M/S. Asian Natural Resources (India) Ltd v. Income Tax Settlement Commission, New Delhiand Three Others

HIGH COURT OF MADHYA PRADESH : BENCH AT INDORED.B.: HON'BLE MR. S. C. SHARMA ANDHON'BLE MR. RAJEEV KUMAR DUBEY, JJ WRIT PETITION No. 7944 / 2016 M/S. ASIAN NATURAL RESOURCES (INDIA) LTD., Vs. INCOME TAX SETTLEMENT COMMISSION, NEW DELHIAND THREE OTHERS * * * * * O R D E R( 02/05/2017) PER : S. C. SHARMA, J :- The petitioner before this Court has filed this present writ petition being aggrieved by the order dt. 24/2/2016 passed u/S. 245D(4) of the Income Tax Act, 1961. Petitioner is also aggrieved by subsequent order dt. 22/9/2016 passed u/S. 245D(6B) of the Income Tax Act, 1961. The contention of the petitioner is that petitioner is a Company for the purpose of the Income Tax Act, 1961 and as per the provisions of the Act, as provided u/S. 245C, the petitioner submitted an application for the assessment year 2007 – 2008 to 2014 – 2015 by filing an application in Form --- 2 --- 34B on 5/8/2014 before the Settlement Commission. The petitioner, as submitted by him, made full and true disclosure of his income and deposited tax. Petitioner has further stated that on 11/2/2016 during the final phase of hearing, the TPO furnished a chart wherein addition of Rs.32.45 crores was proposed, to this the petitioner submitted that since all the documents are at Indore and the staff of the petitioner are busy in hearing at Mumbai on 11/2/2016 and 12/2/2016, they will need some more time. It was also submitted before the Commission that the reply would be furnished on the next date of hearing. Petitioner has further stated that on 11/2/2016 the petitioner furnished a reply in which all the required particulars were given. The Settlement Commission has directed the learned TPO to verify the same and furnish the report. The Settlement Commission also directed the petitioner to file written submission in this regard. On 16/2/2016 petitioner filed written reply vide letter dt. 15/2/2016. On 18/2/2016 TPO filed its reply by email --- 3 --- before the Settlement Commission objecting to the petitioner's application and proposing the addition. The Settlement Commission forwarded report to the petitioner by email directing the petitioner to file reply by 19/2/2016 (Friday) meaning thereby, only a day's time was given to the petitioner. On 19/2/2016 the staff of the petitioner was at Indore and was in constant touch with the Office of the Settlement Commission at Delhi and conveyed that it would not be possible for them to reply within an ultra-short time frame of just one day. The petitioner was also unable to file reply as his counsel were located at Mumbai and documents were located at Indore. On 22/2/2016 the petitioner forwarded detailed reply to the Settlement Commission by email and on 22/3/2016 hard copy of the above reply was filed before the Settlement Commission and the reply was received by the Settlement Commission at 19:00 hrs., duly acknowledged by them. The Settlement Commission has finally passed an order on 22/4/2016 without taking into account the reply of the --- 4 --- assessee. The petitioner, as his reply was not taken into account, has subsequently filed an application on 22/3/2016 pointing out before the Settlement Commission that the reply of the petitioner has not been taken into account, he has not been permitted to explain the objections raised by the TPO, however, the Settlement Commission has again rejected the petitioner's application. The petitioner before this Court has prayed only for remand of the matter directing the Settlement Commission to take into account the documents furnished by the petitioner and to pass a final order in accordance with law. --- 4 --- assessee. The petitioner, as his reply was not taken into account, has subsequently filed an application on 22/3/2016 pointing out before the Settlement Commission that the reply of the petitioner has not been taken into account, he has not been permitted to explain the objections raised by the TPO, however, the Settlement Commission has again rejected the petitioner's application. The petitioner before this Court has prayed only for remand of the matter directing the Settlement Commission to take into account the documents furnished by the petitioner and to pass a final order in accordance with law. On the other hand, a detailed and exhaustive reply has been filed by the Union of India and the learned counsel for the Union of India has vehemently argued before this Court that the question of interference by this Court in the peculiar facts and circumstances of the case, does not arise as the disclosure on the part of the petitioner was not true and correct, the Settlement Commission was justified in passing final order. It has also been argued that the application for --- 5 --- rectification has rightly been dismissed by the Settlement Commission and the question of interference on the merits does not arise. Learned counsel also argued before this Court that the jurisdiction and scope of this Court to interfere with the final order passed by the Settlement Commission is quite limited and, therefore, the present Writ Petition deserves to be dismissed. Additional reply has been filed in the matter and in the additional reply respondents have stated that sufficient opportunity was given to the assessee by the Commission and the assessee has not availed the opportunity given by the Commission and, therefore, the question of interference by this