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Devas Multimedia Private Limited v/s Principal Commissioner of Income-Tax

    Writ Petition No. 11618 of 2016

    Decided On, 27 September 2019

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE P.B. BAJANTHRI

    For the Petitioner: Udaya Holla, Sr. Counsel, Nandisha Patel, Advocate. For the Respondent: K.V. Aravind, M. Dilip, Advocates.



Judgment Text


1. In the instant petition, petitioner has sought for the following reliefs:

(i) declaring that the impugned proceedings initiated by the Respondent under Section 263 of the Act are opposed to the said provisions and therefore without jurisdiction.

(ii) Quashing the impugned Notice No.AACCD2059H/PCIT-2/2015-16 dated 08.02.2016 (Annexure - A) issued by the respondent.

(iii) Pass such other or further order as this Hon'ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity.

2. Petitioner is stated to have engaged in the business of providing internet based multimedia and interactive data services to hand-held mobile terminals through a portfolio of services including streaming of video, audio and data as well as web access, infotainment and social applications. It is stated that it was a unique project which is multifarious requiring high skilled manpower with superior R & D efforts were put in, large infrastructure, high vendor development efforts and funding. It was stated that there was no enterprise in India which could provide for such services as were required by the petitioner. In this backdrop, petitioner is an income tax assessee who had filed returns of income on 23.09.2009 for the assessment year 2009-10 declaring loss of Rs.21,72,53,709/-. Petitioner's return was selected for the purpose of scrutiny and consequently, notice was issued under Section 143(2) of the Income Tax Act, 1961 (for short 'Act 1961') further, followed by another notice under Section 142(4) of the Act. In the process of assessment, a reference was made to the Transfer Presiding Officer (TPO) under Section 92CA of the Act. Certain information were sought from the petitioner in order to meet the assessment process. Petitioner is stated to have completed the requisite material sought by the authorities. Thereafter, several inquiries were made by the Assessing Officer (AO) as well as TPO. AO proceeded to pass a Draft Assessment Order under Section 144C for which the petitioner had certain objections and matter was forwarded to Dispute Resolution Panel (for short 'DRP').

3. Drp consists of 3 Officers who are in the cadre of Commissioner, who have examined the Draft assessment order and objections of the petitioner under Sub-clause of Section 144 against Draft Assessment Order and DRP issued certain directions on 31.12.2003. Consequently, AO passed Final Assessment Order on 31.01.2014.

4. On 08.02.2016, Principal Commissioner of Income Tax, Bengaluru while invoking Section 263 of Act, 1961 issued a notice in respect of Assessment Order for the year 2009-10 pursuant to the return filed by the petitioner on 23.09.2009 declaring loss of Rs.21,72,53,709/- read with the conclusion of the assessment under Section 143(3) read with Section 144C on 31.01.2014 while determining taxable income of the asssessee at Rs.17,98,34,440/- which resulted in net tax liability at Rs.3,71,45,516/-. The addition/disallowance made to arrive at the taxable income. The respondent after assessing various issues relating to investment made by Deutsche Telekom Asia Pvt. Ltd., Telekom Centre Singapore and M.G.Chandrasekhar who have invested USD 75000000 (INR 3232500000.00), INR 30000 and 2839 Class C Equity Shares and 3000 Class E Equity Shares respectively and in terms of the investors amount of inflow read with the number of shares and the face value of share was Rs.10/- and the same were issued at premium of Rs.1,14,015/- during the relevant year read with previous year, the shares have been issued at premium of Rs.21,445.82/-, Rs.25,504.56 and Rs.1,14,015.19/- in March 2006, June 2007 and March 2008 respectively. Further, there was cancellation of agreement between the assessee and M/s Antrix Corporation. In such a scenario, status of the company itself was at stake, huge investments in the form of securities premium without valuation appeared to be without reasonable basis. As such it had definite tax implication. The credit in bank accounts through banking channel was not sufficient to explain the criteria of Sec.68 and no additional information had been provided by the assessee. The sharp rise in share valuation had the possibility of gains accruing to beneficiaries which led to tax demands and with a questionable going concern status of the assessee, the issue had tax implications. Thus, respondent intended to revise order of AO and issued notice under Section 263 of Act 1961.

5. Petitioner feeling aggrieved and dissatisfied of the notice dated 08.02.2016 issued under Section 263 of Act 1961 for the assessment order for the year 2009-10 (Annexure - A), presented this petition.

