PETROFAC INTERNATIONAL (UAE) LLC V. ASSISTANT COMMISSIONER OF INCOME TAX

CWP/21788/2021

AI Insights

The case involves Petrofac International (UAE) LLC, which filed petitions against the Assistant Commissioner of Income Tax, challenging the hastiness and procedural inadequacies in the assessment orders issued under the Income Tax Act, 1961. The petitioner argued that they were not given sufficient time to respond to notices under section 142(1) of the Act, leading to a draft assessment order being prepared without their objections. Despite filing objections with the Dispute Resolution Panel (DRP), the Assessing Officer proceeded to pass a final order without waiting for the DRP's decision. The court found that the petitioner was not given adequate time to respond to the notices, which were issued on short notice and required extensive documentation. The court set aside the final assessment order, emphasizing the need for a fair opportunity to be heard and to submit objections.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 675749 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 06-11-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: URVASHI DHUGGA
• Assessee Lawyers: SUMIT LALCHANDANI; ANANYA KAPOOR
• Keywords: Assessment Order; Dispute Resolution Panel; Income Tax; Insufficient time; Hasty Procedure
• Section: 142(1); 143(2); 144C(2)

Judgement Text

"CWP-21788-2021 235 (2 cases) IN THE HIGH COURT OF PUNJAB AND HARYANA AT 1. PETROFAC INTERNATIONAL (UAE) LLC ASSISTANT COMMISSIONER 2. PETROFAC INTERNATIONAL (UAE) LLC ASSISTANT COMMISSIONER OF INCOME TAX CORAM: HON’BLE MR. HON’BLE MR. JUSTICE Present: Mr Mr. Mr. Sumit Lalchandani, Advocate Ms. Ananya Kapoor, Advocate Mr. Tarun Chanana Ms. Urvashi Dhugga, for the SANJEEV PRAKASH SHARMA, J.(Oral) 1. The petitioner by way of these petitions submits that the petitioner was not given sufficient section 142(1) of the Income Tax Act, 1961 (‘the Act’). He submits that in spite of his request for giving him sufficient time, the respondents 2021 (O&M) and connected case Page 1 of 6 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH PETROFAC INTERNATIONAL (UAE) LLC Vs. ASSISTANT COMMISSIONER OF INCOME TAX **** PETROFAC INTERNATIONAL (UAE) LLC Vs. ASSISTANT COMMISSIONER OF INCOME TAX **** Date of Decision: 06.11 **** HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON’BLE MR. JUSTICE SANJAY VASHISTH **** Mr. Salil Kapoor, Advocate (through VC) Mr. Kushagra Mahajan, Advocate Mr. Sumit Lalchandani, Advocate Ms. Ananya Kapoor, Advocate Mr. Tarun Chanana, Advocate for the Ms. Urvashi Dhugga, Sr. Standing Counsel for the respondents/Revenue. **** SANJEEV PRAKASH SHARMA, J.(Oral) The petitioner by way of these petitions submits that the petitioner was not given sufficient time to reply to the notices issued to him under section 142(1) of the Income Tax Act, 1961 (‘the Act’). He submits that in spite of his request for giving him sufficient time, the respondents IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP-21788-2021 (O&M) PETROFAC INTERNATIONAL (UAE) LLC . . . . Petitioner OF INCOME TAX . . . . Respondent CWP-24947-2021 (O&M) PETROFAC INTERNATIONAL (UAE) LLC . . . . Petitioner ASSISTANT COMMISSIONER OF INCOME TAX . . . . Respondent 06.11.2024 JUSTICE SANJEEV PRAKASH SHARMA SANJAY VASHISTH (through VC) with Kushagra Mahajan, Advocate Mr. Sumit Lalchandani, Advocate , Advocate for the petitioner(s). Sr. Standing Counsel SANJEEV PRAKASH SHARMA, J.(Oral) The petitioner by way of these petitions submits that the petitioner was to reply to the notices issued to him under section 142(1) of the Income Tax Act, 1961 (‘the Act’). He submits that in spite of his request for giving him sufficient time, the respondents (O&M) Petitioner . . . . Respondent (O&M) . . . . Petitioner . . . . Respondent The petitioner by way of these petitions submits that the petitioner was to reply to the notices issued to him under section 142(1) of the Income Tax Act, 1961 (‘the Act’). He submits that in spite of his request for giving him sufficient time, the respondents MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document CWP-21788-2021 prepared a draft assessment order hastily without objections. 2. Learned counsel further submits that against the draft assessment order, the petitioner had filed objections under sections before the Dispute Resolution Panel (DRP), but the Assessing Officer without waiting for the decis order. Resultantly, the order has been passed without giving the petitioner fair opportunity of hearing and without considering his objections and submissions. 