M/S.alden Prepress Services Private Limitedrep. By Its Managing Directorshri.r.gowrishanker'b' Block, 20[Th] North Usman Roadt.nagarchennai – 600 017 v. Deputy Commissioner Of Income Tax Transfer Pricing Officer Iv

In the High Court of Judicature at Madras Dated : 12.07.2018 Coram : The Honourable Mr.Justice T.S.SIVAGNANAMWrit Petition No.13815 of 2011 and WMP.Nos.7943 and 7944 of 2017 M/s.Alden Prepress Services Private LimitedRep. by its Managing DirectorShri.R.Gowrishanker'B' Block, 20[th] North Usman RoadT.NagarChennai – 600 017 ... Petitioner Vs 1.Deputy Commissioner of Income Tax Transfer Pricing Officer IV 121, Mahatma Gandhi Road Chennai – 600 034 2.Deputy Commissioner of Income Tax Company Circle I (1) No.121, Mahatma Gandhi Road Chennai – 600 034 ...Respondents Writ petition filed under Article 226 of The Constitution ofIndia praying for the issuance of a Writ of CertiorarifiedMandamus to call for the proceedings under Section 92CA(2) inC.R.No.TPO-IV/A.Y 2007-08 dated 23.03.2011 on the file of the 1[st]respondent, quash the same and further to direct the secondrespondent to dispose all the objections filed by the petitionerin terms of Section 152(2) of the Act. For Petitioner : Mr.R.Sivaraman For Respondents: Ms.Hema Muralikrishnan and Mr.Naveen Duraibabu ORDER Heard Mr.R.Sivaraman, learned counsel for the petitioner andMr.VMs.Hema Muralikrishnan and Mr.Naveen Duraibabu, learnedstanding counsels appearing for the respondents. https://hcservices.ecourts.gov.in/hcservices/ 2. The petitioner has filed this writ petition challengingthe proceedings of the first respondent dated 23.03.2011 issuedunder Section 92CA (2) of the Income Tax Act, 1961 and to directthe second respondent/Assessing Officer to dispose of theobjections filed by the petitioner under Section 152(2) of theAct. 3. The dispute in the instant case lies in a very narrowcompass. The second respondent vide notice dated 09.09.2009issued under Section 148 of the Act proposed to reassess theincome for the Assessment year 2007-08. The petitioner, byrepresentation dated 05.10.2009, stated that the reopening ofthe assessment was not justified and sought reasons forreopening. Pursuant to such representation, the secondrespondent, vide letter dated 20.10.2009, communicated thereasons for re-opening on the following lines: “1. The Assesses company is in the business ofproviding typesetting services to its parent companylocated in United Kingdom. It is seen from the reportof the Accountant u/s.92E relating to internationaltransactions in Form 3CEB that the amount receivablefor the services rendered by the assessee to its parentcompany as computed having regard to the arms lengthprice is Rs.18,11,61,271, as against an amount ofRs.13,95,87,245/- recorded in the books of account.This information is available in Column No.10(c) of thereport in Form 3 CEB. 2.The arms length price as computed by theassessee by itself is higher than the saleconsideration received by the assessee from itsassociated enterprise situated outside India. However,no adjustment has been made by the assessee in thisregard in the memo of income. Therefore, I havereasons to believe that income chargeable to tax hasescaped assessment.” 4. On receipt of the reasons for reopening, the petitionersubmitted their objections dated 26.04.2010. When theobjections were pending disposal before the second respondent,the impugned notice dated 23.03.2011 has been issued by thefirst respondent under Section 92CA(2) of the Act. 5. The petitioner's case is that the second respondent isbound to dispose of the objections raised by the petitioner videletter dated 26.04.2010 and before the objections are disposedof, the first respondent, namely the Transfer Pricing Officer,has no jurisdiction to issue the impugned notice. 4. On receipt of the reasons for reopening, the petitionersubmitted their objections dated 26.04.2010. When theobjections were pending disposal before the second respondent,the impugned notice dated 23.03.2011 has been issued by thefirst respondent under Section 92CA(2) of the Act. 5. The petitioner's case is that the second respondent isbound to dispose of the objections raised by the petitioner videletter dated 26.04.2010 and before the objections are disposedof, the first respondent, namely the Transfer Pricing Officer,has no jurisdiction to issue the impugned notice. 6. The learned standing counsel appearing for therespondents would vehemently contend that when the reasons forre-opening were communicated, the Assessee filed a fresh formNo.3CEB and therefore, the second respondent had referred thematter to the first respondent for considering the transferpricing documents and therefore, the first respondent has issuedthe impugned notice. Only after the first respondent takes adecision in the matter, the second respondent would be in aposition to take a decision on the reopening proceedings. 7. In my considered view, the Assessing Officer has missedout a very important aspect with regard to powers exercisable bythe Assessing Officer and the powers exercisable by the TransferPricing Officer. Admittedly, the reopening of the assessmentfor the relevant years was at the instance of the AssessingOfficer and for the reasons set out in the letter dated20.10.2009. Therefore, if the second respondent had reason tobelieve that the income chargeable to tax is escaped assessment,upon objections being filed by the Assessee, the AssessingOfficer is bound to dispose of the objections in the mannerknown to law. In fact, it is the mandate as per the judgment ofthe Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. Vs.ITO [reported in (2003) 259 ITR 19]. Thus, it is onlythereafter, if the second respondent chooses to refer the matterto the Transfer Pricing Officer, such procedure could have beenadopted. Thus, without disposing of the petitioner's objectionby passing a speaking order, the second respondent could nothave straight away referred the matter to the first respondentfor consideration. This writ petition is disposed of by directing the firstrespondent to keep the impugned notice in abeyance and thesecond respondent is directed to dispose of the petitioner'sobjection dated 26.04.2010 by passing a speaking order andproceed in accordance with law. No costs. Consequently, theconnected miscellaneous petition is closed. gpa To 1.The Deputy Commissioner of Income Tax Transfer Pricing Officer IV 121, Mahatma Gandhi Road Chennai – 600 034. 2.The Deputy Commissioner of Income Tax Company Circle I (1) No.121, Mahatma Gandhi Road Chennai – 600 034. +1cc to Hema Muralikrishnan, Advocate Sr.45995 Writ Petition No.13815 of 2011 and MP.No.1 of 2011srg 25/07/2018