PETROFAC INTERNATIONAL (UAE) LLC vs. ASSISTANT COMMISSIONER OF INCOME TAX

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CWP/21788/2021HC Punjab & HaryanaPHHC01100308202106 November 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the notices issued under Section 142(1) of the Income Tax Act, 1961, did not provide sufficient time for the petitioner to furnish the requested information and documents. The court noted that the time provided was too short, especially considering the nature of the information sought, which included details for projects ending on 31.03.2019. The court found that the petitioner was not given a fair opportunity of hearing and that the entire proceedings were conducted contrary to the provisions of the Act and Rules, which necessitate providing sufficient opportunity. Consequently, the final assessment order dated 30.11.2021 was set aside. The court directed the authorities to communicate the order to the Assessing Officer, who shall pass a fresh order. The DRP was also directed to provide an opportunity of hearing to the petitioner, as it acts as a quasi-judicial authority. The entire exercise was to be completed within three months.

What were the facts?

The petitioners, Petrofac International (UAE) LLC, filed writ petitions challenging the final assessment order dated 30.11.2021 passed by the Assistant Commissioner of Income Tax. The assessment year is not explicitly stated but implied to be related to the financial year ending 31.03.2019. The petitioner argued that they were not given sufficient time to respond to notices issued under Section 142(1) of the Income Tax Act, 1961, and that the draft assessment order was prepared hastily without considering their objections filed before the Dispute Resolution Panel (DRP). The Revenue contended that ample time was provided, and the petitioner delayed in furnishing the required documents.

What were the issues?

1. Whether the notices issued under Section 142(1) of the Income Tax Act, 1961, provided sufficient time to the petitioner to furnish the requested information and documents, thereby ensuring a fair opportunity to respond to the draft assessment order? 2. Whether the final assessment order dated 30.11.2021, passed without considering the petitioner's objections filed before the DRP and without providing adequate opportunity for hearing, is sustainable in law? Assessee's Contentions: - The petitioner argued that the notices under Section 142(1) were issued with very short timelines, including on weekends, making it impossible to gather and provide the extensive documentation requested (e.g., contract details, TDS evidence, ledger accounts, chartered engineer certificates). They claimed this deprived them of a fair opportunity to object to the draft assessment order. - They also contended that their objections filed before the DRP were not considered, and the final order was passed hastily. Revenue's Contentions: - The Revenue argued that sufficient and ample time was given to the petitioner. - They pointed out that the initial notice was served on 31.03.2021, and subsequent notices were issued, but the petitioner delayed in providing the necessary documents.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 144C(2),Section 44BB

AI-generated summary — verify with the full judgment below

CWP-21788-202 235 (2 cases)

IN TH 1. PETROFAC I ASSISTANT 2. PETROFAC I ASSISTANT CORAM: H

H Present: M M M M M

f SANJEEV P

1.

The pet not giv section in spite 21 (O&M) and connected case Page 1 of 6 HE HIGH COURT OF PUNJA CHANDIGAR

INTERNATIONAL (UAE) LLC Vs.

COMMISSIONER OF INCOM ****

INTERNATIONAL (UAE) LLC Vs.

COMMISSIONER OF INCOM **** Date of Decision: 06. **** HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN **** Mr. Salil Kapoor, Advocate (thro Mr. Kushagra Mahajan, Advocat Mr. Sumit Lalchandani, Advocat Ms. Ananya Kapoor, Advocate Mr. Tarun Chanana, Advocate fo Ms. Urvashi Dhugga, Sr. Standin for the respondents/Revenue. **** RAKASH SHARMA, J.(Oral) titioner by way of these petitions ven sufficient time to reply to t 142(1) of the Income Tax Act, 1 e of his request for giving him AB AND HARYANA AT RH CWP-21788-2021 (O&M) C . . . . Petitioner ME TAX . . . . Respondent CWP-24947-2021 (O&M) C . . . . Petitioner ME TAX . . . . Respondent .11.2024 NJEEV PRAKASH SHARMA NJAY VASHISTH ough VC) with te te or the petitioner(s). ng Counsel ) s submits that the petitioner was the notices issued to him under 1961 (‘the Act’). He submits that sufficient time, the respondents

) r t ) r t s r t s MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document

CWP-21788-202 prepare objectio 2. Learned the pet before without order. R fair opp submiss 3. Learned section and ver 1962, t 26.09.2 and 26. asked w enginee as on 3 getting 4. He furth he was PM. In should case in wherein 21 (O&M) and connected case Page 2 of 6 ed a draft assessment order hasti ons. d counsel further submits that ag itioner had filed objections und the Dispute Resolution Panel (D t waiting for the decision of the Resultantly, the order has been pa portunity of hearing and withou sions. d counsel has taken this Court to 142(1) of the Act on 24.09.2021 rified in the prescribed manner u the information called for as p 021 at 3:00 PM. He submits that 09.2021 happened to be Sunday, were relating to certain documents er for recognizing income and ex 31.03.2019. The time therefore the details as demanded by the re her submits that vide another noti asked to furnish accounts and d n the said notice, the respondent not be taxed under section 44BB itiated earlier in the initial notic n only details relating to exports/i ily without even considering his gainst the draft assessment order, der sections 144C(2) of the Act DRP), but the Assessing Officer DRP, proceeded to pass a final ssed without giving the petitioner ut considering his objections and o the notice issued to him under at 8:21 PM asking him to furnish under Rule 14 of the I.T. Rules, per the annexure, on or before t the notice was issued on Friday and the details which were being s and also certificate of chartered xpenditure for each of the project was absolutely insufficient for espondents. ice dated 27.09.2021 at 8:31 PM, documents by 28.09.2021 at 3:00 ts asked as to why the receipts B of the Act which was never a ce issued to him on 31.03.2021, imports, high creditors/liabilities,

