Dongfang Electric Corporation Ltd. V. Commissioner of Income Tax

WP/36007/2024

AI Insights

The case involves Dongfang Electric Corporation Ltd., a company based in China, which filed writ petitions against the rejection of their applications under the Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSV Scheme, 2024) by the Income Tax Department. The petitions challenged the rejection orders dated 05-12-2024 for various assessment years, claiming that the rejections were illegal, arbitrary, and violative of principles of natural justice. The main contention was that the DTVSV Scheme, 2024, which allows for tax payment and waiver of interest and penalties, was not being properly applied, and that the scheme overrides previous schemes, specifically the DTVSV of 2020. The court found that the rejection orders were cryptic and lacked adequate reasoning, thus failing to meet the standards required for judicial scrutiny.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 690861 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 07-01-2025
• Assessment Year: misc
• Other Referred Cases: Mohindhr Singh Gill and Another v. Chief Election Commissioner, New Delhi and others, Kranti Associates (Pl) Ltd. v. Masood Ahmed Khan, Kalinga Mining Corp. v. Union of India
• Laws Referred To: Constitution of India, Income Tax Act, 1961, DTVSV Scheme, 2024, DTVSV Scheme, 2020
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIJAY PUNNA; GADI KUMAR
• Assessee Lawyers: C V NARASIMHAM
• Keywords: DTVSV Scheme; Income Tax; Refund of taxes; Rejection Order; Writ of Mandamus
• Section: 263; 90; 91; 226

Judgement Text

"[ 3430 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI WRIT PETITION Nos. 35796. 36006 AND 36007 0F 2024 WRIT PETITION NO: 35796 OF 2024 Between: Dongfang Electric Corporation Ltd., 18, Xixin Avenue, High Tech West Park Chengdu, Sichuan, China Pan No. AADCD7492F Rep. by Authorised Signatory Mr. Rajesh Vaishnav aged about 30 years S/o. Satyanarayan Vaishnav, No 4-3-428, Hanuman Tekdi, Hyderabad. ..PETITIONER AND 1 Commissioner of lncome Tax, lnternational Taxation and Transfer Pricing Sth floor, Aayakar Bhavan Basheerbagh, Hyderabad - 500004 Commissioner of lncome Tax Appeal CIT (A), Hyderabad-10 6th floor, Aayakar Bhavan Basheerbagh, Hyderabad - 500004 3- Union of lndia, Rep. by its Secretary, Department of Revenue, lVinistry of Finance, North Block New Delhi - 1 10001 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue Writ Order or Direction more particularly in the nature of Writ of Mandamus declaring the impugned Rejection dated 05-12-2024 tor A.Y.20'13-14 passed by 1't respondent as being illegal, arbitrary, inconsistent, violative of principles of natural justice, without jurisdiction, without authority of law and violative of Articles 14, 19 (1) g and 265 of Constitution of lndia and contrary to provisions of DTVSV Scheme, 2O24 and consequently set aside the impugned Rejection daled 05-12-2024 passed by 1't respondent in petitioner's application in Form-l dated 20-11-2024 bearing Acknowledgement No.718693360201124 fot 2 TUESDAY, THE SEVENTH DAY OF JANUARY TWO THOUSAND AND TWENry FIVE t\"')--- A.Y.2013-14 filed under DTVSV Scheme, 2024 and direct the 1st respondent to accept the Form-1 of the Petitioner and issue Form-2 fol|00 percentage tax payment and waiver of interest and penalty and permit to file Form-3 and issue Form-4 for final settlement under DTVSV Scheme, 2024. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings including the Appeal pending before the 2nd respondent and revision under section 263 pending before the 1st respondent, for A.y.2013- 14, till further orders of this Hon'ble Court. lA NO: 2 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the impugned rejection dated 05-'12-2024 and direct the 1st respondent to treat the application filed under Form-1 dated 2O-11-2024 bearing Acknowledgement No.718693360201 124 under DTVSV Scheme, 2024 as pending, till disposal of this wdt petition. Counsel for the Respondent Nos.1 and 2: SRMJHAY K PUNNA (sENtoR sc FOR lTD) Counsel forthe Respondent No.3: SRI cADl PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL WRIT PETITION NO: 36006 OF 2024 Between: Dongfang Electric Corporation Ltd., 18, Xixin Avenue, High Tech West park Chengdu, .Sich-uan, China Pan No. AADCD7492F R6p. by Authorised Signatory l4r .