6. Shri Udaya Holla, learned Senior Counsel for petitioner vehemently contended that Principal Commissioner of Income Tax has no jurisdiction to invoke Section 263 of Act 1961 in issuing notice to the petitioner on 08.02.2016 in respect of Assessment Order for the year 2009-10 which has attained finality by the AO in passing the Final Assessment Order on 31.01.2014. Undisputedly, AO notified Draft Assessment Order while invoking Section 144C on 15.03.2013 for which petitioner had grievance under the provisions of Section 144C(1)(b) read with Section 92CA relates to TPO (international transactions). Accordingly, petitioner is stated to have filed objections for Draft Assessment Order dated 15.03.2013. Consequently, matter was referred to DRP and proceeded to pass order on 31.12.2003. In terms of the DRP decision dated 31.12.2003, the AO proceeded to pass Final Assessment Order on 31.01.2014. The DRP consists of three Commissioner's (Panel), in such circumstances, respondent being a Principal Commissioner cannot sit over the decision of the DRP consisting of three Commissioners. Therefore, respondent Principal Commissioner has no jurisdiction. On this score itself, the impugned notice issued by the respondent in invoking Section 263 of Act 1961 is liable to be set-aside.

7. Learned Senior Counsel further submitted that while invoking Section 263 of Act 1961 by the respondent in issuing notice to the petitioner, two ingredients like erroneous decision of the AO and it is prejudicial to the interest of revenue are not appraised. Perusal of notice, it is evident that the aforesaid ingredients are not forthcoming in the notice. Further, DRP decision has not been addressed. Therefore, even on the ground of non-compliance of the ingredients stated in Section 263 of Act 1961, impugned notice dated 08.02.2016 is liable to be set-aside.

8. Learned Senior Counsel for the petitioner relied on R.SRINIVASAN vs THE ASST./DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I COIMBATORE decided by the High Court of Judicature at Madras in Tax Case (Appeal)No.354 of 2006 disposed of on 11.09.2012, para.20 which is relevant reads as under:

"20. Given the fact that the revisional jurisdiction of the Commissioner under Sections 263 or 264 of the Act enables the Commissioner to call for and examine the record of any proceedings under the Act and 'record' is defined under Section 263 Explanation (b) to "include and shall be deemed to always to have included all records relating to any proceedings under this Act" available at the time of examination by the Commissioner and the approval under Section 158BG also being part of the record in the passing of the order under Section 158BC, we agree with the assessee's contention that the self-same rank Officer cannot once again review an order passed under Section 158 BC made with the approval of the Commissioner of Income Tax. Further, apparently, faced with the situation of the nature as one prevailing herein, Section 158 BG, after amendment in 1997 substitutes the approval by the Commissioner to an approval by the Joint Commissioner in respect of search done after 1.1.97, and that an appeal remedy to the Commissioner of Income Tax (Appeal) thereon is provided under the Act as against the original appeal remedy before the Income Tax Appellate Tribunal, we hold that going by the scheme of Act. Thus, once approval is given by the Commissioner in respect of proceedings made before 1.1.1997, the "approval" being an expression indicating application of mind on the part of the higher authority viz., the Commissioner, to the materials seized leading to the block assessment and the approving authority not being lower in rank than that of the revisional Appellate Authority himself and hence an appeal remedy thereupon before the Tribunal alone is provided thereon, we do not find any justifiable ground to accept the plea of the Revenue that the approval on the order passed under Section 158BC would be a mere administrative nod and hence, the assessment is amenable to be proceeded under Section 263 of the Act. As pointed out by the Karnataka High Court in the decision reported in C.I.T. v. SMT.ANNAPOORNAMMA CHANDRASHEKAR,2012 204 Taxman 158 the act of approval is not for a mere passing of an order under Section 158BC, but an approval which takes note of the subject matter of assessment and there is application of mind before granting the approval. The Apex Court in the decision reported in ASHOK KUMAR SAHU v. UNION OF INDIA, (2006) AIR SC 2879 held that the expression 'approve' means to have or express a favourable opinion of to accept as satisfactory as to the content of the assessment made under Section 158BC. The Karnataka High Court pointed out the difference between the approval and permission by referring P.Ramanatha Aiyar's Law Lexicon and held that when approval is given it means the approving authority has full knowledge about the contents of what is approved and confirmed authoritatively the order of the lower authority.

9. Further, he relied on Brief Note submitted during the course of arguments on Section 263 of Act 1961 (Para.6 to 9 and 13 to 16) which reads as under:

6. Section 144C was inserted in the Act by the Finance Act, 2009 and came into effect from 1st October, 2009. In the Notes on Clauses to the Finance Bill, 2009, the reason for insertion of Section 144C was as under:

"The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure.

With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism."

7. It is with this intention i.e. "with a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department....", the DRP was introduced to shorten the length of tax disputes in international transactions involving computation of Arm's Length Price. Further, since the DRP constitutes a collegium comprising of three Commissioners of Incometax, the directions given are binding on the Assessing Officer which is evident from Section 144C (10) of the Act. Therefore, by providing an alternative, the intention of the Legislature was to reduce lengthy litigations and put an end to the disputes. In the present case, the Respondent by issuing the Impugned Notice has done the exact opposite.

