GOOGLE IRELAND LIMITED vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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WP/1726/2019HC KarnatakaKAHC01000017201903 June 2025Bench: B M SHYAM PRASAD7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petitions and quashed the impugned orders dated 24.12.2018. The Court's reasoning was based on the precedent set by the Division Bench of the same High Court in Commissioner of Income-tax (International Taxation) Vs. Cisco Systems Services B.V. The petitioner's argument that the orders, despite mentioning Section 144C and the opportunity for objections, concluded the assessment, issued a demand notice under Section 156, and initiated penalty proceedings under Section 271(1)(c), was accepted. The Court found that the revenue's attempt to rectify this by issuing a corrigendum to treat the final assessment order as a draft order was an attempt to gloss over an incurable error. The revenue's submission that the description as 'Final Assessment Order' was a typographical error was not accepted, especially since the counsel could not controvert the simultaneous demand and penalty initiation, nor the established legal position. The ratio decidendi is that the simultaneous issuance of a final assessment order, tax demand, and penalty proceedings, without following the mandatory procedure for a draft assessment order under Section 144C, renders the assessment order invalid. The operative direction was to quash the impugned orders.

What were the facts?

The petitioner, Google Ireland Limited, is challenging final assessment orders dated 24.12.2018 passed by the Assistant Commissioner of Income Tax, International Taxation, for Assessment Years 2009-10 and 2010-11. The orders assessed total incomes of INR 241,77,35,793/- and INR 268,40,62,959/- respectively. The petitioner also challenges notices dated 24.12.2018 for tax demands of INR 56,66,60,453/- and INR 59,50,76,888/-, and notices initiating penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. A corrigendum dated 31.3.2018, attempting to treat the final assessment order as a draft order, is also under challenge. The core dispute revolves around whether the impugned orders are final or draft assessment orders.

What were the issues?

1. Whether the impugned orders dated 24.12.2018, passed under Section 143(3) read with Sections 147, 92CA, and 144C of the Income Tax Act, 1961, are to be treated as Final Assessment Orders or Draft Assessment Orders, as required under Section 144C of the Act? Assessee's Contention: The learned counsel for the petitioner argued that the impugned orders are indeed Final Assessment Orders. This is evidenced by paragraph 6 of the operative portion, which refers to Section 144C and the opportunity to file objections with the Dispute Resolution Panel. However, the subsequent paragraph concludes the assessment, computes income and tax, issues a demand notice under Section 156, and initiates penalty proceedings under Section 274 read with Section 271(1)(c). The petitioner relies on the Division Bench decision in Commissioner of Income-tax (International Taxation) Vs. Cisco Systems Services B.V., which held that simultaneous demand and initiation of penalty proceedings, instead of a draft order, constitute an incurable error. Revenue's Contention: The learned standing counsel for the respondent contended that the description of the orders as 'Final Assessment Orders' was a typographical error. However, the counsel could not controvert the fact that there was a computation of tax with simultaneous initiation of penalty proceedings, nor could they dispute the import of the law as declared by the Division Bench.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 92CA,Section 144C,Section 156,Section 274,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP No. 1730 of 2019
WP No. 1726 of 2019

Read from the judgment's own cause title. This page is filed under one of them.

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HC-KAR NC: 2025:KHC:18714 WP No. 1730 of 2019 C/W WP No. 1726 of 2019

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 1730 OF 2019 (T-IT) C/W WRIT PETITION NO. 1726 OF 2019 (T-IT)

IN WP No. 1730/2019 BETWEEN:

GOOGLE IRELAND LIMITED GORDON HOUSE, BARROW STREET, DUBLIN -4, D04, E5WR, IRELAND, REPRESENTED HEREIN BY ITS AUTHORIZED SIGNATORY MS SABIA VEQAR RESIDING AT C121, SARASWATI KUNJ APARTMENTS, PLOT NO.25, PATPARGANJ, DELHI - 110092. …PETITIONER (BY SRI. DEEPAK CHOPRA A/W SRI. ANMOL ANAND, MS. PRIYA TANDON AND SRI. GOUTHAM R., ADVOCATES)

AND: THE ASSISTANT COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE - 1(1), ROOM NO 441,

Digitally signed by VANAMALA N Location: High Court of Karnataka

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HC-KAR NC: 2025:KHC:18714 WP No. 1730 of 2019 C/W WP No. 1726 of 2019

IV FLOOR, BMTC BUILDING, 80 FT ROAD, KORAMANGALA BANGALORE - 560095 …RESPONDENT (BY SRI. E I SANMATHI A/W SRI. M. DILIP, ADVOCATES)

THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE FINAL ASSESSMENT ORDER DATED 24.12.2018 (IMPUGNED ORDER, MARKED AS ANNEXURE-F) PASSED BY THE RESPONDENT IN THE CASE OF THE PETITIONER FOR AY 2010-11 THEREBY ASSESSING THE TOTAL INCOME OF THE PETITIONER AT INR 268,40,62,959/-; QUASH THE NOTICE DATED 24.12.2018 (MARKED AS ANNEXURE-G) ISSUED BY THE RESPONDENT U/S 156 OF THE ACT THEREBY RAISING A TAX DEMAND OF INR 59,50,76,888/- AGAINST THE PETITIONER FOR AY 2010-11; QUASH THE NOTICE DATED 24.12.2018 (MARKED AS ANNEXURE-H) ISSUED BY THE RESPONDENT THEREBY INITIATING PENALTY PROCEEDINGS U/S 271(1)(c) OF THE ACT AGAINST THE PETITIOENR FOR AY 2010-11; QUASH THE CORRIGENDUM DATED 31.3.2018 (MARKED AS ANNEXURE-I) ISSUED BY THE RESPONDENT WHEREBY HE HAS SOUGHT TO RECTIFY HIS ILLEGALITY BY TREATING THE FINAL ASSESSMENT ORDER DATED 24.12.2018 AS A DRAFT ORDER;