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CWP-21788-202 refund asked fo 5. Learned hastily objectio conside He sub deprivin 6. Per con sufficie the not issues o the noti necessa not pro providin asked t Vide an relating provide prepare said dr required objectio 21 (O&M) and connected case Page 3 of 6 claim, contract receipts or fees, for. d counsel submits that insufficien preparing of draft assessment ons to the said draft assessme ered, and a final assessment order bmits that the entire action has ng the petitioner of his right to obj ntra, learned counsel appearing ent and ample time was given to th ice was initially served upon th on which further clarifications w ice itself. Thus, the petitioner wa ary documents and provide them ovided in time. She submits tha ng the necessary documents, an to furnish certain documents but nother notice dated 27.09.2021, g to certain other aspects to be clar ed in time. The department there e a draft assessment order as there aft assessment order was conve d to file the objections within ons before 30.10.2021, and there foreign outward remittance were nt time resulted in wrongful and order. The petitioner submitted ent order which too were not r has been passed on 30.11.2021. been taken in a hasty manner bject. g for the Revenue submits that he petitioner. It is pointed out that he petitioner on 31.03.2021, and ere required were detailed out in as required to keep ready all the m to the respondents, which were at the petitioner has delayed in nd on 24.09.2021 again, he was t he failed to provide the same. another opportunity was given arified, but the same were also not efore had no other option but to e was a time frame provided. The eyed to the petitioner, who was time, but he failed to file the efore the final order was passed.

e d d t . r t t d n e e n s . n t o e s e . MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document

CWP-21788-202 She sub raise ob 7. We hav 8. This C issued t 142(1) reply to to him asked contrac invoice account of cert expend issued informa time pr 9. We also as Satu provide another informa year 20 section 21 (O&M) and connected case Page 4 of 6 bmits that if the petitioner still ha bjections in appeal. ve considered the submissions. Court finds that a notice under to the petitioner on 31.03.2021 a dated 16.09.2021 along with a o the same, whereafter subsequ on 24.09.2021 under section 14 to provide copy of decla ct/agreement for procurement es/bills, evidence to show that T t of trade payables, details of im tificate of chartered engineer diture for each of the project as on 24.09.2021 with directio ation on or before 26.09.2021 at rovided was too short. o notice that the petitioner subm urdays and Sundays were non ed till 28.09.2021 for furnishin r notice dated 27.09.2021 at 8:3 ation on or before 28.09.2021 at 019-20 relating to receipts and re 44BB of the Act, and also to f as any grievances, he can always section 143(2) of the Act was and another notice under section questionnaire. He has filed his ently another notice was issued 42(1) of the Act whereby he was aration under FEMA/AMLA, of goods/services along with TDS has been deducted, ledger mports in prescribed format, copy for recognizing income and on 31.03.2019. The notice was on to provide the aforesaid 3:00 PM. Thus, we find that the mitted a reply and requested that n-working days, time may be ng the said information. Vide 31 PM, he was asked to furnish t 3:00 PM relating to assessment easons for not taxing them under furnish complete information in

s s n s d s , h r y d s d e t e e h t r n MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document

CWP-21788-202 support He wa limitati 30.09.2 01.11.2 last dat 10. Having come o provide have be informa not eve furnish D details order p section the sam objectio would n set asid provisio opportu submit 21 (O&M) and connected case Page 5 of 6 t of income and expenditure sho as also informed that the issu ion on 30.09.2021. The draft as 2021. The objections in this 2021, and as the same were filed te, the same were dismissed on th g noticed the aforesaid provisi on record, we find that while init e certain details along with qu een issued on 24.09.2021 and 2 ation altogether, and the time pr en of seven days, which is th ing of information. Decision taken without giving would therefore stand vitiated passed on the said basis as abov 144C(2) of the Act before the DR me. The Assessing Officer h ons. In view thereto, the final ass not be sustainable in law and the de, as the entire proceedings ons of the Rules and the A unity of hearing including provid their objections. own in Profit and Loss account. ue would get time barred by ssessment order was passed on s regard were submitted on after 30.10.2021, which was the he ground of limitation. ions and the facts which have tially the petitioner was asked to uestionnaire, the notices which 27.09.2021 deal with a different rovided under these notices was he minimum required time for opportunity of filing reply and d in law. The draft assessment ve, was also objected to as per RP, but the DRP has not decided has also not delved with the sessment order dated 30.11.2021 e same therefore will have to be undertaken go contrary to the Act, which necessarily require ding of sufficient opportunity to

. y n n e e o h t s r d t r d e

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CWP-21788-202 11. In the 30.11.2 by the commu pass a f be free 12. The D which i aforesa hencefo 13. With th 14. All pen

November 06, Mohit goyal 1. Whethe 2. Whethe 21 (O&M) and connected case Page 6 of 6 circumstances, we set aside th 021 and direct the authorities to e petitioner on 01.11.2021, unicate the order to the Assessin fresh order. If the petitioner is sti to file an appeal in accordance w DRP shall also provide opportun is held to be inherent as it acts a aid exercise shall be conducted w orth. he aforesaid directions, both thes nding applications also stand disp

(SANJ , 2024 r speaking/reasoned?

Y r reportable?

Y he final assessment order dated o deal with the objections raised whereafter the DRP shall ng Officer who shall accordingly ill aggrieved, the petitioner shall with law. nity of hearing to the petitioner as a quasi-judicial authority. The within a period of three months e writ petitions are disposed of. posed of. JEEV PRAKASH SHARMA) JUDGE

(SANJAY VASHISTH) JUDGE Yes/No Yes/No

d d l y l r e s MOHIT GOYAL 2024.11.13 12:17 I attest to the accuracy and integrity of this document

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