2010 (10) TMI 818 - SC - Income Tax

Principle of transfer pricing - notice was issued under section 148 - writ petition filled on question of jurisdiction Held that - On going through the papers it is find that foundational facts are required to be established which could not have been done by way of writ petition. Thus the assessee should be relegated to adopt proceedings which are pending as of date before various authorities under the Act. Direct these authorities to expeditiously hear and dis-pose of pending proceedings as early as possible.

Summary

Issues: Application of transfer pricing principle; Jurisdiction of High Court; Relegation of assessee to adopt pending proceedings; Direction to authorities to expeditiously dispose of pending proceedings; Exhaustion of statutory remedy; Disposal of special leave petition; Vacation of stay order.

In this judgment, the Supreme Court addressed the issue of the application of the transfer pricing principle. The assessee had received a notice under section 148 of the Income-tax Act for certain assessment years. A writ petition was filed challenging the jurisdiction, which was disposed of by the High Court. The Court noted that foundational facts needed to be established, which could not be done through a writ petition. Consequently, the Court directed the assessee to continue with the proceedings pending before various authorities under the Act, as indicated in a chart provided. This decision aimed to ensure the proper establishment of facts and adherence to the statutory procedure.

The Supreme Court further directed the authorities to promptly hear and resolve the pending proceedings. It emphasized that if the assessee was dissatisfied with any orders issued by these authorities, it must exhaust the statutory remedies available under the Act. The Court clarified that the authorities should decide on the matter independently, without being influenced by any observations in the impugned judgment. This directive aimed to uphold the integrity of the decision-making process and ensure a fair resolution for all parties involved.

Consequently, the special leave petition was disposed of by the Court. Additionally, the stay order previously granted was vacated as part of the judgment. The Court's decision highlighted the importance of following due process, exhausting statutory remedies, and ensuring the impartiality of authorities in resolving tax-related disputes. The judgment served to streamline the proceedings and uphold the principles of natural justice and legal procedure in tax matters.