Court does not arise. Reliance has been placed upon the judgment delivered by the apex Court in the case of Asst. Commissioner ofIncome Tax Vs. Saurashtra Kutch Stock Exchange (details of citations have not been furnished) and it has been stated that the rectification can only be done in case there is a mistake apparent on the face of the record and in the present --- 6 --- case there is no mistake apparent on the face of the record and, therefore, Commission was justified in rejecting the application. Heard learned counsel for the parties at length and perused the record. In the present case, the only grievance of the petitioner is that he was not heard by the Settlement Commission while passing the final order. The petitioner on affidavit, has stated before this Court that on the basis of report submitted by the TPO, at the time of final hearing on 11/2/2016 he wanted to submit a reply and only a day's time was given. It was also stated that his Lawyers were at Mumbai, record was at Indore and the proceedings were going on at Delhi and, therefore, it was humanly impossible for the petitioner to file a reply in the matter and he was given only a day's time that too through email. Settlement Commission has also dealt with this issue at page 195 of the order passed by the Settlement Commission. The Settlement Commission has observed as under : Having gone through the same and having seen the Annexure 'A' attached to this reply, we are of the considered view that this approach of the Department is fair and reasonable and deserves to be confirmed. It may be added here that again an opportunity was given to the applicant on 19/2/2016 for responding to it but no such response has been received from them. Accordingly, following the method of internal CUP available for Asstt. Year 2010-11 adjustment of Rs.32.45 cr. Is being hereby made for this Asstt. Year. The undisputed facts is that only a day's time was given to the petitioner by the Commission. Even in the order passed on an application preferred for rectification, the Settlement Commission has observed as under : Having gone through the same and having seen the Annexure 'A' attached to this reply, we are of the considered view that this approach of the Department is fair and reasonable and deserves to be confirmed. It may be added here that again an opportunity was given to the applicant on 19/2/2016 for responding to it but no such response has been received from them. Accordingly, following the method of internal CUP available for Asstt. Year 2010-11 adjustment of Rs.32.45 cr. Is being hereby made for this Asstt. Year. The undisputed facts is that only a day's time was given to the petitioner by the Commission. Even in the order passed on an application preferred for rectification, the Settlement Commission has observed as under : It is observed that the last letter of applicant dated 23/2/2016 was received by our office on 23/2/2016 at 7 p.m. This is the time when order u/s. 245D(4) had been completed and consequently released on the following day. As such, we had no option but to complete the order on the basis of material available to us till that point of time. In any case, a number of hearings were held earlier and applicant had enough opportunity to place all its relevant facts earlier during the course of preceding months – something like 5000 pages were filed by the applicant in this case. In such circumstances, it is not acceptable that principles of natural justice have not been followed appropriately. Further, we may add here that even if – say, for the sake of discussion – the last letter of applicant dated 23/2/2016 were to be considered by the Bench, it would again require giving an opportunity to the Deptt. / TPO on the same as there is a substantial difference in applicant's claim leading to a sizable reduction in its tax liability. In the circumstances, decision of ITSC was a considered and a fair decision and it would not fall under the purview of provisions of Sec. 245D(6B) of the IT Act.Therefore, on this issue, no interference is called for. This Court is of the considered opinion that the --- 8 --- Settlement Commission is certainly jurisdictionally competent to decide an application preferred for Settlement but the least which was expected from the Commission and the authorities is to provide an opportunity of hearing to the petitioner who was before them. In similar circumstances, this Court in W.P.No. 1707/2015 has passed the following order : W. P. No.1707/2015 10.02.2016 Shri P. M. Choudhari, learned counsel for the petitioner.Shri P. Prasad, learned counsel for the respondents. Heard. By this writ petition, under Article 226 of the Constitution of India, the petitioner is challenging the order dated 30.12.2014 (Annexure-P/1) passed by the Settlement Commission in Settlement Application No.4088/2014 to 4090/2014 dated 03.03.2014. 2. Learned counsel for the petitioner has drawn our attention to Page- 0 of the writ petition and submits that hearing in the settlement application took place on 11.09.2014 and 13.10.2014 and on both the dates, Shri Pradeep Asawa, C.A., representative of the petitioner was present and thereafter, the matter was closed for orders. In between, the Settlement Commission directed the Revenue to file certain documents. In pursuant to the aforesaid direction, on 11.12.2014, the respondents submit that application as desired by the Bench and on the basis of aforesaid calculation, interest liability has been revised. On coming to know about the same, the petitioner has filed additional submissions on 22.12.2014 (Annexure-P/4) but the Settlement Commission without giving any opportunity of hearing to the petitioner, passed the impugned order dated 30.12.2014. 