3. Learned counsel has taken this Court to the notice iss section 142(1) of the Act on 24.09.2021 at 8:21 PM asking him to furnish and verified in the prescribed manner under Rule 14 of the I.T. Rules, 1962, the information called for as per the annexure, on or before 26.09.2021 at 3:00 PM. He su and 26.09.2021 asked were relating to certain documents and also certificate of chartered engineer for recognizing income and expenditure for each of the pro as on 31.03.2019. The time therefore was getting the details as demanded by the respondents. 4. He further submits that vide another notice he was asked to furnish accounts and documents by 28.09.2 PM. In the said notice, the respondents asked as to why the receipts should not be taxed under section 44BB of the Act which was never a case initiated earlier in the initial notice issued to him on 31.03.2021, wherein only details 2021 (O&M) and connected case Page 2 of 6 prepared a draft assessment order hastily without objections. Learned counsel further submits that against the draft assessment order, the petitioner had filed objections under sections before the Dispute Resolution Panel (DRP), but the Assessing Officer without waiting for the decision of the DRP, proceeded to pass a final order. Resultantly, the order has been passed without giving the petitioner fair opportunity of hearing and without considering his objections and submissions. Learned counsel has taken this Court to the notice iss section 142(1) of the Act on 24.09.2021 at 8:21 PM asking him to furnish and verified in the prescribed manner under Rule 14 of the I.T. Rules, 1962, the information called for as per the annexure, on or before 26.09.2021 at 3:00 PM. He submits that the notice was issued on Friday and 26.09.2021 happened to be Sunday, and the details which were being asked were relating to certain documents and also certificate of chartered engineer for recognizing income and expenditure for each of the pro as on 31.03.2019. The time therefore was getting the details as demanded by the respondents. He further submits that vide another notice he was asked to furnish accounts and documents by 28.09.2 PM. In the said notice, the respondents asked as to why the receipts should not be taxed under section 44BB of the Act which was never a case initiated earlier in the initial notice issued to him on 31.03.2021, wherein only details relating to exports/imports, high creditors/liabilities, prepared a draft assessment order hastily without even considering his Learned counsel further submits that against the draft assessment order, the petitioner had filed objections under sections 144C(2) of the Act before the Dispute Resolution Panel (DRP), but the Assessing Officer ion of the DRP, proceeded to pass a final order. Resultantly, the order has been passed without giving the petitioner fair opportunity of hearing and without considering his objections and Learned counsel has taken this Court to the notice issued to him under section 142(1) of the Act on 24.09.2021 at 8:21 PM asking him to furnish and verified in the prescribed manner under Rule 14 of the I.T. Rules, 1962, the information called for as per the annexure, on or before bmits that the notice was issued on Friday happened to be Sunday, and the details which were being asked were relating to certain documents and also certificate of chartered engineer for recognizing income and expenditure for each of the project as on 31.03.2019. The time therefore was absolutely insufficient for getting the details as demanded by the respondents. He further submits that vide another notice dated 27.09.2021 at 8:31 PM, he was asked to furnish accounts and documents by 28.09.2021 at 3:00 PM. In the said notice, the respondents asked as to why the receipts should not be taxed under section 44BB of the Act which was never a case initiated earlier in the initial notice issued to him on 31.03.2021, exports/imports, high creditors/liabilities, is Learned counsel further submits that against the draft assessment order, 144C(2) of the Act before the Dispute Resolution Panel (DRP), but the Assessing Officer ion of the DRP, proceeded to pass a final order. Resultantly, the order has been passed without giving the petitioner fair opportunity of hearing and without considering his objections and ued to him under section 142(1) of the Act on 24.09.2021 at 8:21 PM asking him to furnish and verified in the prescribed manner under Rule 14 of the I.T. Rules, 1962, the information called for as per the annexure, on or before bmits that the notice was issued on Friday happened to be Sunday, and the details which were being asked were relating to certain documents