FINASTRA SOFTWARE SOLUTIONS (INDIA) vs. ASSESSMENT UNIT

PDF · subscribers
WP/9887/2024HC KarnatakaKAHC01018922202425 September 2024Bench: S.R.KRISHNA KUMAR7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the DRP had not considered the objections filed by the petitioner. Instead, the DRP proceeded to pass directions under Section 144C(5) of the IT Act based on the final assessment order, without giving due consideration to the petitioner's objections. The Court found this approach to be contrary to the principles of natural justice and the intent of the statutory provisions. Consequently, the Court decided to quash the impugned final assessment order, computation sheet, and demand notice issued by Respondent No.1, as well as the impugned directions issued by Respondent No.4-DRP. The matter was remitted back to Respondent No.4-DRP for fresh consideration, with a direction to consider the objections filed by the petitioner and to provide a reasonable opportunity of hearing to the petitioner. Liberty was also granted to the petitioner to file additional pleadings and documents. The ratio decidendi is that statutory authorities must consider all objections filed before them and cannot proceed based on a prior order without such consideration.

What were the facts?

The petitioner, Finastra Software Solutions (India) Private Limited, filed a writ petition before the High Court of Karnataka challenging the final assessment order dated 04.10.2023 passed by the Assessment Unit (Respondent No.1) for Assessment Year 2020-21. The petitioner's grievance was that their objections filed before the Dispute Resolution Panel (DRP) on 28.09.2023, pursuant to a draft assessment order, were disregarded by Respondent No.1 when passing the final assessment order. Subsequently, the DRP (Respondent No.4) issued directions under Section 144C(5) of the Income Tax Act, 1961, dated 30.05.2024, which were also challenged via an amendment to the petition. The petitioner contended that both the final assessment order and the DRP's directions were passed without proper consideration of their objections.

What were the issues?

1. Whether the final assessment order dated 04.10.2023 passed by the Assessment Unit (Respondent No.1) under Section 143(3) read with Section 144C(3) and Section 144B of the Income Tax Act, 1961, for AY 2020-21 is liable to be quashed for being passed without considering the objections filed by the petitioner before the Dispute Resolution Panel (DRP)? (Question of law and fact, turning on Section 144C of the IT Act). 2. Whether the directions issued by the DRP (Respondent No.4) under Section 144C(5) of the Income Tax Act, 1961, dated 30.05.2024, are liable to be set aside for being passed based on the final assessment order without considering the petitioner's objections? (Question of law and fact, turning on Section 144C of the IT Act). Assessee's Contentions: The petitioner argued that the impugned final assessment order and the DRP's directions were passed without considering the objections filed by the petitioner. They sought for these orders to be set aside and the matter remitted back to the DRP for fresh consideration in accordance with law. Revenue's Contentions: The revenue contended that there was no merit in the petition and that it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C,Section 144C(3),Section 144C(5),Section 144B,Section 156

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2024:KHC:39819 WP No. 9887 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 9887 OF 2024 (T-IT) BETWEEN:

FINASTRA SOFTWARE SOLUTIONS (INDIA) PRIVATE LIMITED, A LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT 4TH TO 6TH FLOOR, VIRGO BUILDING, BAGMANE CONSTELLATION BUSINESS PARK, DODANEKUNDI, BENGALURU - 560 037 PAN: AAACK 9067G

REP. BY ITS DIRECTOR MR. SARGUROH ABRAR AHMED, S/O GULAM MOHIDDIN SARGUROH, AGED ABOUT 58 YEARS, DESIGNATION: DIRECTOR, RESIDING AT NO. 675, FERNS PARADISE, DODDANAKUNDI, BENGALURU - 560 037 …PETITIONER (BY SRI. PAI DHUNGAT ANKUR DEEPAK, SRI. VISHAL KALRA, ADVOCATES)

AND:

1.

ASSESSMENT UNIT INCOME TAX DEPARTMENT, MINISTRY OF FINANCE,

Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:39819 WP No. 9887 of 2024

GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI - 110 001

2.

THE DEPUTY COMMISSIONER OF INCOME TAX 3(1)(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BANGALORE-560 095

3.

THE PRINCIPAL COMMISSIONER OF INCOME TAX RANGE - 3 BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BANGALORE-560 095

4.

THE DISPUTE RESOLUTION PANEL - 1 KENDRIYA SADAN, 4TH FLOOR, C WING, BENGALURU - 560 034 …RESPONDENTS (BY SRI. THIRUMALESH M., AND SRI. M. DILIP, ADVOCATES)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO i) QUASH THE IMPUGNED FINAL ASSESSMENT ORDER DATED 04/10/2023 PASSED BY THE R1 UNDER SECTION 143(3) READ WITH SECTION 144C(3) READ WITH SECTION 144B OF THE IT ACT IN DIN ITBA/AST/S/143(3)/2023-24/10567533301(1) (ANNEXURE-D) FOR THE AY 2020-21 AND ETC.