8. Further, the Hon'ble Bombay High Court in Vodafone India Services Pvt. Ltd. vs Union of India and Others,2013 SCCOnlineBom 1534 held as under:

"The proceeding before the DRP is not an appeal proceeding but a correcting mechanism in the nature of a second look at the proposed assessment order by high functionaries of the revenue keeping in mind the interest of the assessee. It is a continuation of the Assessment proceedings till such time a final order of assessment which is appelable is passed by the Assessing Officer. This also finds support from Section 144C (6) which enables the DRP to collect evidence or cause any enquiry to be made before giving directions to the Assessing Officer under Section 144C (5). The DRP procedure can only be initiated by an assessee objecting to the draft assessment order. This would enable correction in the proposed order (draft assessment order) before a final assessment order is passed. Therefore, we are of the view that in the present facts this issue could be agitated before and rectified by the DRP."

9. It is submitted that the issue to taxability of shares being issued at a premium has already been well settled. The Revenue had raised a similar issue regarding discrepancy in valuation of the share premium received in the case of Vodafone India Services (P) Ltd vs UOI, (2014) 368 ITR 1 (Bom) . A transfer pricing adjustment was made to the valuation of the shares, holding that valuation of shares adopted by the assessee is incorrect. The Hon'ble Bombay High Court in no uncertain terms laid down the law stating as under:-

"25. But we have examined the issue afresh. The word income for the purpose of the Act has a well understood meaning as defined in Section 2(24) of the Act. This even when the definition in Section 2(24) of the Act is an inclusive definition. It cannot be disputed that income will not in its normal meaning include capital receipts unless it is so specified, as in Section 2(24) (vi) of the Act. In such a case, Capital Gains chargeable to tax under Section 45 of the Act are, denied to be income. The amounts received on issue of share capital including the premium is undoubtedly on capital account. Share premium have been made taxable by a legal fiction under Section 56(2)(viib) of the Act and the same is enumerated as Income in Section 2(24)(xvi) pf the Act. However, what is bought into the ambit of income is the premium received from a resident in excess of the fair market value of the shares. In this case what is being sought to be taxed is capital not received from a non-resident i.e, premium allegedly not received on application of ALP. Therefore, absent express legislation, no amount received, accrued or arising on capital account transaction can be subjected to tax as Income......."

13. Prior to the year 2016, an appeal was provided from the order/directions of the DRP to the Appellate Tribunal as per Section 253(2A) of the Act. Bearing in mind the decision of the Hon'ble Supreme Court referred to above, Parliament in its wisdom deleted Section 253(2A) of the Act, thereby giving finality to the order/directions of the DRP.

14. By not allowing appeals against the directions of the DRP and giving finality to the order/directions of the DRP, the Legislature implicitly conceded to the fact that, in matters of determining tax liability relating to international transactions, the DRP is an independent mechanism within the framework of Income Tax Department separate from the Revenue. Also, the 2016 amendment which omitted the appeal to ITAT provision (253(2A)) cities the reason being minimization of litigation to be the reason for omission.

15. Further, the law on the proposition that 'what cannot be done directly cannot be done indirectly' is well settled. As explained hereinabove, a separate ADR mechanism was created for resolving the disputes relating to Transfer Pricing in International Transactions. Further vide the 2016 amendment, the right to appeal was specifically taken away in order to minimize these disputes.

16. Once the DRP has exercised its power under Section 144C of the Act, the Commissioner loses his jurisdiction to exercise power under Section 263 of the Act. Consequently, the Commissioner cannot issue a show cause notice under Section 263 exercising his revisionary powers, especially when the legislature has specifically (a) created a separate mechanism of DRP; and (b) has barred any statutory appeal against the order. Therefore, by virtue of issuing a notice under Section 263, the Respondent is attempting to assume jurisdiction, when it has done and is trying to have a re-look at the final DRP order, when the jurisdiction to do so is barred under the Act. (Reliance in this regard is placed on the unreported judgment passed by the Division of Madras High Court in Appeal No.354/2006 para 20).

10. On the other hand, learned counsel for the Respondent Sri K V Aravind vehemently contended that contention of the petitioner that respondent has no jurisdiction to invoke Section 263 of Act 1961 in respect of Assessment Order which was pursuant to the DRP decision and further, its acceptance by the AO is without any legal substance. Even though, contention of the petitioner that DRP consists of three Commissioners and their decision has been taken note off by the AO while passing a Final Assessment Order, still there is no statutory provision barring the jurisdiction of the Respondent/Principal Commissioner to invoke Section 263 of Act 1961 to revise Assessment order of the Assessing Officer. On the other hand, Clause (c) to Explanation (1) of Section 263 of Act 1961 there is a bar in respect of the following issue:

"263(1)(c): Where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal (filed on or before or after the 1st day of June, 1988), the powers of the (Principal Commissioner or) Commissioner under this sub-section shall extend (and shall be deemed always to have extended) to such matters as had not been considered and decided in such appeal)".

