2022 (5) TMI 1014 - HC - Income Tax

Validity of assessment order passed u/s 253 - Draft Assessment Order on two issues i.e., the arm s length and the Rate - Assessing Officer had opined that the petitioners would be liable to pay capital gains tax at the rate of 20% instead of 10% - DRP has examined the first ground viz. the arm s length and has issued certain directions which has resulted in the Assessment orders that are impugned in the respective appeals as aforesaid, the DRP has not examined the second ground on the question of its jurisdiction - HELD THAT - This Court, in the peculiar circumstances of the case, and the fact that the Department does not dispute that the question of the Rate could also be gone into in the pending appeals, is of the considered view that there should be no impediment to the appellate Tribunal to consider the petitioners grounds even as regards the Rate. Therefore, the petitions must be disposed of with liberty to the petitioners to prosecute their appeals even as regards the Rate.

Summary

Issues:
Impugning directions issued by the Dispute Resolution Panel-2 (DRP) dated 20.07.2018; Incorporation of DRP's directions in Assessment Orders; Question of arm's length and Rate in Draft Assessment Order; Jurisdiction of DRP; Appellate remedy on the Rate issue.

Analysis:
The petitioners challenged the directions issued by the DRP on 20.07.2018. The Senior Counsel argued that Assessment Orders were passed during the pendency of the writ petitions, incorporating DRP's directions. The Assessing Officer's opinion in the Draft Assessment Order regarding the arm's length and the Rate was disputed. The DRP examined the arm's length issue, leading to the impugned Assessment Orders, but did not address the Rate issue's jurisdiction.

The petitioners expressed concern that the Department might limit the appellate Tribunal's consideration to the arm's length issue only, excluding the Rate issue. They sought clarification to avoid being deprived of appellate remedy on the Rate matter. The respondents contended that the petitioners must utilize the statutory remedy available, emphasizing the Tribunal's authority to consider both the arm's length and Rate questions in the pending appeals.

The Court, considering the circumstances and the Department's acknowledgment that the Rate issue could be addressed in the pending appeals, ruled in favor of the petitioners. It held that the appellate Tribunal should have no hindrance in considering the petitioners' grounds, including the Rate issue. Consequently, the petitions were disposed of, granting the petitioners liberty to pursue their appeals concerning the Rate issue.

The judgment ensured that the petitioners could fully avail their appellate remedy by allowing the Tribunal to consider both the arm's length and Rate issues in the pending appeals. The Court's decision removed any potential impediment that could have restricted the Tribunal's jurisdiction, safeguarding the petitioners' rights to challenge the Assessment Orders comprehensively.