and also certificate of chartered ject insufficient for 27.09.2021 at 8:31 PM, 021 at 3:00 PM. In the said notice, the respondents asked as to why the receipts should not be taxed under section 44BB of the Act which was never a case initiated earlier in the initial notice issued to him on 31.03.2021, exports/imports, high creditors/liabilities, MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document CWP-21788-2021 refund claim, contract receipts or fees, foreign outward remittance asked for. 5. Learned counsel submits that insufficient time resulted in wrongful and hastily objections to the said draft assessment order which too were not considered, and a final assessment order has been passed on 30.11.2021. He submits that the entire action has been taken in a hasty manner depriving the petitioner of his right 6. Per contra, sufficient and ample time was given to the petitioner. It is pointed out that the notice was initially served upon the petitioner on 31.03.2021, and issues on which further clar the notice itself. Thus, the petitioner was required to keep ready all the necessary documents and provide them to the respondents, which were not provided in time. She submits that the petitioner has delayed i providing the necessary documents, and on 24.09.2021 again, he was asked to furnish certain documents but he failed to provide the same. Vide another notice relating to certain other aspects to be clarified provided in time. The department therefore had no other option but to prepare a draft assessment order as there was a time frame provided. The said draft assessment order was conveyed to the petitioner, who was required to file objections before 30.10.2021, and therefore the final order was passed. 2021 (O&M) and connected case Page 3 of 6 refund claim, contract receipts or fees, foreign outward remittance asked for. Learned counsel submits that insufficient time resulted in wrongful and hastily preparing of draft assessment order. The petiti objections to the said draft assessment order which too were not considered, and a final assessment order has been passed on 30.11.2021. He submits that the entire action has been taken in a hasty manner depriving the petitioner of his right to object. Per contra, learned counsel appearing for the Revenue submits that sufficient and ample time was given to the petitioner. It is pointed out that the notice was initially served upon the petitioner on 31.03.2021, and issues on which further clarifications were required were detailed out in the notice itself. Thus, the petitioner was required to keep ready all the necessary documents and provide them to the respondents, which were not provided in time. She submits that the petitioner has delayed i providing the necessary documents, and on 24.09.2021 again, he was asked to furnish certain documents but he failed to provide the same. Vide another notice dated 27.09.2021, another opportunity was given relating to certain other aspects to be clarified provided in time. The department therefore had no other option but to prepare a draft assessment order as there was a time frame provided. The said draft assessment order was conveyed to the petitioner, who was required to file the objections within time, but he failed to file the objections before 30.10.2021, and therefore the final order was passed. refund claim, contract receipts or fees, foreign outward remittance were Learned counsel submits that insufficient time resulted in wrongful and draft assessment order. The petitioner submitted objections to the said draft assessment order which too were not considered, and a final assessment order has been passed on 30.11.2021. He submits that the entire action has been taken in a hasty manner to object. learned counsel appearing for the Revenue submits that sufficient and ample time was given to the petitioner. It is pointed out that the notice was initially served upon the petitioner on 31.03.2021, and ifications were required were detailed out in the notice itself. Thus, the petitioner was required to keep ready all the necessary documents and provide them to the respondents, which were not provided in time. She submits that the petitioner has delayed in providing the necessary documents, and on 24.09.2021 again, he was asked to furnish certain documents but he failed to provide the same. , another opportunity was given relating to certain other aspects to be clarified, but the same were also not provided in time. The department therefore had no other option but to prepare a draft assessment order as there was a time frame provided. The said draft assessment order was