Andheri(E), Mumbai-400 099 v. Dy. Commissioner Of Income Tax

Digitally signedby CHITRACHITRASANJAYSONAWANESANJAYDate:SONAWANE2022.04.2715:25:59+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2437/2021 Renaissance Services BV]C/o Marriott Hotels India ]Private Limited, 303 A, 304, ]Fulcrum, B Wing, Hiranandani ]Business Park, Sahar road, ]Andheri(E), Mumbai-400 099. ]PAN: ]…. Petitioner. Vs.Dy. Commissioner of Income Tax- ]International Tax Circle-4(1)(1) ]Mumbai having an address at 17[th ] ]floor,Air India Building, Nariman ] Point, Mumbai-400 021. ] 2. Union of India ]Through the Secretary, ] Ministry of Finance, ] Government of India, ]North Block, ] New Delhi -110 001 ] ….. Respondents. --------- Mr. J. D. Mistri, Senior Advocate a/w Advocate Paras Savla and Advocate Pratik Poddar for petitioner. Mr. Suresh Kumar, Advocate for Respondents. --------- CORAM : K.R. SHRIRAM & N.R.BORKAR, JJ. DATE : 21[st] APRIL 2022. Chitra Sonawane ORAL JUDGMENT (PER K.R. SHRIRAM, J.) : 1.Petitioner is a Company and tax resident of the Netherland.Petitioner is impugning in this petition an order dated 27.09.2021 passedunder Section 143(3) r/w Section 144-C(3) of the Income Tax Act, 1961(hereinafter to be referred to as the ‘said Act’) and consequent penaltynotice on the ground that assessment order was passed beyond the periodof limitation provided u/s 144-C of the said Act. 2.Petitioner filed its original return of income for the relevantAssessment Year 2018-2019 on 29.10.2018 declaring total income of19,96,290/-. Subsequently, return was revised to claim correct taxdeducted at source, total income being the same. Return of income waspicked up for scrutiny and notice dated 22.09.20219 u/s 143(2) of the saidAct was issued to petitioner. Subsequent notices were also issued andpetitioner responded to those notices. Respondent no.1 passed draftassessment order dated 19.4.2021 u/s 143(3) r/w Section 144-C of thesaid Act proposing to make addition amounting to Rs.38,97,58,539/-(hereinafter to be referred as ‘draft assessment order’). 3.This draft assessment order came to be passed as per the provisions Chitra Sonawane of Sub-section 1 of Section 144-C of the said Act with variations proposedsince the petitioner was eligible assessee as per provisions of Section 144-C(15)(b) of the said Act. 4.As per provisions of Sub-section 2 of Section 144-C of the said Acteligible assessee has a right to file objections to draft assessment order orconvey his acceptance against proposed variations in draft assessmentorder within 30 days from the date of receipt of draft assessment order. Ifassessee conveys his acceptance to the draft assessment order or does notfile objections with Dispute Resolution Panel (hereinafter to be referred toas ‘DRP’) within time limit prescribed in Section 144-C(2) of the said Act,then, as per Sub-section 4 of Section 144-C of the said Act, the AssessingOfficer has to pass final assessment order on the basis of the draft orderwithin 1 month from the end of the month in which acceptance is receivedor period of filing of objections under Sub-section 2 of Section 144-C of thesaid Act expires. 5.By letter dated 15.5.2021, forwarded to respondent no.1 by email on17.5.2021, petitioner informed respondent no.1 that it would not be optingfor DRP route and instead would pursue normal appellate channel, i.e., file Chitra Sonawane 5.By letter dated 15.5.2021, forwarded to respondent no.1 by email on17.5.2021, petitioner informed respondent no.1 that it would not be optingfor DRP route and instead would pursue normal appellate channel, i.e., file Chitra Sonawane an appeal with Commissioner of Income Tax (Appeals) against finalassessment order. Petitioner, of course, also noted its objections to theadditions proposed. In short, petitioner informed respondent no.1 to goahead and pass final assessment order as per proposed draft withoutprejudice to petitioner’s right to raise all objections before Commissioner ofIncome Tax(Appeals). Receipt of this communication is admitted byrespondent no.1. 6.Therefore, it is petitioner’s case that as per provisions of sub-section4 of Section 144-C of said Act, respondent no.1 ought to have passed finalassessment order u/s 143(3) r/w Section 144-C(3) of the said Act, withinone month, from the end of the month in which acceptance of variations isreceived or period to file objections expires which, in the present case was30.06.2021. According to the petitioner since the order impugned in thispetition has been passed only on 27.9.2021, order is non-est, bad in lawand requires to be quashed and set aside since it is passed beyond theperiod of limitation prescribed. 7.It is respondent’s case that order passed is within limitation because;a) e-mail dated 17.5.2021 was not communicated through e-a) e-mail dated 17.5.2021 was not communicated through e- Chitra Sonawane proceeding functionality on ITBA system b) Pursuant to Circular no.8/2021 dated 30.4.2021, time limit tofile objections by the tax payer to DRP u/s 144-C of the said Act was extended to be filed within time provided under that Sectionor by 31.5.2021 whichever is later. c)As per notification no.74/S.O.2580(e) dated 25.6.2021time limit for completion for assessment which were getting timebarred on 30.6.2021 was extended to 30.9.2021 and the samehas also been clarified by Press Release dated 20.6.2021 issued byCBDT by which time limit for passing assessment order wasfurther extended to 30.9.2021. 