Thus, Section 263 of Act 1961 provides for revision of order, if it is erroneous and prejudicial to revenue, which earmarks that Principal Commissioner is empowered to Section 263 of Act 1961 in order to rectify the Assessment Order made by the AO. Further, respondent counsel pointed out by reading of Explanation 2(a to d), it is crystal clear that there is no prohibition to the Principal Commissioner to invoke Section 263 of Act 1961 even in an assessment matter where DRP has examined the Draft Assessment Order along with assessee objections.

11. Learned counsel for the Respondent submitted that any short coming relates to twin ingredients of Section 263 of Act 1961 which cannot be agitated in the present petition. Petitioner has a remedy before the respondent by submitting his explanation. If his explanation is satisfactory, respondent may drop further proceedings or else, if he is not satisfied, in such an event he shall proceed in accordance with the provisions of Section 263 of Act 1961 while providing ample opportunity to the petitioner.

12. The cited decision on behalf of the petitioner has no application to the present case for the reasons that there is no bar in respect of invoking Section 263 of Act 1961 by the Principal Commissioner even in the event of examination of Draft Assessment Order by the DRP. The respondent is prohibited in invoking Section 263 of Act 1961 only under one circumstance which is stated in Sub-clause (c) of Explanation (1) to Section 263 of Act 1961 cited supra. Thus, petitioner has not made out a case in respect of issue relation to, "Jurisdiction of the respondent in invoking Section 263 of Act 1961". Consequently, if there is any shortcoming in the impugned notice, petitioner has other remedy of furnishing explanation and appraising the respondent. Thus, writ petition is not maintainable and it is to be rejected at threshold.

13. Heard learned counsel for the parties.

14. The questions for consideration in the present petition is:

(1) Whether respondent could invoke Section 263 of Act 1961 in respect of an assessment order of the AO pursuant to DRP decision or not?

(2) Impugned notice dated 08.02.2016 is in terms of the Section 263 of Act 1961 or not?

15. Petitioner who is an assessee had filed return of income on 23.09.2009 for the assessment year 2009-10. In view of the fact that International Money Transaction was involved in the petitioner's business, AO is required to initially proceed with the draft assessment order and communicate the same to the petitioner/assessee for either acceptance or filing of objection. Petitioner had filed objections. Consequently, objections were examined by the DRP consisted of three panel members who were in the cadre of Commissioner. On receipt of DRP's decision, AO proceeded to pass a Final Assessment Order. In this backdrop, question is, "Whether the Respondent - Principal Commissioner could invoke Section 263 of Act 1961 to examine the Assessment Order of the AO or not"?

16. Learned counsel for the petitioner submitted that if a Draft Assessment Order was scrutinized by the DRP and followed by Final Assessment Order by AO, in such circumstances, respondent - Principal Commissioner has no jurisdiction for the reasons that DRP consists of three Commissioners and such decision cannot be examined by sole Principal Commissioner - respondent. The hierarchy is required to be taken note of. Respondent - Principal Commissioner is equivalent to one of the Commissioner of DRP where as three such Commissioners have taken a decision on the Draft Assessment Order of the AO. Consequently, it is not appropriate for the respondent/Principal Commissioner alone to examine the decision of the DRP. At the best, it could be examined by the Tribunal.

17. Before examining the contentions of the petitioner, it is appropriate to take note of few provisions of Act, 1961.

92A. (1) For the purposes of this section and sections 92, 92B, 92C, 92D, 92E and 92F, associated enterprise", in relation to another enterprise, means an enterprise-

(a) Which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise; or

(b) in respect of which one or more persons who participate, directly or indirectly, or through one or more intermediaries, in its management or control or capital, are the same persons who participate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise.

92CA. (1) Where any person, being the assessee, has entered into an international transaction (or specified domestic transaction) in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the (Principal Commissioner or) Commissioner, refer the computation of the arm's length price in relation to the said international transaction (or specified domestic transaction) under section 92C to the Transfer Pricing Officer.

(2) Where a reference is made under sub-section (1), the Transfer Pricing Officer shall serve a notice on the assessee requiring him to produce or cause to be produced on a date to be specified therein, any evidence on which the assessee may rely in support of the computation made by him of the arm's length price in relation to the international transaction (or specified domestic transaction) referred to in sub-section (1).

((2A) Where any other international transaction (other than an international transaction referred under sub-section (1), comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply as if such other international transaction is an international transaction referred to him under sub-section (1)).