conveyed to the petitioner, who was the objections within time, but he failed to file the objections before 30.10.2021, and therefore the final order was passed. were Learned counsel submits that insufficient time resulted in wrongful and oner submitted objections to the said draft assessment order which too were not considered, and a final assessment order has been passed on 30.11.2021. He submits that the entire action has been taken in a hasty manner learned counsel appearing for the Revenue submits that sufficient and ample time was given to the petitioner. It is pointed out that the notice was initially served upon the petitioner on 31.03.2021, and ifications were required were detailed out in the notice itself. Thus, the petitioner was required to keep ready all the necessary documents and provide them to the respondents, which were n providing the necessary documents, and on 24.09.2021 again, he was asked to furnish certain documents but he failed to provide the same. , another opportunity was given , but the same were also not provided in time. The department therefore had no other option but to prepare a draft assessment order as there was a time frame provided. The said draft assessment order was conveyed to the petitioner, who was the objections within time, but he failed to file the objections before 30.10.2021, and therefore the final order was passed. MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document CWP-21788-2021 She submits that if the petitioner still has any grievances, he can always raise objections in appeal. 7. We have considered the 8. This Court finds that a notice under section 143(2) issued to the petitioner on 31.03.2021 142(1) dated 16.09.2021 reply to the same, whereafter to him on 24.09.2021 under section 142(1) of the Act whereby he was asked to provide copy of declaration under FEMA/AMLA, contract/agreement for procurement of goods/services along with invoices/bills, evidence to sho account of trade payables, details of imports in prescribed format, copy of certificate of chartered engineer for recognizing income and expenditure for each of the project as on 31.03.2019. issued on 24. information on or before 26.09.2021 at 3:00 PM. time provided was too short. 9. We also notice that the petitioner submitted a reply and requested that as Saturdays and Sundays were non provided till 28.09.2021 for furnishing the said information. Vide another notice dated 27.09.2021 at 8:31 PM, he was asked to furnish information on or before 28.09.2021 at 3:00 PM relating to assessment year 2019 section 44BB of the Act, and also to furnish complete information in 2021 (O&M) and connected case Page 4 of 6 She submits that if the petitioner still has any grievances, he can always raise objections in appeal. We have considered the submissions. This Court finds that a notice under section 143(2) issued to the petitioner on 31.03.2021 and another notice under section 142(1) dated 16.09.2021 along with a questionnaire. He has filed his reply to the same, whereafter subsequently another notice was issued to him on 24.09.2021 under section 142(1) of the Act whereby he was asked to provide copy of declaration under FEMA/AMLA, contract/agreement for procurement of goods/services along with invoices/bills, evidence to show that TDS has been deducted, ledger account of trade payables, details of imports in prescribed format, copy of certificate of chartered engineer for recognizing income and expenditure for each of the project as on 31.03.2019. issued on 24.09.2021 with direction to provide the aforesaid information on or before 26.09.2021 at 3:00 PM. time provided was too short. We also notice that the petitioner submitted a reply and requested that as Saturdays and Sundays were non provided till 28.09.2021 for furnishing the said information. Vide another notice dated 27.09.2021 at 8:31 PM, he was asked to furnish information on or before 28.09.2021 at 3:00 PM relating to assessment year 2019-20 relating to receipts and reasons for not taxing them under section 44BB of the Act, and also to furnish complete information in She submits that if the petitioner still has any grievances, he can always This Court finds that a notice under section 143(2) of the Act was and another notice under section along with a questionnaire. He has filed his subsequently another notice was issued to him on 24.09.2021 under section 142(1) of the Act whereby he was asked to provide copy of declaration under FEMA/AMLA, contract/agreement for procurement of goods/services along with w that TDS has been deducted, ledger account of trade payables, details of imports in