8.Therefore, questions which arise that require answer from us are : a) Whether the Circular and Notifications relied upon byrespondents, cover petitioner’s case ?respondents, cover petitioner’s case ? b) Whether time to complete assessment under Section 144-C(4) could be stated to have been extended till 30.9.2021 ?(4) could be stated to have been extended till 30.9.2021 ? 9. Sub-section 1, 2, 3 and 4 of Section 144-C of the said Act reads as under : 144C.(1) The Assessing Officer, shall, notwithstandinganything to the contrary contained in this Act, in thefirst instance, forward a draft of the proposed order ofassessment (hereafter in this section referred to as thedraft order) to the eligible assessee if he proposes tomake, on or after the 1[st] day of October, 2009, anyvariation which is prejudicial to the interest of suchassessee. Chitra Sonawane (2) On receipt of the draft order, the eligible assesseeshall, within thirty days of the receipt by him of thedraft order- (a) file his acceptance of the variations to the Assessing Officer; or Assessing Officer; or b) file his objections, if any, to such variation with-with- i) the Dispute Resolution Panel and ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2).specified in sub-section (2). (4) The Assessing Officer shall, notwitstanding anythingcontained in section 153 (or section 153B), pass theassessment order under sub-section (3) within one monthfrom the end of the month in which - (a) the acceptance is received; or (b) the period of filing of objections under sub-section(2) expires.” expires.” 10. Circular No.8 of 2021 dated 30.4.2021, notification no.74/2021 i) the Dispute Resolution Panel and ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2).specified in sub-section (2). (4) The Assessing Officer shall, notwitstanding anythingcontained in section 153 (or section 153B), pass theassessment order under sub-section (3) within one monthfrom the end of the month in which - (a) the acceptance is received; or (b) the period of filing of objections under sub-section(2) expires.” expires.” 10. Circular No.8 of 2021 dated 30.4.2021, notification no.74/2021 dated 25.6.2021 and press release of CBDT dated 25.6.2021 are scanned and reproduced herein for ease of reference. Chitra Sonawane Chitra Sonawane Chitra Sonawane Chitra Sonawane Chitra Sonawane Chitra Sonawane Chitra Sonawane 913-wp-2437-2021.odt 11. Section 144-C of said Act clearly provides two options to the assesseewhen the assessee receives draft assessment order which is prejudicial tothe interest of such assessee. The two options are to be exercised within30 days from receipt of draft assessment order, i.e., a) file his acceptance of variations to the Assessing Officer; or b) file objections to any such variations with the DisputeResolution Panel and the Assessing Officer. Resolution Panel and the Assessing Officer. If, the Assessing Officer receives acceptance of variations from theassessee or does not receive any objections within 30 days of receipt ofacceptance by the assessee of draft order, the Assessing Officer shallcomplete the assessment on the basis of draft order. Sub-section 4 ofSection 144-C prescribes for time within which such assessment order hasto be passed, whether the Assessing Officer has received acceptance ofvariation or has not received any objections to variations and that periodprescribed is within 1 month from the end of the month in whichacceptance is received or the period of filing of objections under Sub-section 2 of Section 144-C of the said Act expires. In this case,communication has been received by respondent no.1 on 17.5.2021 andtherefore, time limit under sub-section 4 of Section 144-C of the said Actwould expire on 30.06.2021. Even if we accept respondent no.1’sgrievance that e-mail dated 17.5.2021 was not uploaded in ITBA system Chitra Sonawane 14 913-wp-2437-2021.odt and if at all we say that the email has to be ignored, still, draft order havingbeen received by petitioner on 19.4.2021, thirty day period provided undersub-section 2 of Section 144-C of the said Act would have expired on18.05.2021 which would mean time limit under Sub-section 4 of the saidAct would still expire on 30.6.2021. Admittedly, in this case, order hasbeen passed on 27.09.2021. 12. Let us consider whether we could accept respondent’s contentionthat order was within time. Mr. Suresh Kumar submitted under theprovisions of the Taxation and Other Laws (Relaxation and Amendment ofCertain Provisions) Act, 2020 r/w notification received and relied in theaffidavit-of-reply, time has been extended. Mr. Suresh Kumar submittedthat notification under Relaxation Act issued by the Government of Indiafor mitigating pains of the tax payers due to general lockdown andrestrictions due to COVID pandemic. Same yard-stick apply to theGovernment officials who were also prevented from working in normalconditions. Government tried its best to save citizens including tax payersand Officers of Government department and hence, provision should begiven purposive interpretation. Mr. Suresh Kumar submitted that time limitto file objections by the tax payers to DRP was extended by CBDT CircularNo. 