009, it stands to reason that the petitioner should have availed of the personal hearing on the date on which the reply was filed. Having thus failed to avail of the same, I do not find any justification in the plea of the petitioner that the order had been passed on transfer pricing aspect without affording personal hearing.
9. Leaving that as it may, it is not as though the petitioner is remedyless in this regard. Even though the order of the transfer pricing is binding on the assessing authority, as rightly pointed out by the learned standing counsel that as per Section 144C of the Income Tax Act, with the Dispute Resolution Panel available, it is always open to the petitioner to go before the panel to agitate on all aspects of assessment including the questions relating to the transfer pricing aspect. Learned standing counsel informed this Court that a Board had already been constituted. In this background, I hold that it is but proper for the petitioner to avail of the remedy available under the Income Tax Act. There are no extraordinary circumstances for this Court to interfere with the proceedings.
10. As far as the present case is concerned, under normal circumstances, the limitation for passing the assessment order is December 31, 2003. Section 144C of the Act begins with the non obstante clause that notwithstanding anything to the contrary contained in the Act if the assessing authority proposes to make any variation in the income or loss returned which is prejudicial to the interest of such assessee on or after the October 1, 2009, at the first instance, the assessing authority shall forward a draft of the proposed order of assessment to the assessee. Sub-section (4) to Section 144C provides for the limitation period to pass the assessment order.
11. Sub-section (2) gives the assessee an opportunity to file his objection to the draft order proposed and sent to the petitioner. Sub-section (4) of Section 144C of the Act states that notwithstanding anything contained in Section 153, the assessing authority shall pass the assessment order under Sub-section (3) within one month from the end of the month of receipt of acceptance or on the expiry of the period of filing of objections under Sub-section (2).
12. In the face of the limitation given u/s 153 thus taken care of u/s 144C and that it provides for service of a draft assessment order, it is open to the assessee to exhaust the remedies as provided for u/s 144C of the Act. In the circumstances, considering the availability of the alternative remedy, the writ petition stands dismissed. No costs. Consequently, M. P. No. 1 of 2009 is closed.