(2B) Where in respect of an international transaction, the assessee has not furnished the report under section 92E, and such transaction comes to the notice of the Transfer Pricing Officer during the course of the proceeding before him, the provisions of this Chapter shall apply as if such transaction is an international transaction referred to him under subsection (1).

(2C) Nothing contained in sub-section (2B) shall empower the Assessing Officer either to assess or reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year, proceedings for which have been completed before the 1st day of July, 2012.

3. On the date specified in the notice under sub-section (2), or as soon thereafter as may be, after hearing such evidence as the assessee may produce including any information or documents referred to in subsection (3) of Section 92D and after considering such evidence as the Transfer Pricing Officer may require on any specified points and after taking into account all relevant materials which he has gathered, the Transfer Pricing Officer shall, by order in writing, determine the arm's length price in relation to the international transaction (or specified domestic transaction) in accordance with sub-section (3) of Section 92C and send a copy of his order to the Assessing Officer and to the assessee.

((3A) Where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub-section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (1) is made on or after the 1st day of June, 2007, an order under subsection (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires:)

(Provided that in the circumstances referred to in clause (ii) or clause (x) of Explanation 1 to section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, such remaining period shall be deemed to have been extended accordingly.)

(4. On receipt of the order under sub-section (3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of section 92C in conformity with the arm's length price as so determined by the Transfer Pricing Officer.)

5. With a view to rectifying any mistake apparent from the record, the Transfer Pricing Officer may amend any order passed by him under sub-section (3), and the provisions of section 154, shall so far as may be, apply accordingly.

6. Where any amendment is made by the Transfer Pricing Officer under sub-section (5), he shall send a copy of his order to the Assessing Officer who shall thereafter proceed to amend the order of assessment in conformity with such order of the Transfer Pricing Officer.

7. The Transfer Pricing Officer may, for the purposes of determining the arm's length price under this section, exercise all or any of the powers specified in clauses (a) to (d) of sub-section (1) of section 131 or sub-section (6) of section 133 (or Section 133A).

Explanation:- For the purposes of this section, "Transfer Pricing Officer" means a Joint Commissioner or Deputy Commissioner or Assistant Commissioner authorized by the Board to perform all or any of the functions of an Assessing Officer specified in sections 92C and 92D in respect of any person or class of persons.

144C. (1) xxxxx

(2) xxxxx

(b) file his objections, if any, to such variation with,-

(i) the Dispute Resolution Pane; and

(ii) the Assessing Officer.

263. (1) The (Principal Commissioner - or) Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the (Assessing) Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceling the assessment and directing a fresh assessment.

(Explanation)- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section.-

(a) an order passed (on or before or after the 1st day of June, 1988) by the Assessing Officer shall include-

(i) an order of assessment made by the Assistant Commissioner (or Deputy Commissioner) or the Income-tax Officer on the basis of the directions issued by the (Joint) Commissioner under section 144A.

(ii) an order made by the (Joint) Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the (Principal Chief Commissioner or) Director General or (Principal Commissioner or) Commissioner authorized by the Board in this behalf under section 120.

(b) "record" (shall include and shall be deemed always to have included) all records relating to any proceeding under this Act available at the time of examination by the (Principal Commissioner or) Commissioner.

(c) where any order referred to in this subsection and passed by the Assessing Officer had been the subject matter of any appeal (filed on or before or after the 1st day of June, 1988), the powers of the (Principal Commissioner or) Commissioner under this sub-section shall extend (and shall be deemed always to have extended) to such matters as had not been considered and decided in such appeal.

(Explanation 2.- For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner-

(a) the order is passed without making inquiries or verification which should have been made

(b) the order is passed allowing any relief without inquiring into the claim;

(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or

(d) the order has not been passed in accordance by the jurisdiction High Court or Supreme Court in the case of the assessee or any other person.

(2) No order shall be made under subsection (1) after the expiry of two years from the end of the Financial year in which the order sought to be revised was passed.

(3) Notwithstanding anything contained in sub-section (2) an order in revision under this action may be passed at any time in the case of an order which has been passed in consequence of or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, (National Tax Tribunal), the High Court or the Supreme Court.

Explanation - In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.

