GXS INDIA TECHNOLOGY V. DEPUTY COMMISSIONER OF

WP/22243/2021

AI Insights

The case involves GXS India Technology Centre Private Limited, which filed a writ petition against the Deputy Commissioner of Income Tax and others, challenging the legality of various assessment orders and notices issued under the Income Tax Act, 1961. The petitioner argued that the draft assessment order was passed without considering their submitted response, violating principles of natural justice. Additionally, it was contended that the final assessment order was passed without awaiting directions from the Dispute Resolution Panel (DRP), which was against the procedural law. The court found merit in the petitioner's arguments, leading to the quashing of the impugned orders and remitting the matter back for a fresh assessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 732808 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 25-08-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SANMATHI
• Assessee Lawyers: DEEPIKA AGARWAL
• Keywords: Assessment Order; Dispute Resolution Panel; Income Tax; Natural Justice; Writ petition
• Section: 143(3); 144C(5); 270A; 156

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF AUGUST, 2022 BEFORE THE HON’BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.22243/2021 (T-IT) BETWEEN: GXS INDIA TECHNOLOGY CENTRE PRIVATE LIMITED, THE_V_ PLOT_ NO_ 17 BUILDING_ D_ MARNIER, SOFTWARE_ UNITS_ LAYOUT MADHAPUR SHAIKPET, HYDERABAD – 500 081, TELANGANA, INDIA. REPRESENTED BY ITS DIRECTOR, MR. NEWTON ISAAC RAJKUMAR, AGED ABOUT 54 YEARS, R/AT NO.611, NAVADEWEEPA, PRITHVI BLOCK, MADHAPUR, HYDERABAD – 500 081. ...PETITIONER (BY MS. DEEPIKA AGARWAL, ADVOCATE FOR SRI. MOHAN MAIYA G.L., ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1), BMTC BUILDING, KORAMANGALA, BANGALORE – 560 034, KARNATAKA. - 2 - 2. PR. COMMISSIONER OF INCOME TAX – 3, BMTC BUILDING, KORAMANGALA, BANGALORE – 560 034, KARNATAKA. 3. THE ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME - TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, C – BLOCK, 4TH FLOOR, S.P.M. CIVIC CENTRE, NEW DELHI – 110 001. ...RESPONDENTS (BY SRI. SANMATHI E.I., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED ORDER DATED 09.11.2021 ALONG WITH CONSEQUENTIAL DEMAND NUMBER DATED 09.11.2021 AND PENALTY NOTICE DATED 09.11.2021 ISSUED BY RESPONDENT NO.3 WHICH IS PRODUCED AT ANNEXURE-A AS BEING ILLEGAL AND UNSUSTAINABLE IN LAW AND ETC., THIS WRIT PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R In this petition, petitioner has sought for the following reliefs: (i) Issue appropriate writ certiorari and/or any other appropriate writ, direction quashing the impugned order No. ITBA/ AST/S/ 143(3)/ 2021-22/ 1036788250(1) dated 09.11.2021 along with consequential demand ITBA/ AST/S/ 156/ 2021- 22/ 1036788322(1) dated 09.11.2021 and penalty notices ITBA/PNL/S/270A/2021-22/1036788386(1) - 3 - DATED 09.11.2021 issued by Respondent No.3, which is produced at Annexure 'A', as being illegal and unsustainable in law; (ii) Issue appropriate writ certiorari and/or any other appropriate writ, order or direction quashing and setting aside draft assessment order No.ITBA/AST/F/ 144C/ 2021-22/ 1035895475(1) dated 25.09.2021 passed by Respondent No.3, which is produced at Annexure 'M', as being illegal and unsustainable in law; (iii) Issue a writ of Prohibition/ Mandamus or any other appropriate writ, order or direction staying operation of the impugned order No. ITBA/AST/S/ 143(3)/2021-22/1036788250(1) dated 09.11.2021 vide Annexure-A passed by Respondent No.3 pending the hearing and final disposal of this petition; (iv) Issue writ of Certiorari and/or any other appropriate writ, order or direction quashing and setting aside Ld. Dispute Resolution Panel order Direction under section 144C(5) of the Income tax Act, 1961 in DIN No. ITBA/DRP/M/ 144C(5)/ 2022- 23/ 1043699887(1) and in F. NO.240/DRP-1/ BNG/ 2021-22 dated 30.06.2022 which is produced at Annexure S being unsustainable and unlawful in the interest of justice and equity. (v) Issue a Writ of Prohibition/Mandamus or any other appropriate writ, order or direction prohibiting Respondent No.1, Respondent No.2, and Respondent No.3 from initiating any recovery proceedings against the Petitioner pending the hearing and final disposal of this petition; (vi) Issue any other writ, order or direction in favour of the Petitioner, which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case. 2. Heard Ms. Deepika Agarwal, learned counsel for Sri. Mohan Maiya G.L., learned counsel for the - 4 - petitioner and Sri. Sanmathi E.I., learned counsel for the respondents and perused the material on record. 