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2019 (7) TMI 233 - HC - Income TaxDividend distribution Tax (DDT) - buy back its own shares u/s 77A of the Companies Act - distribution of accumulated profit or not - impact of pendency of application filed under 245Q before Authority for Advance Rulings - scope of amendment in Section 115QA w.e.f. 01.06.2016 - assessee contended that it has bought back its own shares under the Scheme of Arrangement and Compromise u/ss 391 to 393 of the Companies Act prior to the amendment. Section 115O of the Act mandates issuance of SCN, enquiry before passing a final order - HELD THAT - From a plain reading of the provisions from 115O to 115QA, it is seen that Section 115 O is a charging section on its own. These Sections are self contained codes in themselves and they do not demand for issuing any show-cause notice and then passing any order. - It is to be noted that unless the law requires, the AO need not issue notice before making a demand u/s 115 O. The parliament in its wisdom brought amendments to the Finance Act and inserted Section 115 O to 115 Q with effect from 01.06.1997 (Special Provisions) to achieve an object. If any other view is taken, then the Special Provisions under Chapter XIV would become redundant and it would be opening a pandoras box. Breach of principles of natural justice - HELD THAT - Admittedly, a notice dated 21.11.2017 was issued to the petitioner calling for details and meetings were convened, in which, indisputably, the officials of the petitioner Company participated and a detailed note explaining the various provisions of the Act have been given to them. It is pertinent to note that the object and purpose of issuing show cause notice is to put on notice to the proposed action to be initiated by the Officials and nothing else. But, a curious stand is taken by the petitioner that the letter dated 21.11.2017 cannot be construed as a showcause notice and the informal discussion cannot be substituted for a proper show-cause notice with a chance of reply and an opportunity of hearing, hence, I find no substance in the said submission. AO is prohibited from issuing the impugned order in the light of the bar prescribed in Section 245 RR - petitioner approached the Authority for Advance Rulings only on 20.03.2018 - notice issued on 21.11.2017 - HELD THAT - Section 245R makes it clear that if the enquiry is already pending before the AO, the Authority for Advance Rulings has no jurisdiction to entertain the application. Hence, I find no force in the argument of the learned Senior Counsel for the petitioner that the impugned order does not stand in view of the bar u/s 245 RR. Writ Petition is maintainable - HELD THAT - It is well settled that the assessee has an appeal remedy u/s 246. In this case, an unsuccessful attempt has been made by the petitioner to bypass the appeal remedy, but, I find no valid ground to entertain the Writ Petition. In that view, the Writ Petition is dismissed as not maintainable at this stage. The Writ Petition fails and the same is dismissed. However, liberty is given to the petitioner to prefer an appeal within a period of four weeks from today. If such an appeal is filed within the stipulated time, the Appellate Authority shall dispose of the same on merits.
Issues Involved:
1. Whether Section 115 O of the Income Tax Act mandates issuance of show-cause notice and enquiry before passing a final order. 2. Whether there is any breach of principles of natural justice. 3. Whether the Assessing Officer is prohibited from issuing the impugned order in light of the bar prescribed in Section 245 RR of the Income Tax Act. 4. Whether the Writ Petition is maintainable. Detailed Analysis: Issue 1: Show-Cause Notice Requirement under Section 115 O The court examined whether Section 115 O of the Income Tax Act requires the issuance of a show-cause notice and an enquiry before passing a final order. The relevant provisions, including Sections 115-O, 115-P, and 115-Q, were scrutinized. The court observed that these sections are self-contained codes and do not necessitate issuing a show-cause notice before making a demand. The court noted that the provisions under Chapter XIV of the Act, which prescribe procedures for regular assessments, differ from the special provisions under Section 115 O, which do not require such procedural formalities. Therefore, the court concluded that there is no legal requirement for issuing a show-cause notice under Section 115 O before making a tax demand. Issue 2: Breach of Principles of Natural Justice The court addressed the petitioner's claim that the impugned order was passed in violation of the principles of natural justice, as no proper show-cause notice was issued. The court noted that a notice dated 21.11.2017 was issued to the petitioner, calling for details, and several meetings were held where the petitioner's officials participated and were informed about the tax liability. The court emphasized that the purpose of a show-cause notice is to inform the party of the proposed action, which was effectively achieved through the notice and meetings. Hence, the court found no substance in the petitioner's argument and ruled that there was no breach of natural justice. Issue 3: Bar under Section 245 RR The court examined whether the Assessing Officer was prohibited from issuing the impugned order due to the bar under Section 245 RR, given that the petitioner had filed an application under Section 245Q for advance rulings. The court noted that the respondent had issued a notice on 21.11.2017, seeking information on remittances, before the petitioner approached the Authority for Advance Rulings on 20.03.2018. The court concluded that since the enquiry was already pending before the Assessing Officer, the Authority for Advance Rulings had no jurisdiction to entertain the application under Section 245Q. Therefore, the bar under Section 245 RR did not apply, and the impugned order was validly issued. Issue 4: Maintainability of the Writ Petition The court considered whether the writ petition was maintainable, given that the petitioner had an alternative remedy of appeal under Section 246 of the Act. The court cited several precedents, including decisions by the Supreme Court and various High Courts, which held that an assessee denying liability can appeal under Section 246. The court emphasized that the petitioner had an effective alternative remedy and that the writ petition was an attempt to bypass the appeal process. Consequently, the court dismissed the writ petition as not maintainable at this stage. Conclusion: The court dismissed the writ petition, directing the petitioner to avail the appeal remedy within four weeks. The court noted that the petitioner had deposited ?495 Crores in compliance with an earlier order and directed the Appellate Authority to consider this amount while entertaining the appeal. The court also maintained the status quo regarding fixed deposits for two weeks. The petition was dismissed without costs, and the connected miscellaneous petition was closed.
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