18. It is undisputed that Draft Assessment Order was notified by the AO in view of the fact that assessee's business involved International Money Transaction. Petitioner/assessee was entitled to have an opportunity to look into Draft Assessment Order. He had option either to accept or to submit objections on variations. If objections were filed, in such an event, the AO is required to forward Draft Assessment Order and objections raised by the petitioner - assessee before the DRP to examine the objections raised by the assessee. DRP drew proceedings and forwarded to the AO. Consequently, AO passed the Final Assessment Order. In this background, where assessment order has attained finality and respondent/Principal Commissioner is not permitted to invoke Section 263 of Act 1961 or not, sub-clause (c) of Explanation 1 of Section 263 of Act 1961 stipulates that there is a prohibition in respect of a particular circumstance, where respondent/Principal Commissioner shall not invoke Section 263 of Act 1961 whereas similar Clause is not forth coming in respect of the matter examined by DRP against Draft Assessment Order of the AO along with objections of the Assessee. Therefore, the contention of the petitioner that respondent does not have power to invoke Section 263 of the Act insofar as examination of Final Assesment Order along with Assessee's objection pursuant to the DRP decision, is untenable. No-doubt DRP panel consists of three Commissioners and Principal Commissioner examining or sitting over decision of the DRP may not be appropriate. At the same time, one cannot lose sight off, of a statutory provision like Section 263 of Act 1961, unless and until Section 263 of Act 1961 prohibits to examine the Final Assessment order, pursuant to the DRP decision. One cannot go beyond the statutory provision and so also 'read' or 'add' words by the Courts while interpreting a statutory provision. Time and again, Supreme Court and other Courts have held that in a matter of interpretation of statutory provisions, Court cannot 'add any words or sentence'. Even if there is any ambiguity, at the best Court can read down or struck down such statutory provision. In the present case, reading of Section 263 of Act 1961, it is crystal clear that there is no bar for the Principal Commissioner to invoke Section 263 of Act 1961 to examine the Final Assessment Order passed by the AO pursuant to the DRP decision.

19. Supreme Court in the following decision examined 'jurisdiction of an officer with reference to relevant provisions' in the case of GUJARAT URJA VIKAS NIGAM LTD. Vs ESSAR POWER LTD., (2008) 4 SCC 755 and has held at paras. 35, 39 and 61 as under:

35: It is well settled that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner [vide Chandra Kishore Jha v.Mahavir Prasad, (1999) 8 SCC 266 : AIR 1999 SC 3558 ] (SCC para 17 : AIR para 12), Dhanajaya Reddy v. State of Karnataka, (2001) 4 SCC 9 : 2001 SCC (Cri) 652 : AIR 2001 SC 1512] (SCC para 23 : AIR para 22 ), etc.]. Section 86(1)(f) provides a special manner of making references to an arbitrator in disputes between a licensee and a generating company. Hence by implication all other methods are barred.

39. It may be mentioned that the Mimansa rules of interpretation were our traditional principles of interpretation laid down by Jaimini, whose sutras were explained by Shabar, Kumarila Bhatta, Prabhakar, etc. These Mimansa principles were regularly used by our great jurists like Vijnaneshwara (author of Mitakshara), Jimutvahana (author of Dayabhaga), Nanda Pandit, etc. whenever they found any conflict between the various smritis or any ambiguity, incongruity, or casus omissus therein. There is no reason why we cannot use these principles on appropriate occasions. However, it is a matter of deep regret that these principles have rarely been used in our law courts. It is nowhere mentioned in our Constitution or any other law that only Maxwell's principles of interpretation can be used by the court. We can use any system of interpretation which helps us to resolve a difficulty. In certain situations Maxwell's principles would be more appropriate, while in other situations the Mimansa principles may be more suitable.

61. We make it clear that it is only with regard to the authority which can adjudicate or arbitrate disputes that the Electricity Act, 2003 will prevail over Section 11 of the Arbitration and Conciliation Act, 1996. However, as regards the procedure to be followed by the State Commission (or the arbitrator nominated by it) and other matters related to arbitration (other than appointment of the arbitrator) the Arbitration and Conciliation Act, 1996 will apply (except if there is a conflicting provision in the Act of 2003). In other words, Section 86(1)(f) is only restricted to the authority which is to adjudicate or arbitrate between licensees and generating companies. Procedural and other matters relating to such proceedings will of course be governed by the Arbitration and Conciliation Act, 1996, unless there is a conflicting provision in the Act of 2003.

20. Supreme Court in the case of ASSISTANT COMMERCIAL TAXES OFFICER VS. MAKKAD PLASTIC AGENCIES, (2011) 4 SCC 750 , para 15, it is held as under:-

15. In CIT v. Ralson Industries Ltd., (2007) 2 SCC 326 a similar situation arose for the interpretation of this Court regarding the scope and ambit of Section 154 of the Income Tax Act, 1961 vesting the power of rectification as against the power vested under Section 263 of the Income Tax Act, which is a power of revision. While examining the scope of the power of rectification under Section 154 as against the power of revision vested under Section 263 of the Income Tax Act, it was held by this Court as follows at SCC para 8: (SCC p. 330)

"8. The scope and ambit of a proceeding for rectification of an order under Section 154 and a proceeding for revision under Section 263 are distinct and different. Order of rectification can be passed in certain contingencies. It does not confer a power of review. If an order of assessment is rectified by the assessing officer in terms of Section 154 of the Act, the same itself may be a subject-matter of a proceeding under Section 263 of the Act. The power of revision under Section 263 is exercised by a higher authority. It is a special provision. The revisional jurisdiction is vested in the Commissioner. An order thereunder can be passed if it is found that the order of assessment is prejudicial to the Revenue. In such a proceeding, he may not only pass an appropriate order in exercise of the said jurisdiction but in order to enable him to do it, he may make such inquiry as he deems necessary in this behalf."

