IBM India Private Limited V. The Commissioner of Income-Tax Large Tax Payers Unit

WP/5042/2013

AI Insights

IBM India Private Limited filed writ petitions against the Commissioner of Income-Tax, challenging the show cause notices issued under Section 263 of the Income Tax Act, 1961, for the assessment years 2006-07 and 2007-08. The notices were intended to initiate revisionary proceedings against the assessment orders passed by the Assessing Officer under Section 143(3) of the Act. The petitioner argued that the notices were vague and did not specify the infirmities in the assessment orders, thus failing to meet the legal standards required for such notices. The court agreed with the petitioner, noting that the notices lacked the necessary details to allow for an effective response, and thus quashed them, allowing for the possibility of issuing new notices that comply with legal requirements.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 794289 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-03-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: T SURYANARAYANA; SANDEEP HUILGOL
• Keywords: Assessment Order; Dispute Resolution Panel; Jurisdiction; Revisionary proceeding; Show cause notices
• Section: 143(3); 263; 226

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 20th DAY OF MARCH, 2013 BEFORE THE HON'BLE MR.JUSTICE RAM MOHAN REDDY WRIT PETITION NO. 5042 OF 2013 (T-IT) C/W WRIT PETITION NO. 5043 OF 2013 (T-IT) BETWEEN: IBM INDIA PRIVATE LIMITED (FORMERLY IBM GLOBAL SERVICES INDIA PVT. LTD) No. 12, SUBRAMANYA ARCADE BANNERGHATTA ROAD BANGALORE - 560 029 REP.HEREIN BY ITS DIRECTOR MR. RAVIKUMAR RAMANAN AGE 52 YEARS. … PETITIONER COMMON (BY SRI. T SURYANARAYANA AND SANDEEP HUILGOL, ADVOCATES) AND : THE COMMISSIONER OF INCOME-TAX LARGE TAX PAYERS UNIT JSS TOWERS, 100 FEET RING ROAD BANASHANKARI 3RD STAGE BANGALORE - 560 085. … RESPONDENT COMMON (BY SRI. K V ARAVIND, ADVOCATE) 2 W.P.5042/13 IS FILED UNDER ARTICLE 226 OF CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE IMPUGNED PROCEEDINGS INITIATED BY THE RESPONDENT UNDER SECTION 263 OF THE ACT IN RESPECT OF THE ASSESSMENT YEAR 2006-07 IS OPPOSED TO THE SAID PROVISION AND THEREFORE WITHOUT JURISDICTION; AND ETC. W.P. 5043/13 IS FILED UNDER ARTICLE 226 OF CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE IMPUGNED PROCEEDINGS INITIATED BY THE RESPONDENT UNDER SECTION 263 OF THE ACT IN RESPECT OF THE ASSESSMENT YEAR 2007-08 IS OPPOSED TO THE SAID PROVISION AND THEREFORE WITHOUT JURISDICTION; AND ETC. THESE WRIT PETITIONS ARE COMING ON FOR PRL.HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Common question of law and that of fact arise for decision making, hence with the consent of the learned Counsel for the parties, petitions are clubbed together, finally heard and are disposed of by this order. 3 2. Petitioner is aggrieved by the Show Cause Notices issued by the Commissioner of Income-Tax, Large Tax Payers Unit, invoking Section 263 of the Income Tax Act, 1961 (for short, ‘the Act’) in the matter of orders passed by the Assessment Officer under Section 143(3) of the Act for the assessment years 2006- 07 and 2007-08. 3. There is force in the submission of the learned senior counsel for the petitioner that in the absence of recording an opinion over why the orders of assessment require initiation of revisionary proceeding, the mere expression that certain items of expenses etc., “need to be examined” does not satisfy the requirement of the issue of Show Cause Notices, under Section 263 of the Act. Having perused the Show Cause Notices impugned undoubtedly, the Commissioner of Income Tax, without disclosing the exact nature of the infirmity noticed in the orders under Section 143(3) of 4 the Act of the Assessing Officer opined that show cause notices are necessary since there is a need to examine the said order on certain aspects. 4. Learned senior counsel hastens to add that the Dispute Resolution Panel (for short, ‘DRP’ ), having already considered various aspects of the objections raised by the petitioner over the draft assessments, which when resolved followed by an assessment order of the Assessing Officer, the Commissioner of Income Tax has no jurisdiction to initiate a revisionary proceeding in substitution of the orders passed by the DRP. If that is so, it is open for the petitioner to point out in the explanation to the show cause notices over such orders of the DRP. 5. Suffice it to state that the show cause notices impugned do not satisfy the requirement of law and therefore, liable to be quashed, reserving liberty to the Commissioner of Income Tax to issue show cause 5 notices afresh, comprehensively including all such infirmities as are noticed by him in the orders passed under Section 143(3) of the Act, so as to enable petitioner to file effective explanation. Petitions are ordered accordingly. Sd/- JUDGE sma "