2021 (10) TMI 291 - HC - Income Tax

Demand u/s 201(1) and 201(1A) - jurisdictional conditions precedent for invoking Section 201 - As submitted that the remittances made by the petitioner to BT Plc are not chargeable to tax and therefore, the jurisdictional conditions for initiation of proceedings under Section 201 of the Act are not fulfilled - HELD THAT - It is not denied by the learned counsel for the petitioner that on similar issues, demands have been raised against the petitioner for the Assessment Years 2012-13 and 2013-14 which have been challenged by the petitioner before the CIT(A). The impugned Order has been passed by the respondent no.1 in purported compliance with the order dated 2021 (3) TMI 911 - DELHI HIGH COURT of this Court, holding that the jurisdictional conditions precedent for invoking Section 201 of the Act are satisfied. As the petitioner has already availed of its remedies of appeal in relation to two AYs, we do not deem it proper to entertain the present petitions challenging the said finding of the respondent no. 1, at this stage. It will be open to the petitioner to challenge the final order passed by the respondent no.1 fastening any liability on the petitioner under Sections 201(1) and 201(1A) of the Act, including on the grounds that have been taken in the present petitions, by way of an appeal in accordance with the Act. Present petitions are dismissed granting leave to the petitioner to avail of its alternate efficacious remedy, if so advised.

Summary

Issues:
Challenging common order dated 26.08.2021 passed by respondent no.1, Show Cause Notices under Sections 201(1) and 201(1A) of the Income Tax Act, 1961, Compliance with court order dated 19.03.2021, Taxability of remittances to non-residents without TDS, Pending adjudication before the Authority for Advance Rulings (AAR), Jurisdictional facts under Section 201(1) and 201(1A), Limitation on initiation of proceedings, Appeal against final adjudication, Jurisdictional conditions for invoking Section 201 satisfied, Challenge to findings of respondent no.1, Remedies of appeal for Assessment Years 2012-13 and 2013-14, Entertaining present petitions, Merits of submissions.

Analysis:

1. The petitioner filed petitions challenging the common order dated 26.08.2021 by respondent no.1, which was in compliance with the court's order dated 19.03.2021. The challenge was against Show Cause Notices issued under Sections 201(1) and 201(1A) of the Income Tax Act, 1961, regarding remittances made to non-residents without TDS.

2. The petitioner contended that the jurisdictional facts under Section 201(1) and 201(1A) needed to be established before assuming jurisdiction. The petitioner had agreements with a non-resident company, and the taxability of the remittances was under consideration by the Authority for Advance Rulings (AAR).

3. The petitioner argued that the respondent no.1 did not await the AAR's adjudication on the taxability of the remittances to the non-resident company. The petitioner maintained that the remittances were not taxable in India and that the initiation of proceedings was barred by limitation.

4. The respondent no.1, in compliance with the court's order, held that the jurisdictional conditions for invoking Section 201 were met. The respondent no.1 observed that the petitioner had already appealed against similar issues for Assessment Years 2012-13 and 2013-14 before the Commissioner of Income Tax (Appeals) (CIT(A)).

5. The court dismissed the present petitions, stating that since the petitioner had availed remedies of appeal for previous assessment years, challenging the findings of respondent no.1 at this stage was not appropriate. The court allowed the petitioner to challenge any final order passed by respondent no.1 through an appeal according to the Act.

6. The court clarified that it had not expressed any opinion on the merits of the submissions made by the parties, leaving all such arguments open for adjudication in suitable proceedings. The judgment emphasized the importance of following due process and exhausting available legal remedies.