2017 (12) TMI 1065 - HC - Income Tax

Addition made under Section 40(a)(ia) - Held that - Tribunal noted that the Assessing Officer relied only on the facts based on Form 56F wherein it has been mentioned that the production commenced on 21.01.1999 relating to assessment year 1999-2000 as first year. The Tribunal held that the revenue could not substantiate with any evidence before it that the production was commenced in the assessment year 1999-2000 but relied only on Form 56F filed by the assessee. Thus the Tribunal held that considering the apparent facts, material record and the paper book filed the matter has to be re-examined by the Assessing Officer as these facts were not mentioned in the order of the DRP and it is not clear as to whether the assessee had filed these details before the DRP or before the Assessing Officer to substantiate its claim. Therefore, the Tribunal remanded the issue to the file of the Assessing Officer to verify the genuineness after providing an opportunity of hearing to the assessee. With regard to the issue pertaining to the claim that communication charges are paid to Indian Companies in respect of the lease lines, the Tribunal opined that the matter has to be verified by the Assessing Officer and accordingly set aside the order of the Assessing Officer on the said issue for the limited purpose to examine the nature of charges and verify whether this income has been offered in the hands of the recipients and the assessee to be afforded an opportunity before passing an order. Advance to subsidiary companies without charging any interest - Held that - when there is a specific direction by the Tribunal to re-examine the matter in a particular manner, the Assessing Officer is bound to scrupulously follow the directions of the Tribunal. The direction of the Tribunal is binding on the Assessing Officer. Therefore, to conclude that no further evidence was produced by the petitioner may not be the correct approach to be adopted. On the given set of documents, the Assessing Officer was bound to cause verification of the details and ascertain the genuineness and then take a decision. However, while passing the impugned order this has not been done. The Assessing Officer has made a verification that with regard to the date of commencement of production except for the letter the petitioner has not produced any document. However, the petitioner s case is that the paper book which was filed by them before the Tribunal and also placed before the Assessing Officer contained the copy of the order of approval granted by the STPI which the respondent has not considered. In this regard, the learned counsel for the petitioner has drawn the attention of this court to the orders of approval of the STPI dated 18.03.2000. Thus, find that the impugned order has been passed without adhering to the directions issued by the Tribunal and the chronology of dates and events would show that the petitioner did not have adequate opportunity to put forth their submissions. Therefore, it is a fit case where the matter should be remanded for re-consideration by the Assessing Officer.

Summary

Issues Involved:
1. Validity of multiple assessment orders for the same assessment year.
2. Violation of principles of natural justice.
3. Compliance with the Tribunal's directions.

Issue-wise Detailed Analysis:

1. Validity of Multiple Assessment Orders:
The petitioner argued that the provisions of the Income Tax Act do not allow for multiple assessment orders for the same assessment year. They contended that the impugned order dated 04.05.2017 is invalid and unsustainable in law. However, the court noted that the petitioner did not challenge the first order dated 22.03.2017, which was in their favor. Consequently, the court did not examine this contention as it became hypothetical due to the petitioner's conduct.

2. Violation of Principles of Natural Justice:
The petitioner claimed that the order dated 22.03.2017 was passed without giving them an opportunity of being heard, as the first date of hearing was fixed on 27.03.2017. They further argued that the subsequent order dated 04.05.2017 was also passed without adequate opportunity for them to present their case. The court found that the petitioner did not have an effective opportunity before the respondent prior to the impugned order dated 04.05.2017. The chronology of dates and events indicated that the petitioner did not have adequate opportunity to put forth their submissions, and thus, the principles of natural justice were violated.

3. Compliance with the Tribunal's Directions:
The Tribunal had remanded the matter to the Assessing Officer with specific directions to re-examine certain issues. The petitioner argued that the Assessing Officer did not consider the voluminous documents filed before him, particularly the STPI approval and the paper book submitted before the Tribunal. The court observed that the Assessing Officer is bound to follow the Tribunal's directions scrupulously. The Tribunal had directed the Assessing Officer to verify the genuineness of the documents and provide an opportunity of hearing to the petitioner. However, the Assessing Officer concluded that no further evidence was produced by the petitioner without conducting the required verification. The court found that the Assessing Officer did not adhere to the Tribunal's directions and passed the impugned order without proper verification of the documents.

Conclusion:
The court allowed the writ petition, set aside the impugned order dated 04.05.2017, and remanded the matter to the Assessing Officer for fresh consideration. The Assessing Officer was directed to fix a date for personal hearing, consider the documents filed in the form of a paper book, and re-do the assessment in accordance with law.