prescribed format, copy of certificate of chartered engineer for recognizing income and expenditure for each of the project as on 31.03.2019. The notice was 09.2021 with direction to provide the aforesaid information on or before 26.09.2021 at 3:00 PM. Thus, we find that the We also notice that the petitioner submitted a reply and requested that as Saturdays and Sundays were non-working days, time may be provided till 28.09.2021 for furnishing the said information. Vide another notice dated 27.09.2021 at 8:31 PM, he was asked to furnish information on or before 28.09.2021 at 3:00 PM relating to assessment eceipts and reasons for not taxing them under section 44BB of the Act, and also to furnish complete information in She submits that if the petitioner still has any grievances, he can always was and another notice under section along with a questionnaire. He has filed his subsequently another notice was issued to him on 24.09.2021 under section 142(1) of the Act whereby he was asked to provide copy of declaration under FEMA/AMLA, contract/agreement for procurement of goods/services along with w that TDS has been deducted, ledger account of trade payables, details of imports in prescribed format, copy of certificate of chartered engineer for recognizing income and The notice was 09.2021 with direction to provide the aforesaid Thus, we find that the We also notice that the petitioner submitted a reply and requested that orking days, time may be provided till 28.09.2021 for furnishing the said information. Vide another notice dated 27.09.2021 at 8:31 PM, he was asked to furnish information on or before 28.09.2021 at 3:00 PM relating to assessment eceipts and reasons for not taxing them under section 44BB of the Act, and also to furnish complete information in MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document CWP-21788-2021 support of income and expenditure shown in Profit and Loss account. He was also informed that the issue limitation o 30.09.2021. The objections in this regard were submitted on 01.11.2021, and last date, 10. Having noticed the aforesaid provisions and the facts which have come on record, provide certain details along with questionnaire, the notices which have been issued on 24.09.2021 and 27.09.2021 deal with information altogether, and the time provided under these notices was not even of seven days, which is the minimum required time for furnishing of information. Decision taken details would order passed on the said basis section the same. objections. would not be sustainable in law and the same therefore will have to be set aside provisions of the Rules and the Act, which nec opportunity of hearing including providing of sufficient opportunity to submit their objections. 2021 (O&M) and connected case Page 5 of 6 support of income and expenditure shown in Profit and Loss account. He was also informed that the issue limitation on 30.09.2021. The draft assessment order was passed on 30.09.2021. The objections in this regard were submitted on 01.11.2021, and as the same were filed after 30.10.2021, which was the last date, the same were dismissed on the ground of limitation g noticed the aforesaid provisions and the facts which have come on record, we find that while initially the petitioner was asked to provide certain details along with questionnaire, the notices which have been issued on 24.09.2021 and 27.09.2021 deal with information altogether, and the time provided under these notices was not even of seven days, which is the minimum required time for furnishing of information. Decision taken without giving opportunity of filing reply and details would therefore stand vitiated in law. order passed on the said basis as above, was also objected to section 144C(2) of the Act before the DRP the same. The Assessing Officer has also not delved with the bjections. In view thereto, the final assessment order would not be sustainable in law and the same therefore will have to be set aside, as the entire proceedings provisions of the Rules and the Act, which nec opportunity of hearing including providing of sufficient opportunity to submit their objections. support of income and expenditure shown in Profit and Loss account. He was also informed that the issue would get time barred by n 30.09.2021. The draft assessment order was passed on 30.09.2021. The objections in this regard were submitted on as the same were filed after 30.10.2021, which was the the same were dismissed on the ground of limitation. g noticed the aforesaid provisions and the facts which have we find that while initially the petitioner was asked to provide certain details