3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, the learned counsel for the petitioner invites my attention to draft assessment order dated 25.09.2021 at Annexure-M in order to point out that respondent No.1 proceeded to pass the impugned order on the basis that no submission was received from the petitioner/assessee in respect of queries putforth by the respondent No.1. In this context, it is submitted that prior to the aforesaid draft assessment order dated 25.09.2021, the petitioner had submitted its detailed response/ submission/ reply on 22.09.2021 itself as can be seen from the Annexure-L dated 22.09.2021. It is therefore submitted that the impugned draft assessment order without taking into consideration the response/ submission/ reply dated 22.09.2021 submitted by the petitioner is factually incorrect and inviolation of principles of natural justice and the same deserves to be quashed. - 5 - 4. Secondly, it is submitted that aggrieved by the impugned draft assessment order, the petitioner submitted his objections before Dispute Resolution Panel (DRP) and the final assessment order passed by respondent No.1 without awaiting directions from the Dispute Resolution Panel before whom the matter was pending is wholly without jurisdiction or authority of law apart from being illegal and arbitrary and the same deserves to be quashed on this ground also. 5. Thirdly, learned counsel for the petitioner submits that at the time of preferring the present petition, the Dispute Resolution Panel had not passed any orders on the objections filed by the petitioner to the draft assessment order. However, during the pendency of the petition, when the matter was sub-judice, since there was no interim order passed by this Court in relation to the Dispute Resolution Panel proceedings, the Dispute Resolution Panel has proceeded to pass the impugned order at Anneuxre-S dated 30.06.2022 and the legality, validity and correctness of the same has also been questioned by the petitioner in the petition by way of an - 6 - amendment. It is therefore, submitted that impugned orders at Annexures- A, M and S deserve to be quashed. 6. Per contra, learned counsel for the respondent submits that there is no merit in the petition and the same is liable to be dismissed. 7. I have given my anxious consideration to the rival submissions and perused the material on record. 8. As rightly contended by the learned counsel for the petitioner, a perusal of the impugned draft assessment order at Annexure-M will clearly indicate that respondent No.1 has proceeded on the erroneous basis that the petitioner had not submitted the reply/ response/ submission to the queries putforth by the respondent No.1 as recorded in the impugned order. The said finding recorded by the respondent No.1 is factually incorrect inasmuch as prior to the draft assessment order 25.09.2021, the petitioner had already submitted its response as evident from the submission/ reply/ response dated 22.09.2022 submitted by the petitioner. Under these circumstances, it is clear that the impugned draft - 7 - assessment order which proceeds on the erroneous premise that the petitioner had not submitted his response is illegal, arbitrary and violative of principles of natural justice and the same deserves to be quashed. 9. Learned counsel for the petitioner is also correct in her submission that pursuant to the petitioner filing his objections to the draft assessment order, the DRP had not issued any directions nor passed any order on the objections filed by the petitioner and consequently, the respondent No.1 did not have jurisdiction or authority of law in proceeding to pass the final assessment order without awaiting directions from the DRP before whom the matter was pending consideration. Under the circumstances also the impugned final assessment order Annexure-A is illegal, arbitrary, vitiated and the same deserves to be quashed. 10. Insofar as the impugned assessment order dated 30.06.2022 passed by the DRP during the pendency of the present petition is concerned, in view of setting aside of the draft assessment order and the final assessment order passed by the respondent No.1 as stated - 8 - supra, the impugned order of the DRP at Annexure-S dated 30.06.2022 which has come into existence during the pendency of the present petition also deserves to be quashed. 11. In the result, I pass the following: ORDER (i) The petition is hereby allowed. (ii) The impugned draft assessment order dated 25.09.2021 at Annexure-M and impugned Final Assessment Order dated 30.06.2022 at Annexure-S passed by the Dispute Resolution Panel of the respondents are hereby quashed. (iii) The matter is remitted back to the respondent No.1 - Deputy Commissioner of Income Tax to reconsider the matter afresh and to pass fresh/ new draft assessment order after providing sufficient and reasonable opportunity to the - 9 - petitioner and giving him personal hearing in accordance with law. (iv) Consequent, upon quashing the impugned orders at Annexures-A, M and S referred to supra, the impugned notices at Annexure-T and Annexure- U dated 22.07.2022 produced along with I.A.No.4/2022 are also hereby quashed. Sd/- JUDGE JS/- "