M/S.coastal Energy Pvt Ltd, Rep By Its Director Mr. Ahmed A.r.buhari v. Additional Joint Commissioner Of Income Tax, O/O Addl/Jcit Transfer Pricing Officer-I, Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.08.2020 CORAM THE HONOURABLE DR. JUSTICE ANITA SUMANTH W.P. Nos.34618, 34626, 34630, 34644, 34656, 34660, 34665 & 34668 of 2019AndWMP. Nos.35374, 35379, 35383, 35384, 35385, 35386, 35396, 35398, 35409, 35410, 35413, 35416, 35419, 35420, 35423 & 35425 of 2019 W.P. No.34618 of 2019 M/S.COASTAL ENERGY PVT LTD, Rep by its Director Mr. Ahmed A.R.BUHARI,No.4,Buhari Towers,Moores Road, Egmore, Chennai-6... Petitioner in all WPs Vs. 1. Additional Joint Commissioner of Income Tax, O/O ADDL/JCIT Transfer Pricing Officer-I, Room No 502, 5[th] Floor,Tower-, BSNL building 16, Greams Road, Chenani-600 006. 2. Assistant Commissioner of Income tax, Central circle-1(1), 121 Mahatma Gandhi Road, Nungambakkam, Chennai-34. .. Respondents in al WPs Prayer in WP No.34618 of 2019: Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent inpassing the Impugned order No ITBA/TPO/F/92CA3/2019-20/1019690595(1) for the Assessment year 2010-11 under Section92 CA(3) of the Income tax- act 1961 dated 1.11.2019 quash thesame as illegal arbitrary and devoid of merit. Prayer in WP No.34626 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/1019690595(1)FOR THE Assessment year 2011-12 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. https://hcservices.ecourts.gov.in/hcservices/ Prayer in WP No.34630 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/1019690049(1)FOR THE Assessment year 2012-13 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. Prayer in WP No.34644 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of the First respondent inpassing the impuged order No ITBA/TPO/F/92CA3/2019-20/1019690314(1) for the Assessment year 2013-14 under section92 CA(3) of the Income tax act 1961 dated 1.11.2019 quashthe same as illegal arbitrary and devoid of merit. Prayer in WP No.34656 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/1019691292(1)FOR THE Assessment year 2014-15 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. Prayer in WP No.34660 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/1019691186(1)FOR THE Assessment year 2015-16 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. Prayer in WP No.34665 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/10196/90912(1)FOR THE Assessment year 2016-17 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. Prayer in WP No.34660 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/1019691186(1)FOR THE Assessment year 2015-16 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. Prayer in WP No.34665 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/10196/90912(1)FOR THE Assessment year 2016-17 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. Prayer in WP No.34668 of 2019 : Writ Petition filed underArticle 226 of the Constitution of India praying Certiorari tocall for the records on the file of First Respondent in passngthe Impugned order No ITBA/TPO/F/92CA3/2019-20/10196/92142(1)FOR THE Assessment year 2017-18 under Section 92 CA(3) of theIncome tax- act 1961 dated 1.11.2019 quash the same as illegalarbitrary and devoid of merit. https://hcservices.ecourts.gov.in/hcservices/ C O M M O N O R D E R These Writ Petitions challenge orders dated 01.11.2019passed by R1/Transfer Pricing Officer (TPO) under theprovisions of Section 92 CA(3) of the Income Tax Act 1961 (inshort ‘Act’) in respect of Assessment Years (A.Y.) 2010-11 to2017-18. 2. The petitioner was in receipt of notices under Section148 of the Act alleging escapement of income. Whileproceedings for re-assessment were on-going, the petitionerapproached the Settlement Commission on 12.12.2018, whichapplication was rejected by order passed under Section 245D(1)dated 19.12.2018. A second application was filed on14.02.2019, which was also rejected at the stage of admissionby order dated 21.02.2019. A third application filed on16.04.2019 was treated as defective and rejected by orderdated 25.04.2019. Pursuant to the third rejection, a showcause notice dated 20.11.2019 was issued reviving theproceedings for assessment in terms of Section 245HA of theAct. 