along with questionnaire, the notices which have been issued on 24.09.2021 and 27.09.2021 deal with a different information altogether, and the time provided under these notices was not even of seven days, which is the minimum required time for without giving opportunity of filing reply and therefore stand vitiated in law. The draft assessment above, was also objected to as per 144C(2) of the Act before the DRP, but the DRP has not decided The Assessing Officer has also not delved with the assessment order dated 30.11.2021 would not be sustainable in law and the same therefore will have to be , as the entire proceedings undertaken go contrary to the provisions of the Rules and the Act, which necessarily require opportunity of hearing including providing of sufficient opportunity to support of income and expenditure shown in Profit and Loss account. time barred by n 30.09.2021. The draft assessment order was passed on 30.09.2021. The objections in this regard were submitted on as the same were filed after 30.10.2021, which was the g noticed the aforesaid provisions and the facts which have we find that while initially the petitioner was asked to provide certain details along with questionnaire, the notices which a different information altogether, and the time provided under these notices was not even of seven days, which is the minimum required time for without giving opportunity of filing reply and The draft assessment as per , but the DRP has not decided The Assessing Officer has also not delved with the 30.11.2021 would not be sustainable in law and the same therefore will have to be go contrary to the essarily require opportunity of hearing including providing of sufficient opportunity to MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document CWP-21788-2021 11. In the circumstances, we 30.11.2021 and by the petitioner on 01.11.2021, whereafter the DRP shall communicate the order to the Assessing Officer who shall accordingly pass a fresh order. If the petitioner is still aggrieved, the petitioner shall be free to file an appeal in accordance with law. 12. The DRP shall also provide opportunity of hearing to the petitioner which is held to be inherent as it acts as a quasi aforesaid exercise shall be conducted within a period of three months henceforth. 13. With the aforesaid directions, both these writ petitions are 14. All pending applications also stand disposed of. November 06, 2024 Mohit goyal 1. Whether speaking/reasoned? 2. Whether reportable? 2021 (O&M) and connected case Page 6 of 6 In the circumstances, we set aside the final assessment order dated 30.11.2021 and direct the authorities to deal with the objections raised by the petitioner on 01.11.2021, whereafter the DRP shall communicate the order to the Assessing Officer who shall accordingly pass a fresh order. If the petitioner is still aggrieved, the petitioner shall be free to file an appeal in accordance with law. The DRP shall also provide opportunity of hearing to the petitioner which is held to be inherent as it acts as a quasi aforesaid exercise shall be conducted within a period of three months henceforth. With the aforesaid directions, both these writ petitions are All pending applications also stand disposed of. (SANJEEV PRAKASH SHARMA , 2024 1. Whether speaking/reasoned? Yes/No 2. Whether reportable? Yes/No set aside the final assessment order dated direct the authorities to deal with the objections raised by the petitioner on 01.11.2021, whereafter the DRP shall communicate the order to the Assessing Officer who shall accordingly pass a fresh order. If the petitioner is still aggrieved, the petitioner shall be free to file an appeal in accordance with law. The DRP shall also provide opportunity of hearing to the petitioner which is held to be inherent as it acts as a quasi-judicial authority. The aforesaid exercise shall be conducted within a period of three months With the aforesaid directions, both these writ petitions are disposed of. All pending applications also stand disposed of. SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE Yes/No Yes/No set aside the final assessment order dated direct the authorities to deal with the objections raised by the petitioner on 01.11.2021, whereafter the DRP shall communicate the order to the Assessing Officer who shall accordingly pass a fresh order. If the petitioner is still aggrieved, the petitioner shall The DRP shall also provide opportunity of hearing to the petitioner judicial authority. The aforesaid exercise shall be conducted within a period of three months MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document "