IN WP NO. 1726/2019 BETWEEN: GOOGLE IRELAND LIMITED GORDON HOUSE, BARROW STREET DUBLIN-4 D04, E5W5, IRELAND

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HC-KAR NC: 2025:KHC:18714 WP No. 1730 of 2019 C/W WP No. 1726 of 2019

REPRESENTED HEREIN BY ITS AUTHORIZED SIGNAOTRY MS SABIA VEQAR R/AT C-121, SARASWATI KUNJ APTS, PLOT NO.25, PATPARGANJ, DELHI-11092 ...PETITIONER (BY SRI. DEEPAK CHOPRA A/W SRI. ANMOL ANAND, MS. PRIYA TANDON AND SRI. GOUTHAM R., ADVOCATES) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIRCLE -1(1), ROOM NO.441,IV FLOOR BMTC BUILDING, 80 FT ROAD, KORAMANGALA BANGALORE-560095 ...RESPONDENT (BY SRI. Y.V.RAVIRAJ A/W SRI. M.DILIP, ADVOCATES) THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE FINAL ASSESSMENT ORDER DATED 24.12.2018 (IMPUGNED ORDER, MARKED AS ANNEXURE-F) PASSED BY THE RESPONDENT IN THE CASE OF THE PETITIONER FOR AY 2009-10 THEREBY ASSESSING THE TOTAL INCOME OF THE PETITIONER AT INR 241,77,35,793/-; QUASH THE NOTICE DATED 24.12.2018 (MARKED AS ANNEXURE-G) ISSUED BY THE RESPONDENT U/S 156 OF THE ACT THEREBY RAISING A TAX DEMAND OF INR 56,66,60,453/- AGAINST THE PETITIONER FOR AY 2009-10; QUASH THE NOTICE DATED 24.12.2018 (MARKED AS ANNEXURE-H) ISSUED BY THE RESPONDENT THEREBY INITIATING PENALTY PROCEEDINGS U/S 271(1)(c) OF THE ACT AGAINST THE PETITIONER FOR AY 2009-10; QUASH THE CORRIGENDUM DATED 31.3.2018 (MARKED AS ANNEXURE-I) ISSUED BY THE RESPONDENT WHEREBY

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HC-KAR NC: 2025:KHC:18714 WP No. 1730 of 2019 C/W WP No. 1726 of 2019

HE HAS SOUGHT TO RECTIFY HIS ILLEGALITY BY TREATING THE FINAL ASSESSMENT ORDER DATED 24.12.2018 AS A DRAFT ORDER.

THESE PETITIONS, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE B M SHYAM PRASAD

ORAL ORDER The petitioner is aggrieved by the orders dated 24.12.2018 under Section 143(3) read with Section 147, 92CA and 144C of the Income Tax Act, 1961 [for short, 'the IT Act'] and these impugned orders are relevant to the Assessment Years 2009-10 and 2010-11. Mr. Deepak Chopra, the learned counsel for the petitioner, submits that the outcome in these petitions must turn on whether this Court could accept the respondent's case that the impugned orders dated 24.12.2018 are not Final Assessment Orders but Draft Assessment Orders as required under Section 144C of the IT Act.

2.

Mr. Deepak Chopra, to buttress the argument that the impugned orders are indeed Final

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HC-KAR NC: 2025:KHC:18714 WP No. 1730 of 2019 C/W WP No. 1726 of 2019

Assessment Orders and not Draft Assessment Orders, while inviting this Court's attention to paragraph No.6 of the operative portion of the impugned orders where there is a reference to Section 144C and the opportunity to file objections with the Dispute Resolution Panel, Bengaluru, submits that the impugned orders cannot be treated as Draft Assessment Orders because of the succeeding paragraph where the assessment is concluded computing income and tax while issuing demand notice under Section 156 of the IT Act with the initiation of proceedings under Section 274 read with Section 271(1)(c) thereof.

3.

Mr. Deepak Chopra further submits that in very similar circumstances, a Division Bench of this Court in Commissioner of Income-tax (International Taxation) Vs. Cisco Systems Services B.V.1, has opined that instead of a Draft Assessment

1 [2023] 149 taxmann.com486 (Karnataka)

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HC-KAR NC: 2025:KHC:18714 WP No. 1730 of 2019 C/W WP No. 1726 of 2019

Order, the Final Assessment Order is passed and that the subsequent correction is an attempt by the Revenue to gloss over this incurable error. The learned counsel submits that the Division Bench has held that the Revenue's defense cannot be accepted when there is simultaneous demand and initiation of penal proceedings.

4.

Mr. E. I. Sanmathi, the learned standing counsel for the respondent, relying upon the assertions in the Statement of Objections, canvasses to contend that the description of the impugned orders as Final Assessment Orders would only be a typographical error, but the learned counsel cannot controvert the fact that there is a computation of tax with simultaneous initiation for penalty with tax, or the import of law as is declared by the Division Bench. As such, the following:

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HC-KAR NC: 2025:KHC:18714 WP No. 1730 of 2019 C/W WP No. 1726 of 2019

ORDER The petitions are allowed and the impugned orders dated 24.12.2018 [Annexure-F] are quashed.

Sd/- (B M SHYAM PRASAD) JUDGE

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