8 of 2021 dated 30.4.2021 and as per said Circular last date for filing Chitra Sonawane 913-wp-2437-2021.odt Chitra Sonawane 913-wp-2437-2021.odt of objections before DRP which was due on 1.4.2021 or thereafter wasextended upto 31.5.2021. Thus, in view of the said Circular, petitionercould have filed objections to draft order dated 19.4.2021 by 31.5.2021.Therefore, as per sub-section 4 of Section 144-C of the Act, the AssessingOfficer was required to complete assessment by 30.6.2021, i.e., within onemonth from the end of the month in which period of filing objections hadexpired. Subsequently, Notification No.74/2021, S.O.2580(E) dated25.6.2021 was issued by Central Board of Direct Taxes and as pernotification, time limit for completion of assessment which were gettingtime barred on 30.6.2021 was extended to 30.9.2021. Mr. Suresh Kumarsubmitted that this was clarified by CBDT in its press release dated25.6.2021. 13. In our view, neither Circular no.8/2021 nor notification no.74/2021dated 25.6.2021 or press release dated 25.6.2021 would help respondentno.1. In Circular No. 8/2021 dated 30.4.2021, sub-clause (b) of Clause 1only provides for objections to Dispute Resolution Panel u/s 144-C of thesaid Act for which, last date of filing under that Section is 1.4.2021 orthereafter may be filed within the time provided under that Section or by31.5.2021 whichever is later. Therefore, it only provides for extension of Chitra Sonawane time for filing of objections. It does not extend time for passing orderunder sub-section 4 of Section 144-C of the Act. In any case, even if, weproceed on the basis that, it would extend time to pass orders, still, asadmitted in affidavit in reply itself, time to pass such order would haveexpired on 30.6.2021. 14. Now coming to the notification no.74/2021 dated 25.6.2021 reliedupon by respondent no.1, in our view that notification does not apply toassessment u/s 144-C of the Act. We say this, because, by the saidnotification no.74/2021 the Government of India, relying on the provisionsof Relaxation Act are only partially modifying notifications already issuedunder Relaxation Act which are referred to in the said notification. Circularno.8/2021 has not been modified because it is not referred to in the saidnotification. Moreover, Clause A(i) of the said Notification only providesfor assessment or re-assessment under the said Act and the time limitationfor completion of such action u/s 153 or 153-B thereof expires on30.06.2021, due to its extension by the said notifications, such time limitshall further stand extended to 30.9.2021. First of all, it does not refer toSection 144-C of the said Act. Sub-section 4 of Section 144-C of the saidAct also says that the Assessing Officer shall, notwithstanding anythingcontained in Section 153 or 153-B shall pass assessment order under sub- Chitra Sonawane 913-wp-2437-2021.odt section (3) within time prescribed therein. Thirdly, it also says “… due towhich extension by said notifications …...” and the said notifications aredefined in the said notification itself and none of those notifications applyto the provisions of Section 144-C of the said Act. We would add, it is noteven the case of respondent that, any of these notifications will apply toSection 144-C(4) of the said Act. If that was the case, we would haveexpected him to say so in the affidavit-in-reply. For this reason certainlypress release relied upon dated 25.6.2021 will also be not applicable. Infact press release clarifies “Extension of Timelines-….. provided throughnotification nos.74/2021 and 75/2021 dated 25.06.2021 …..”. None ofthe notifications referred in the press release pertains to any timelineprescribed u/s 144-C of the said Act. 15. In the circumstances, we will have to agree with petitioner’s case thatthe assessment order dated 27.09.2021 has been passed beyond prescribedtime limit. 16. Therefore, we allow petition in terms of prayer clause (a) of thepetition, which reads as under;petition, which reads as under; 15. In the circumstances, we will have to agree with petitioner’s case thatthe assessment order dated 27.09.2021 has been passed beyond prescribedtime limit. 16. Therefore, we allow petition in terms of prayer clause (a) of thepetition, which reads as under;petition, which reads as under; “(a) that this Hon’ble Court be pleased to issue a Writof Certiorari or any other appropriate writ, order, ordirection in the nature of certiorari under Article 226of Certiorari or any other appropriate writ, order, ordirection in the nature of certiorari under Article 226 Chitra Sonawane of the Constitution of India calling for all papers andproceedings of the petitioner’s case pertaining toAssessment Year 2018-2019, and after examining thevalidity, legality and propriety thereof, and quash andset aside final Assessment order and consequentialpenalty notice made by respondent no.1, as non-est,being barred by limitation”. 17. Petition disposed with no order as to costs. (N.R. BORKAR, J.) (K.R.SHRIRAM, J.) Chitra Sonawane