2018 (12) TMI 133 - HC - Income Tax

Reopening of assessment u/s 147 - transfer pricing report by EXL India, which has business connection with the petitioner and the company being situated outside India is not liable to pay tax as contemplated under Section 92-C(A) - Held that - The proceedings initiated under Section 148 of the Act is based on transfer pricing report by EXL India, which has business connection with the petitioner and the company being situated outside India is not liable to pay tax as contemplated under Section 92-C(A) of the Act. Sri Gaurav Mahajan, learned counsel appearing for the respondents prays for and is allowed three weeks time to file counter affidavit. The petitioner shall have one week thereafter to file rejoinder affidavit. List thereafter before the appropriate Bench. It shall not be treated as part heard or tied up to this Bench. Till the next date of listing, further proceedings pursuant to notice under Section 148 of the Act with regard to assessment year 2011-2012 shall remain stayed.

Summary

Issues:
Challenge to re-assessment proceedings under Section 147 of the Income Tax Act based on income escaping assessment. Allegation of identical reasons for notice as in previous assessment years. Petitioner's contention regarding transfer pricing report by EXL India and tax liability under Section 92-C(A) of the Act.

Analysis:
The High Court addressed the challenge to re-assessment proceedings initiated under Section 147 of the Income Tax Act by the petitioner, alleging that the notice was based on the same reasons as in earlier assessment years. The petitioner had previously challenged orders for assessment years 2004-2005 to 2009-2010 through various writ petitions, with interim orders in favor of the assessee. The petitioner contended that the proceedings under Section 148 were initiated based on a transfer pricing report by EXL India, a company with business connections to the petitioner, which, being situated outside India, was argued to not be liable to pay tax as per Section 92-C(A) of the Act.

The court allowed the respondents three weeks to file a counter affidavit in response to the petition, with the petitioner granted one week thereafter to file a rejoinder affidavit. The case was directed to be listed before the appropriate Bench for further proceedings. Importantly, the court ordered a stay on any further proceedings related to the notice under Section 148 of the Act concerning the assessment year 2011-2012 until the next date of listing. It was clarified that the matter would not be considered as part-heard or tied up to the current Bench, ensuring a fair and independent adjudication of the issues raised by the petitioner.