3. In the meantime, a reference was made to the TPO fordetermination of Arms Length Price (ALP) of internationaltransactions with associated entities. The TPO passed ordersdated 01.11.2019, impugned in these Writ Petitions. 4. At the outset, the affidavit filed in support of theseWrit Petitions is incomplete and bereft of the above narrationof events. It was left for the Court to glean thisinformation from the order of assessment dated 26.02.2020passed by the Assessing Officer in the course of hearing ofthese Writ Petitions. 5. Though the impugned orders have been challenged onseveral grounds, including the bar of limitation, before methe petitioner specifically restricts its challenge to theaspect of violation of principles of natural justice only,giving up all other grounds raised. 6. The following dates are relevant to decide thisissue. The first notice issued by the TPO is dated 26.08.2019,in response to which details were submitted on 12.09.2019. Ashow cause notice was issued thereafter on 29.10.2019 andreply thereto on 31.10.2019. The order of the TPO has beenpassed on 01.11.2019 within a day of the reply having beenfiled. Clearly, there has been no effective opportunityextended to the petitioner to respond to the show cause noticeand neither has there been any time for the TPO to haveapplied his mind to the response of the petitioner. Havingreceived the preliminary details under cover of reply datedhttps://hcservices.ecourts.gov.in/hcservices/ 12.09.2019, the show cause notice has been issued only on29.10.2019, nearly six (6) weeks thereafter. 12.09.2019, the show cause notice has been issued only on29.10.2019, nearly six (6) weeks thereafter. 7. The impugned orders are thus set aside on the groundof violation of principles of natural justice. Proceedingsshall be initiated de novo by R1 within a period of four (4)weeks from date of uploading of a copy of this order and onceinitiated, the petitioner shall be heard either over videoconference or by way of physical hearing, as may be mutuallyconvenient to the parties and proceedings shall be completedwithin eight (8) weeks of date of first hearing. 8. Pursuant to the third rejection by the SettlementCommission and the revival of proceedings for assessment, theAssessing Authority has passed an order of assessment dated26.02.2020 incorporating the order passed by the TPO dated01.11.2019 impugned in these Writ Petitions. By virtue of thesetting aside of the impugned order now and the direction tothe TPO to redo the transfer pricing component of theassessment alone, only the portion relating to the adjustmentto ALP at paragraph 6 of order dated 26.02.2020 will standsubstituted by the order to be passed by the TPO now and anorder (consolidated order of assessment) incorporating thesame shall be passed by the Assistant Commissioner of IncomeTax /R2 upon receipt thereof from the TPO and communicated tothe assessee. Limitation in regard to any challenge to thedetermination of ALP will run from date of service of theconsolidated order of assessment upon the assessee. 9. These Writ Petitions are disposed in the above terms.No costs. Connected Miscellaneous Petitions are closed. Sd/-Assistant Registrar(CS-III) //True copy// Sub Assistant Registrar slTo 1. Additional Joint Commissioner of Income Tax, O/O ADDL/JCIT Transfer Pricing Officer-I, Room No 502, 5[th] Floor,Tower-, BSNL building 16, Greams Road, Chenani-6. 2. Assistant Commissioner of Income Tax, Central circle-1(1), 121 Mahatma Gandhi Road,https://hcservices.ecourts.gov.in/hcservices/ Nungambakkam, Chennai-34. +1cc to Mr.AP.Srinivas, Advocate SR.No.28170 W.P. Nos.34618, 34626, 34630, 34644, 34656, 34660, 34665 & 34668 of 2019AndWMP. Nos.35374, 35379, 35383, 35384, 35385, 35386, 35396, 35398, 35409, 35410, 35413, 35416, 35419, 35420, 35423 & 35425 of 2019 NRL(CO)GMY(23/09/2020)