- 3 -

NC: 2024:KHC:39819 WP No. 9887 of 2024

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, the petitioner seeks the following reliefs. 1. Issue a writ of certiorari or any other writ, order or direction: (i) Quashing the impugned final assessment order dated 04.10.2023 passed by the Respondent No.1 under section 143(3) read with section 144C(3) read with section 144B of the IT Act in DIN: ITBA/AST/S/143(3)/ 2023-24/1056753330(1) (ANNEXURE 'D') for the AY 2020-21;

(ii) Quashing the impugned computation sheet dated 04.10.2023 issued by the Respondent No.1 under section 143(3) read with section 144C of the IT Act in DIN: ITBA/AST/S/630/2023-24/1056753399(1) (ANNEXURE 'D1') for the AY 2020-21;

(iii) Quashing the impugned demand notice dated 04.10.2023 issued by the Respondent No.1

- 4 -

NC: 2024:KHC:39819 WP No. 9887 of 2024

under section 156 of the IT Act in DIN and Notice No: ITBA/AST/S/156/2023- 24/1056753400(1) (ANNEXURE 'D2') for the AY 2020-21;

2.

Issue a writ of mandamus or any other writ, order or direction to the DRP i.e., respondent No.4 to consider the objections filed by the petitioner on 28.09.2023 vide Annexure-B and dispose of the same on merits; and

3.

Issue any other writ, order or direction to which the petitioner is found entitled to in the present fact and circumstances.

2.

Heard learned counsel for the petitioner and learned counsel for the respondent and perused the material on record.

3.

A perusal of the material on record would indicate that pursuant to the draft assessment order dated 01.09.2023 passed by respondent No.1, the petitioner filed his objections before the Dispute Resolution Panel (DRP) on 28.09.2023.

4.

It is the grievance of the petitioner that despite the petitioner filing detailed objections before the DRP as stated supra, the respondent No.1 disregarded the same and proceeded to pass

- 5 -

NC: 2024:KHC:39819 WP No. 9887 of 2024

the impugned final assessment order dated 04.10.2023, which is assailed in the present petition along with the computation sheet and demand notice.

5.

Subsequently, after raising grievances before respondent No.1 and filing an appeal out of abundant caution, the petitioner approached this court by way of the present petition, during the pendency of which the respondent No.4-DRP has issued directions under Section 144(C)(5) of the Income Tax Act, 1961 dated 30.05.2024, which is also challenged by way of an amendment to the present petition, which came to be allowed by this court by allowing I.A.3/2024.

6.

Learned counsel for the petitioner submits that apart from the fact that the impugned order at Annexure-D has been passed without considering the objections filed by the petitioner, the impugned directions at Annexure-J dated 30.05.2024 also deserves to be set aside and the matter remitted back to respondent No.4 for re-consideration afresh in accordance with law.

- 6 -

NC: 2024:KHC:39819 WP No. 9887 of 2024

7.

Per contra, learned counsel for the respondent submits that there is no merit in the petition and the same is liable to be dismissed.

8.

A perusal of the material on record would indicate that upon the respondent No.1 passing the final assessment order at Annexure-D dated 04.10.2023, the respondent No.4-DRP has passed the impugned directions under Section 144(C)(5) of the I.T Act on the basis of the final assessment order without considering the objections filed by the petitioner.

9.

Under these circumstances, having regard to the fact that respondent No.4 did not consider the objections filed by the petitioner, but proceeds on the basis of the final assessment order, I am of the considered opinion that the impugned final assessment order and the impugned directions at Annexures-D & J deserve to be set aside and the matter remitted back to respondent No.4-DRP for re-consideration afresh in accordance with law.

In the result, petition is hereby allowed.

The impugned final assessment order at Annexure-D, computation sheet at Annexure-D1 and demand notice at

- 7 -

NC: 2024:KHC:39819 WP No. 9887 of 2024

Annexure-D2 are hereby quashed. So also, the impugned directions at Annexure-J dated 30.05.2024 issued by respondent No.4-DRP are also set aside.

The matter is remitted back to respondent No.4-DRP for re- consideration afresh after considering the objections filed by the petitioner and to proceed further in accordance with law by providing sufficient and reasonable opportunity to the petitioner and hearing him.

Liberty is reserved in favour of the petitioner to file additional pleadings, documents etc., which shall be considered by respondent No.4 in accordance with law.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

SS List No.: 1 Sl No.: 35

More judgments on Section 144C

All 3,699 judgments and leading authorities on Section 144C →

Recent GST High Court judgments

Search GST case law →