In para 12 of the said judgment it was also held that when different jurisdictions are conferred upon different authorities, to be exercised on different conditions, both may not be held to be overlapping with each other. While examining the scope and limitations of jurisdiction under Section 154 of the Income Tax Act, it was held that such a power of rectification could only be exercised when there is an error apparent on the face of the record and that it does not confer any power of review. It was further held that an order of assessment may or may not be rectified and if an order of rectification is passed by the assessing authority, the rectified order shall be given effect to.

21. Scope of Section 263 examined in the case of COMMISSIONER OF INCOME TAX, SHIMLA VS. GREENWORLD CORPORATION, PARWANOO, (2009) 7 SCC 69 , Paras 20, 28, 41 and 52 reads as under:-

20. An Income Tax Officer while passing an order of assessment performs judicial function. An appeal lies against his order before the appellate authority. A revision application would also lie before the Commissioner of Income Tax. It is trite that the jurisdiction exercised by the revisional authority pertains to its appellate jurisdiction. (See Shankar Ramchandra Abhyankar v. Krishnaji Dattatreya Bapat, (1969) 2 SCC 74 : AIR 1970 SC 1 ] .)

28. Before, however, adverting to the jurisdictional issue raised by the assessee herein, we may consider the jurisdiction of the Commissioner of Income Tax to issue notice in terms of Section 263 of the Act. It provides for a revisional power. It has its own limitations. An order can be interfered with suo motu by the said authority not only when an order passed by the assessing officer is erroneous but also when it is prejudicial to the interests of the Revenue. Both the conditions precedent for exercising the jurisdiction under Section 263 of the Act are conjunctive and not disjunctive. An order of assessment passed by an Income Tax Officer, therefore, should not be interfered with only because another view is possible.

41. The scope of provisions of Section 263 of the Act is no longer res integra. The power to exercise suo motu revision in terms of Section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein viz. (1) the order is erroneous; (2) by virtue of the order being erroneous prejudice has been caused to the interest of the Revenue, exist.

52. In Rajinder Nath, (1979) 4 SCC 282 : (1979) 120 ITR 14 ] , this Court held: (SCC pp. 286-87, para 11)

"11. The expressions 'finding' and 'direction' are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of, (A) a finding in respect of B may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else, a finding that it belongs to B or does not belong to B would be determinative of the issue whether it can be taxed as A's income. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regards the expression 'direction' in Section 153(3)(ii) of the Act, it is now well settled that it must be an express direction necessary for the disposal of the case before the authority or court. It must also be a direction which the authority or court is empowered to give while deciding the case before it. The expressions 'finding' and 'direction' in Section 153(3)(ii) of the Act must be accordingly confined. Section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation for making an assessment order under Section 143 or Section 144 or Section 147. ( ITO v. Murlidhar Bhagwan Das, (1965) AIR SC 342 : (1964) 52 ITR 335 and N. Kt. Sivalingam Chettiar v.CIT, (1967) 66 ITR 586 (SC) ) The question formulated by the Tribunal raises the point whether the Appellate Assistant Commissioner could convert the provisions of Section 147(1) into those of Section 153(3)(ii) of the Act. In view of Section 153(3)(ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point."

It is, thus, evident that jurisdiction to issue directions is limited.

22. Supreme Court in the case of DHANANJAYA REDDY vs STATE OF KARNATAKA, (2001) 4 SCC 9 , in para no.23 held as under:-

"23. It is a settled principle of law that where a power is given to do a certain thing in a certain manner, the thing must be done in that way or not at all. This Court in State of U.P. v. Singhara Singh, (1964) AIR SC 358 (AIR p. 361, para 8) held:-

"A Magistrate, therefore, cannot in the course of investigation record a confession except in the manner laid down in Section 164. The power to record the confession had obviously been given so that the confession might be proved by the record of it made in the manner laid down".

23. Supreme Court in the case of Director General, ESI and another vs. T. Abdul Razak, (1996) 4 SCC 708 in para no. 14 held as under:-

"14. The law is well settled that in accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer in whom it has been confided, unless sub-delegation of the power is authorised by express words or necessary implication."