3. The sole contention of the learned counsel for the petitioner is that the aforesaid calculation was filed on 11.12.2014 at the back of the petitioner and therefore, an 3. The sole contention of the learned counsel for the petitioner is that the aforesaid calculation was filed on 11.12.2014 at the back of the petitioner and therefore, an opportunity should be granted to the petitioner to explain the same. To support the aforesaid, he has placed reliance to the decision of Apex Court in the case of Aurangabad Electricals (P) Ltd. vs. Commissioner of Central Excise and Customs, Aurangabad reported in 2011 (1) STD 118 wherein, the Apex Court while reserving the order passed by the Tribunal observed that the technicalities should not defeat rendering of complete justice to a litigant and remanded the case to the Tribunal for fresh consideration. Para-11 of the judgment is relevant, which reads as under :-11. The learned senior counsel for the assessee would submit that the adjudicating commissioner and the Tribunal has non-suited the appellants mainly on the ground that the appellants and M/s. Bajaj have neither supplied the details of final product and the landed cost of the material supplied during investigation nor in their reply to the show cause notice. It is also observed that the appellants did not produce any material/data as to actual expenses incurred on account of freight, loading, unloading charges, profit margin etc. The learned senior counsel would submit that the appellants could have supported their defence pleaded in their objections filed to the show cause notice by producing relevant documents including the certificate issued by its chartered accountant but due to unavoidable and unforeseen circumstances, they could not produce the same. It is submitted that this lapse should not be put against the appellants and non-suit them only on this ground. In support of his submission, he would draw our attention to the Certificate issued by the Chartered Accountant in respect of valuation of normal price of Magneto Assemblies manufactured and sold by M/s. Aurangabad EL to M/s Bajaj in wholesale, which was in support of costing. The said Certificate issued by Mukund Mankar and Co., Chartered Accountant, points out freight charges incurred by M/s. Aurangabad EL for getting material from Bajaj to M/s. Aurangabad EL, as well as loading and unloading charges, consumables overheads and profit. If such payment was made, then the whole premises on which show cause notice issued pales into insignificance. The appellant had produced the Certificate along with the other papers filed before the Tribunal, may be after the appeals were heard and reserved for judgment. In the normal course, we would not have accepted either the submission of the learned senior counsel or we would have taken note of the Certificate. Keeping in view the well settled principles laid down by this Court that technicalities should not defeat rendering of complete justice to a litigant, we think it appropriate to remand the --- 10 --- matter to the Tribunal to verify and consider whether the Certificate which is already placed on record by the appellant, would assist them in support of their defence.4. In view of the aforesaid and considering the fact that admittedly, no opportunity has been granted to the petitioner and, therefore, we allow the prayer and direct the Settlement Commission to consider the additional submissions of the petitioner filed on 22.12.2014 and after granting opportunity of hearing to the petitioner, pass an appropriate order within a period of two months from the date of filing of certified copy of the order. Till then, the impugned order 30.12.2014 (Annexure-P/1) shall be kept in abeyance. It is made very clear that we have not expressed any opinion on the merits of the case.5. With the aforesaid, the writ petition is disposed of. Resultantly, this Court is of the considered opinion that Resultantly, this Court is of the considered opinion that as proper opportunity of hearing was not given to the petitioner, the matter is remanded back to the Settlement Commission, New Delhi to hear the petitioner afresh and pass fresh order in accordance with law. It is needless to mention that this Court has not observed anything on the merits of the case and the parties shall be free to place all grounds and facts before the Commission and the Commission shall also be free to grant an opportunity of hearing to the petitioner and shall also permit the petitioner to file additional reply keeping in view the report submitted by the TPO. Accordingly, the present Writ Petition stands allowed. KR --- 11 --- Impugned order dated order dt. 24/2/2016 passed u/S. 245D(4) of the Income Tax Act, 1961 as also the subsequent order dt. 22/9/2016 passed u/S. 245D(6B) of the Income Tax Act, 1961 are hereby quashed. It is further clarified that the matter is remanded only on the limited issues in respect of the report so submitted by the TPO and the rejoinder filed by the petitioner. Other issues are not touched by the petitioner nor by the Department and the same have not been dealt with by this Court. The petition stands allowed. No order as to costs. (S. C. SHARMA)J U D G E (RAJEEV KUMAR DUBEY)J U D G E