&jg:|, Vaishnav aged about 30 years S/o. Satyanarayan Vaishnav. No 4-3-428, Hanuman Tekdi, Hyderabad- ,..PETITIONER AND Counsel for the Petitioner: SRI C.V. NARASIMHAM, APPEAR FOR SRI MOHD MUKHAIRUDDIN 't . Commissioner of lncome Tax, lntemational Taxation and Transfer Pricing 5th floor, AayakarBhavan Basheerbagh, Hyderabad - 500004 2. Commissioner of lncome Tax Appeal CIT (A), Hyderabad-10 Oth floor, Aayakar Bhavan Basheerbagh, Hyderabad - 500004 3. Union of lndia, Rep. by its Secretary, Department of Revenue, Ministry of Finance, North Block New Delhi - 1 10001 ..,RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue writ order or Direction more particularly in the nature of writ of Mandamus declaring the impugned Rejection dated 05-12-2024'for A.Y.2014-15 passed by 1st respondent as being illegal, arbitrary, inconsistent' violative of principles of natural justice, without jurisdiction, without authority of law and violative of Articles 14, 19 (1) g and 265 of Constitution of lndia and contrary to provisions of DTVSV Scheme, 2024 and consequently set aside the impugned Rejection dated 05-12-2024 passed by 1sr respondent in petitioner's application in Form-1 dated 2O-11-2024 bearing Acknowledgement No.718826700201124 lor A.Y.2O14-15 filed under DTVSV Scheme, 2024 and direct the 1sr respondent to accept the Form-1 of the Petitioner and issue Form 2 for 100 percentage tax payment and waiver of interest and penalty and permit to file Form-3 and issue Form-4 for final settlement under DTVSV Scheme, 2024. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the impugned rejection dated 05-12-2024 and direct the 1sr respondent to treat the application filed under Form-1 dated. 2O-11-2024 bearing Acknowledgement No.718826700201124 under DTVSV Scheme, 2O24 as pending, till disposal of this writ petition. lA NO: 2 OF 2024 Petition under section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to stay all further proceedings including the Appeal pending before the 2nd respondent -- 3.- and revision under section 263 pending before the 1st respondent , 'for A.Y.2O14' 15, till further orders of this Hon'ble Court. Counsel for the Petitioner: SRI C.V. NARASIMHAM, APPEAR FOR SRI MOHD MUKHAIRUDDIN Counsel for the Respondent Nos.1 and 2: SRI VIJHAY K PUNNA (sENroR sc FoR ITD) Counsel for the Respondent No.3: SRI GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL WRIT PETITION NO: 36007 OF 2024 Between: Dongfang Electric Corporation Ltd., 18, Xixjn-Aven-ue, High Tech V.Ve.?t P.arkr Cheigdul Sichuan, China, Pan No. AADCD7492F, Rep. by Authorised Sionalorv, Mr. Raiesh Vaishnav, Aged about 30 years, S/o. Satyanarayan Va=ishnav, FJo 4-3-428, Hanuman Tekdi, Hyderabad. ...PETITIONER AND 1. Commissioner of lncome Tax, lnternational Taxation and Transfer Pricing sth Floor, Aayakar Bhavan, Basheerbagh, Hyderabad - 500004' 2. Commissioner of lncome Tax Appeal CIT (A), Hyderabad-'10 6th floor, Aayakar Bhavan Basheerbagh, Hyderabad - 500004. 3. Union of lndia, Rep. by its Secretary, Department of Revenue, Ministry of Finance, North Block, New Delhi - 1 10001 . ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue Writ Order or Direction more particularly in the nature of Writ of Mandamus declaring the impugned Rejection dated 0511212024 lor A-Y -2015-16 passed by 1st respondent as being illegal, arbitrary, inconsistent, violative of principles of natural iustice, without jurisdiction. without authority of law and violative of Articles 14, 19 (1) g and 265 of Constitution of lndia and contrary to provisions of DTVSV Scheme, 2024 and consequently set aside the impugned Rejection daled o't1212024 passed by 1 st respondent in petitioners application in Form-1 dated 2o11112024 bearing Acknowledgement No.71875982O201124 lor A.Y.2015-16 filed under DTVSV Scheme, 2024 and direct the 1st respondent to accept the Form-l of the Petitioner and issue Form-2 for 100 percent tax payment q-- and waiver of interest and penalty and permit to file Form-3 and issue Form-4 for final settlement under DTVSV Scheme. 