2011 (2) TMI 1231 - HC - Income Tax

Writ petition - transfer pricing - Assessing Officer, while proceeding to frame the draft assessment order, has not kept in view the proviso to sub-section (3)(d) of section 92C of the Act - When the Transfer Pricing Officer had accepted the transfer pricing and had directed that no transfer pricing adjustment was required to be done, it was incumbent on the part of the Assessing Officer to follow the same in letter and spirit and that being binding on him as per the provisions contained in section 92CA(4) of the Act - Held that - liberty granted to the petitioner to file the objections within one week in accordance with the provisions contained in sub-section (2) of section 144C, thereafter the Dispute Resolution Panel shall proceed in accordance with the postulates laid down in sub-sections (5) to (7) of section 144C of the Act, writ petition

Summary

Issues:
Challenge to draft assessment under section 144C(1) of the Income-tax Act, 1961 for the assessment year 2007-08 based on failure to consider mandatory provisions, and failure to follow Transfer Pricing Officer's decision.

Analysis:

1. The petitioner sought a writ of certiorari to quash the draft assessment dated December 31, 2010, under section 144C(1) of the Income-tax Act, 1961. The contention was twofold: (a) the Assessing Officer did not consider the mandatory proviso to section 92C(3)(d) as per a previous court decision, and (b) the Assessing Officer did not follow the Transfer Pricing Officer's decision, which was binding under section 92CA(4) of the Act.

2. The Revenue argued that the petitioner could raise objections before the Assessing Officer and the Dispute Resolution Panel as per sections 144C(2) and (5) of the Act. It was suggested that the petitioner should utilize the prescribed remedy instead of solely resorting to a writ petition.

3. The Court examined the relevant sections 92C, 92CA(4), and 144C of the Act. It noted that the Dispute Resolution Panel, upon receiving objections, had the authority to issue directions to guide the Assessing Officer in completing the assessment. The procedural guidelines for the Dispute Resolution Panel were outlined in subsections (6) and (7) of section 144C.

4. It was emphasized that the provisions for Dispute Resolution Panel proceedings were not redundant but provided an essential remedy for the assessee. The Court held that when an intermediate remedy was available under the statute, the assessee was obligated to utilize it.

5. Consequently, the Court granted the petitioner liberty to file objections within a week in accordance with section 144C(2). The Dispute Resolution Panel was directed to follow the procedures outlined in subsections (5) to (7) of section 144C, including providing a personal hearing and issuing a speaking order with cogent reasons.

6. The Court underscored the importance of the Dispute Resolution Panel acting in accordance with the law and fulfilling its obligations to ensure a fair process. This clarification aimed to dispel any concerns about the effectiveness or perfunctory nature of approaching the Dispute Resolution Panel.

7. The writ petition was disposed of with the mentioned directions, and no costs were awarded to either party.

8. The judgment was signed by the Court Master for further action.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised, the legal arguments presented, and the Court's decision regarding the dispute over the draft assessment under the Income-tax Act, 1961.