24. Supreme Court in the case of Sidhartha Sarawgi Vs. Board of Trustees for the Port of Kolkata and others, (2014) 16 SCC 248 , in para nos 4, 9 and 10 held as under:-

4. There is a subtle distinction between delegation of legislative powers and delegation of non-legislative/administrative powers. As far as delegation of power to legislate is concerned, the law is well settled: the said power cannot be sub-delegated. The legislature cannot delegate essential legislative functions which consist in the determination or choosing of the legislative policy and formally enacting that policy into a binding rule of conduct. Subordinate legislation which is generally in the realm of rules and regulations dealing with the procedure on implementation of plenary legislation is generally a task entrusted to a specified authority. Since the legislature need not spend its time for working out the details on implementation of the law, it has thought it fit to entrust the said task to an agency. That agency cannot entrust such task to its subordinates; it would be a breach of the confidence reposed on the delegate.

9. The Constitution confers power and imposes duty on the legislature to make laws and the said functions cannot be delegated by the legislature to the executive. The legislature is constitutionally required to keep in its own hands the essential legislative functions which consist of the determination of legislative policy and its formulation as a binding rule of conduct. After the performance of the essential legislative function by the legislature and laying the guiding policy, the legislature may delegate to the executive or administrative authority, any ancillary or subordinate powers that are necessary for giving effect to the policy and purposes of the enactment. In construing the scope and extent of delegated power, the difference between the essential and non-essential functions of the delegate should also be borne in mind. While there cannot be sub-delegation of any essential functions, in order to achieve the intended object of the delegation, the non-essential functions can be sub-delegated to be performed under the authority and supervision of the delegate.

10. Sometimes, in the plenary legislation itself, the lawmakers may provide for such sub-delegation. That is what we see under Sections 21 and 34 of the Major Port

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Trusts Act, 1963, which we shall be discussing in more detail at a later part of this judgment. 25. Supreme Court in the case of Captain Sube Singh and Others vs. Lt. Governor of Delhi and others, (2004) 6 SCC 440 in para no. 29 held as under:- 29. In Anjum M.H. Ghaswala [ CIT v. Anjum M.H. Ghaswala, (2002) 1 SCC 633 ] a Constitution Bench of this Court reaffirmed the general rule that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. (See also in this connection Dhanajaya Reddy v. State of Karnataka, (2001) 4 SCC 9 : 2001 SCC (Cri) 652 ] .) The statute in question requires the authority to act in accordance with the rules for variation of the conditions attached to the permit. In our view, it is not permissible to the State Government to purport to alter these conditions by issuing a notification under Section 67(1)(d) read with sub-clause (i) thereof. In view of the aforesaid decisions at 22 to 25 respondent alone is entitled to revive the Assessment Order under Section 263 of Act 1961. The cited decisions and contents of brief note on behalf of the petitioner do not assist in the matter and are distinguishable in view of language employed in Section 263 of Act 1961. 26. In view of Section 263 of Act 1961 read with the aforesaid principles laid down by the Apex Court in various decisions, the cited decision on behalf of the petitioner would not aid or support the contention of the petitioner that Principal Commissioner/respondent has no jurisdiction to invoke Section 263 of Act 1961, is not appreciable. Consequently, the contention of the petitioner that Principal Commissioner has no jurisdiction to invoke Section 263 of Act 1961 is hereby rejected. 27. The other contention is that impugned notice dated 08.02.2016 do not contain the ingredients and notice is liable to be set-aside. Petitioner has a remedy before the Principal Commissioner if there is any shortcoming in respect of ingredients stated in Section 263 of Act 1961. Writ Court cannot examine the validity of notice on merit. Petitioner has a remedy before the very same authority by submitting explanation to the notice. Writ Court can interfere in respect of notice only, if, there is any violation of statutory provision. Supreme Court in the case of HARBANSLALSAHNIA AND ANOTHER Vs INDIAN OIL CORPORATION LIMITED AND OTHERS, (2003) AIR SC 2120 , relevant Para.7 reads as under: 7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1 .) The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings. 28. In view of the principle laid down by the Supreme Court (supra), the petitioner has not apprised this Court that he need not exhaust a remedy of submitting explanation/reply to the notice dated 08.02.2016. 29. The power conferred on the High Court under Article 226 of the Constitution of India is to advance justice and not to thwart it. The very purpose of such Constitutional powers being conferred on the High Court is that no man should be subjected to injustice by violating law. This Court does not sit as an appellate authority over the decision of the authorities below. Further, while exercising extra-ordinary jurisdiction by the High Court under Article 226 of the Constitution of India, it should examine whether the impugned action is per se illegal or vitiated by errors apparent on the face of the record. 30. In view of above narrated facts and circumstances read with the legal issues, petitioner has not made out a case so as to interfere with the impugned notice dated 08.02.2016. Resultantly: I. Writ Petition stands rejected reserving liberty to the petitioner to approach the respondent in filing explanation/reply within a period of four weeks from the date of receipt of this order. II. Rule is made absolute in the preceding terms. III. Leaving the parties to bear their respective costs.
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