2024. lA NO: 1 OF 2024 Petition under Section l5'l CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the impugned rejection dated O511212024 and direct the 1st respondent to treat the application filed under Form-'t dated 2011112014 bearing Acknowledgement No.718759820201124 under DTVSV Scheme 2024 pending, till disposal of this writ petition. lA NO: 2 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings including the Appeal pending before the 2nd respondent and revision under section 263 pending before the 1st respondent' for A.Y.201 5- 16, till further orders of this Hon'ble Court. Counsel for the Petitioner: SRI MOHD MUKHAIRUDDIN Counsel for the Petitioner: SRI C.V. NARASIMHAM, APPEAR FOR SRI MOHD MUKHAIRUDDIN Counsel for the Respondent Nos.1 and 2: SRI VIJHAY K PUNNA (sENloR sc FoR lrD) Counsel for the Respondent No.3: SRI GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL The Court made the following: COMMON ORDER q THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI WRIT PETITION Nos.35796 36006 AND 36007 0F 2024 COMMON ORDER; (per Hon'ble Si Justice Sujog Paul) Sri C.V.Narasimham, learned Senior Counsel appears for Sri Mohd Mukhairuddin, learned counsel for the petitioner and Sri Vijhay K Punna, learned Senior Stalding Counsel for Income Tax Department appears for respondent Nos-1 and 2. 2. With the consent hnally heard. 3. Regard being had to the similitude of the questions involved, ttrese matters were analogously heard and decided by this common order. 4. The facts are taken from WP.No.35796 ol 2024. The petitioner was subjected to assessment for the Assessment Year 2OI3-2O14 and assessment order (Annexure P.4) was passed on 78.05.2022 determining the attributable income in India to the tune of 10%. The petitioner received a notice dated 16.06.2O23 under Sectioo 263 of the lncome Tax Act, 1961 proposing revision of percentage to the tune of 25'k. 5. Learned counsel for the petitioner informed that against the said notice, WP.No.33230 of 2023 and batch were filed, which were subsequently withdrawn with liberty to avail the remedy 2 under the Direct Tax Viuad Se Vishrrcs Scheme, 2o24 ( Scheme of 2024). Learned counsel further submits that the petitioner preferred an application online in prescribed form under Section 91 of the said scheme. The petitioner has paid the requisite amount before filing the application under Section 9 1 of the scheme, which can be gathered from part-E of the application (Annexure P.3). By taking this Court to part-F of said application, which as per contention of petitioner is an auto generated amount determined by the Department, an amount of Rs.-2,07,58,934 / - was refundable. The petitioner was shocked to receive the rejection order captioned as \"rejection remarks\". Learned counsel for the petitioner submits that \"rejection remarks\" are not properly worded. It gives an impression as if the Scheme of 2024 does not override the Scheme DTVSV of 2O2O (Scheme of 2O2O), whereas, a plain reading of Section 90 of Schem e of 2024 makes it clear that it is pregnant with a non-obstante clause, which has an overriding effect not only on income tax, but, also on any other law which was in force. Thus, it has over riding effect even on the Scheme of 2020. Section gaQl was heavily relied upon to submit that tax is very much refundable, if conditions are satisfied. Thus, the impugned order is bad in law. ili I I I 3 6- It is submitted that the impugned order is sought to be supported by assigning different and supplementary reasons in the counter, which cannot be taken into account in view of the Constitution Bench Judgment of Supreme Court in Mohindhr Siagh GiIl and Another v. Chief Election Commissioner, New Delhi and othersr. 7. karned Senior Standing Counsel for Income Tax supported the impugned order and submits that the counter shows the decision taken by \"rejection remarks\" is in consonance with law. 8. The parties have confined their arguments to the extent indicated above. g. We have heard the parties at length and pemsed the record' The imPugned order reads thus: (Rejection rematks: The assessee's Issues retated to disputes and taxes settled in DTVsV 202O, but violates conditions of the same including no refund of taxes paid. DTVsV 2024 does not override the DTVsV 2O2O and has to be read harmoniously with it. Hcnce , the form I is rejected' Rejection date: 05-Dec-2O24\" t (19?8) I Supreme Coun Cases 405 4 10. Before dealing with the contents of the \"rejection remarks\", we deem it proper to deal with the argument of learned Senior Standing Counsel for Income Tax based on the counter frled in this matter. In Mohindhr Singh Gill's case supra, the Constitution Bench made it clear that validity of al order of a statutory authority must be .yudged on the basis of reasons assigned in the order and new reasons cannot be provided by filing counter affidavit in the Court. The relevant portion reads thus: mentioned and cannot be supplemented by fresh rqanons in the shape of affldavit or otherwise. Otherwise , an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additiona.l grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji: \"Public orders, pubticly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the oflicer making the order of what he meant, or of what was in his mind, or what he intended to do. Pubiic orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively w'ith reference to the language used in the order itselL \" Orders are not like old wine becoming better as they lqrow older.\" (Emphasis Supplied) 'a. The second equallv relevalt matter is that when a statutory functionary makes an order based on certain grounds. its validity must be iudged bv the reasons so 5 11. The lau, laid down by Constitution Bench in Mohindhr Singh GiII's case supra is still a good law. Thus, the reasons assigned in the counter, which does not form part of rejection order will not instill life or improve the rejection order. Thus, we are not inclined to enter on those reasons and deem it proper to examine the reasons given in the \"rejection remarks\" 12. We may hasten to add that first line of 'rejection remarks\" is not happily worded. It is difficult to gather exact meaning of the first line. It is incomprehensible. However, the first line gives an impression as if something is settled pursuant to Scheme of 2O2O cannot result into refund of taxes paid. Assuming that this is the meaning arising therein, this needs to be examined in view of Section 90 of the Scheme which reads thus \"90. Subject to the provisions of this Scheme, where a declarant liles under the provisions of this Scheme on or before the last date, a declaration to the designated authority in accordance with the provisions of section 91 in respect of tax arrear, then, notwithstandinq anvthing contained in the Income-tax Act or anv other law for the time being in force, the amount payable by the declarant under this Scheme shall be as mentioned in the Table below...\" (Emphasis Supplied) 13. The second reason in the \"rejection remarks\" is that the Scheme of 2024 does not override the Scheme of 2O2O. This 6 reason is also required to be relooked in the light of language employed in Section 90 reproduced hereinabove. In the considered opinion of this Court, the impugned order is too sketchy, too short and too crSptic in nature. The ?easons' are held to be heart beat of the tonclusions'. In the absence of reasons, conclusions cannot sustain judicial scrutiny. The Supreme Court in Kranti Associates (Pl Ltd. v. Masood Ahmed Khan2 emphasized the need of assigning reasons in administrative, quasi judicial and judicial orders. Relevant para reads thus: \"47. Summarising the above discussion, this Court holds: (a) In India the judicial trend reasons, even in administrative alfect anyone prejudicially. has always been to record decisions, if such decisions (Q Insistence on recording of rcasons is meant to serve the wider principte of justice that justice must not only be done it must also appear to be done as well. (@ Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial ald quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerat ions. '(2oro) 9 scc 496 (b) A quasi-judicial authority must record reasons in support of its conclusions. 7 (f Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior courts (h) The ongoing judicial trend in all countries committed to rule of law and constitutiona-l governance is in favour of reasoned decisions based on relevant facts. This is virtually the tifeblood of judicial decision-making justifoing the principle that reason is the soul ofjustice. fuJ Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is in:possible to know whether the person deciding is faithful to the (loctnne of precedent or to principles of incrementalism. (/) Reasons in support of decisions must be cogent. clear and succinct. A pretence of reasons or \"rubber-stamp reasons. is not to be equated with a valid decision-making process. (m) lt cannot be doubted that transparency is the sinc qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges an