M/S PIRAMAL ENTERPRISES LIMIITED ,MUMBSI vs. DY CIT(APPEAL)-RANGE-8(2)(1), MUMBAI

On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, the impugned assessment order passed in the impugned assessment order passed in contravention to contravention to the directions of Hon'ble Bombay High Court is void. the directions of Hon'ble Bombay High Court is void. the directions of Hon'ble Bombay High Court is void.

The Ld. AO, inter alia, failed to appreciate and ought to 2. The Ld. AO, inter alia, failed to appreciate and ought to 2. The Ld. AO, inter alia, failed to appreciate and ought to have held that have held that

The Appellant prays that the impugned order, passed in 3. The Appellant prays that the impugned order, passed in 3. The Appellant prays that the impugned order, passed in contravention with the directions of Hon'ble High Court, and contravention with the directions of Hon'ble High Court, and contravention with the directions of Hon'ble High Court, and also the provisions of the Act, be quashed. also the provisions of the Act, be quashed.

On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, the impugned order passed by Ld. the impugned order passed by Ld. AO is beyond the time AO is beyond the time limit prescribed under limit prescribed under the Act.

The Appellant prays that the impugned order be held as 2. The Appellant prays that the impugned order be held as 2. The Appellant prays that the impugned order be held as time-barred and accordingly, be barred and accordingly, be quashed.

On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, the Ld. AO erred in making disallowance under section 14A the Ld. AO erred in making disallowance under section 14A the Ld. AO erred in making disallowance under section 14A of the Act r.w.r. 8D amounting to Rs. 84,99,35,367/ of the Act r.w.r. 8D amounting to Rs. 84,99,35,367/ of the Act r.w.r. 8D amounting to Rs. 84,99,35,367/-

The Ld. AO, inter alia, f 2. The Ld. AO, inter alia, failed to appreciate and ought to ailed to appreciate and ought to have held that: have held that:

The Appellant prays that the disallowance made w/s 14A 3. The Appellant prays that the disallowance made w/s 14A 3. The Appellant prays that the disallowance made w/s 14A of the Act r.w.r 8D be deleted or be appropriately reduced. t r.w.r 8D be deleted or be appropriately reduced. t r.w.r 8D be deleted or be appropriately reduced.

On the facts and in ci 1. On the facts and in circumstances of the case and in law, rcumstances of the case and in law, the Ld. AO erred in holding the corporate and performance the Ld. AO erred in holding the corporate and performance the Ld. AO erred in holding the corporate and performance guarantee provided by the Appellant as an "international guarantee provided by the Appellant as an "international guarantee provided by the Appellant as an "international transaction and that commission at the rate of 1.68% ought transaction and that commission at the rate of 1.68% ought transaction and that commission at the rate of 1.68% ought to have been charged on the outstanding guaran to have been charged on the outstanding guaran to have been charged on the outstanding guarantee in respect of loans taken by its Associate Enterprises and respect of loans taken by its Associate Enterprises and respect of loans taken by its Associate Enterprises and thereby making an adjustment of Rs 23,62,21,702/ thereby making an adjustment of Rs 23,62,21,702/ thereby making an adjustment of Rs 23,62,21,702/- in that regard.

The Appellant prays that it be held that corporate 2. The Appellant prays that it be held that corporate 2. The Appellant prays that it be held that corporate guarantee is not an 'international transaction' and the suo guarantee is not an 'international transaction' and the suo guarantee is not an 'international transaction' and the suo- moto adjustme moto adjustment made by the Appellant in this regard be nt made by the Appellant in this regard be deleted.

The Appellant further prays that the disallowance of Rs. 3. The Appellant further prays that the disallowance of Rs. 3. The Appellant further prays that the disallowance of Rs. 23,62,21,702/ 23,62,21,702/- made made in in respect respect of of transfer transfer pricing pricing adjustment on commission on the guarantees provided be adjustment on commission on the guarantees provided be adjustment on commission on the guarantees provided be deleted or be appropriately reduced. deleted or be appropriately reduced.

On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, 1. On the facts and in circumstances of the case and in law, the Ld. AO has erred in the Ld. AO has erred in granting short credit of TDS to the granting short credit of TDS to the extent of Rs. 49,61,73,663/ extent of Rs. 49,61,73,663/-.

The Appellant prays that Ld. AO be directed to grant 2. The Appellant prays that Ld. AO be directed to grant 2. The Appellant prays that Ld. AO be directed to grant appropriate credit of TDS as claimed by the appellant in its appropriate credit of TDS as claimed by the appellant in its appropriate credit of TDS as claimed by the appellant in its return of income. return of income.

On the facts and in circumstance of the case and in law, 1. On the facts and in circumstance of the case and in law, 1. On the facts and in circumstance of the case and in law, the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section 10AA of the Act. 10AA of the Act.

The Ld.AO inter alia failed to appreciate and 2. The Ld.AO inter alia failed to appreciate and ought to have ought to have held that upon additions being made to returned income as held that upon additions being made to returned income as held that upon additions being made to returned income as per impugned order, the total income of the appellant turns per impugned order, the total income of the appellant turns per impugned order, the total income of the appellant turns out to be positive and therefore, the appellant is eligible to get out to be positive and therefore, the appellant is eligible to get out to be positive and therefore, the appellant is eligible to get deductions under section 10AA of the Act. deductions under section 10AA of the Act.

The Appella 3. The Appellant prays that the Ld. AO be directed to grant nt prays that the Ld. AO be directed to grant deductions under section 10AA of the Act. deductions under section 10AA of the Act.

On the facts and in circumstance of the 1. On the facts and in circumstance of the case and in law, case and in law, the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section 80G of the Act. 80G of the Act.

The Ld.AO inter alia failed to appreciate and ought to have 2. The Ld.AO inter alia failed to appreciate and ought to have 2. The Ld.AO inter alia failed to appreciate and ought to have held that upon additions being made to returned income as held that upon additions being made to returned income as held that upon additions being made to returned income as per impugned order, the total income of the per impugned order, the total income of the appellant turns appellant turns out to be positive and therefore, the appellant is eligible to get out to be positive and therefore, the appellant is eligible to get out to be positive and therefore, the appellant is eligible to get deductions under section 80G of the Act. deductions under section 80G of the Act.

The Appellant prays that the Ld. AO be directed to grant 3. The Appellant prays that the Ld. AO be directed to grant 3. The Appellant prays that the Ld. AO be directed to grant deductions under section 80G of the Act. deductions under section 80G of the Act.

On the facts and in circumstance of the case and in law, 1. On the facts and in circumstance of the case and in law, 1. On the facts and in circumstance of the case and in law, the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section 80GGB of the Act. 80GGB of the Act.

The Ld.AO inter alia f 2. The Ld.AO inter alia failed to appreciate and ought to have ailed to appreciate and ought to have held that upon additions being made to returned income as held that upon additions being made to returned income as held that upon additions being made to returned income as per impugned order, the total income of the appellant turns per impugned order, the total income of the appellant turns per impugned order, the total income of the appellant turns out to be positive and therefore, the appellant is eligible to get out to be positive and therefore, the appellant is eligible to get out to be positive and therefore, the appellant is eligible to get deductions under section 80GGB of deductions under section 80GGB of the Act.

The Appellant prays that the Ld. AO be directed to grant 3. The Appellant prays that the Ld. AO be directed to grant 3. The Appellant prays that the Ld. AO be directed to grant deductions under section deductions under section 80GGB of the Act.

On the facts 1. On the facts and in circumstance of the case and in law, and in circumstance of the case and in law, the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section the Ld. AO erred by not granting deductions under section 80JJAA of the Act. 80JJAA of the Act.

The Ld.AO inter alia failed to appreciate and ought to have 2. The Ld.AO inter alia failed to appreciate and ought to have 2. The Ld.AO inter alia failed to appreciate and ought to have held that upon additions being made to returned income as held that upon additions being made to returned income as held that upon additions being made to returned income as per impugned per impugned order, the total income of the appellant order, the total income of the appellant turns

The Appellant prays that the Ld. AO be directed to grant 3. The Appellant prays that the Ld. AO be directed to grant 3. The Appellant prays that the Ld. AO be directed to grant deductions under section deductions under section 80JJAA of the Act.

On the facts and circumstances of the case and in law, the 1. On the facts and circumstances of the case and in law, the 1. On the facts and circumstances of the case and in law, the Ld. AO has erred in granting lower interest on refund under Ld. AO has erred in granting lower interest on refund under Ld. AO has erred in granting lower interest on refund under section 244A of section 244A of the Act.

The Appellant prays that Ld. AO be directed to recalculate 2. The Appellant prays that Ld. AO be directed to recalculate 2. The Appellant prays that Ld. AO be directed to recalculate the amount of interest on refund under section 244A of the the amount of interest on refund under section 244A of the the amount of interest on refund under section 244A of the Act.

Briefly stated, facts of the case are that the assessee Briefly stated, facts of the case are that the assessee Briefly stated, facts of the case are that the assessee-company was engaged in the business of manufacturing was engaged in the business of manufacturing of of pharmaceutical formulations as well as trading in pharmaceutical goods. For the formulations as well as trading in pharmaceutical goods. For the formulations as well as trading in pharmaceutical goods. For the year under consideration, the assessee filed return of income in the year under consideration, the assessee filed return of income in year under consideration, the assessee filed return of income in month of November, 2017 declaring Nil income, which was further 17 declaring Nil income, which was further revised on 30.03.2019. revised on 30.03.2019. The return of income filed by the assessee filed by the assessee was selected for scrutiny and statutory notices under the Income- was selected for scrutiny and statutory notices under the was selected for scrutiny and statutory notices under the tax Act, 1961 (in short ‘the tax Act, 1961 (in short ‘the Act’) were issued and complied with. In were issued and complied with. In view view view of of of international international international transaction transaction transaction and and and specified specified specified domestic domestic domestic transactions reported in Form No. 3CEB of transactions reported in Form No. 3CEB of Income Income-tax Form filed

Aggrieved, the assessee is in appeal before the Income Aggrieved, the assessee is in appeal before the Income Aggrieved, the assessee is in appeal before the Income-tax Appellate Tribunal (ITAT) raising Appellate Tribunal (ITAT) raising the ground as reproduced above. ground as reproduced above.

Before us, the Ld. Counsel of the assessee filed a paperbook Before us, the Ld. Counsel of the assessee filed a paperbook Before us, the Ld. Counsel of the assessee filed a paperbook containing pages 1 to 219 including the decision of the Hon’ble containing pages 1 to 219 including the decision of the Hon’ble containing pages 1 to 219 including the decision of the Hon’ble Bombay High Court in the case of the assessee. Bombay High Court in the case of the assessee.

Before us, the assessee has challenge the validity of the Before us, the assessee has challenge the validity of the Before us, the assessee has challenge the validity of the impugned order in view impugned order in view of direction of the Hon’ble Bombay High of direction of the Hon’ble Bombay High Court and submitted that impugned order is void. Court and submitted that impugned order is void.

The Ld. Departmental Representative (DR) on the other hand The Ld. Departmental Representative (DR) on the other hand The Ld. Departmental Representative (DR) on the other hand submitted that there is no violation on the part of the Assessing submitted that there is no violation on the part of the Assessing submitted that there is no violation on the part of the Assessing Officer.

We have heard rival subm We have heard rival submission and perused the relevant ission and perused the relevant material on record. We find that in this case, the assessee is material on record. We find that in this case, the assessee is material on record. We find that in this case, the assessee is aggrieved with the draft assessment order dated 22.04.2021 passed aggrieved with the draft assessment order dated 22.04.2021 passed aggrieved with the draft assessment order dated 22.04.2021 passed u/s 144C(1) r.w.s. 143(3) of the Act wherein he proposed to addition u/s 144C(1) r.w.s. 143(3) of the Act wherein he proposed to u/s 144C(1) r.w.s. 143(3) of the Act wherein he proposed to u/s 14A of the Act and u/s 14A of the Act and addition on account of closing stock along on account of closing stock along with transfer pricing addition. with transfer pricing addition. In the case, the assessee was having he assessee was having grievance that under the procedure laid down u/s 144B(vii) for the grievance that under the procedure laid down u/s 144B(vii) for the grievance that under the procedure laid down u/s 144B(vii) for the purpose of faceless assessment order under clause (vii), it is purpose of faceless assessment order under clause (vii) purpose of faceless assessment order under clause (vii) provided that in case of variation is proposed in draft assessment case of variation is proposed in draft assessment case of variation is proposed in draft assessment order, then opportunity has to be provided to the assessee by opportunity has to be provided to the assessee by opportunity has to be provided to the assessee by serving a notice of show cause and if the assessee or representative show cause and if the assessee or representative show cause and if the assessee or representative so request then personal hearing has also to be provided for making request then personal hearing has also to be provided for making request then personal hearing has also to be provided for making oral submission and present his case before the Income ubmission and present his case before the Income ubmission and present his case before the Income-tax Authorities. In view of grievance Authorities. In view of grievance, the assessee filed writ peition the assessee filed writ peition before the Hon’ble Bombay High Court for praying to hold the draft before the Hon’ble Bombay High Court for praying to hold the draft before the Hon’ble Bombay High Court for praying to hold the draft assessment order as illegal and unsustainable in law. The Hon’ble assessment order as illegal and unsustainable in law. The Hon’ble assessment order as illegal and unsustainable in law. The Hon’ble High Court after considering arguments from both the sides, High Court after considering arguments from both the sides High Court after considering arguments from both the sides observed that opportunity has observed that opportunity has been provided under the procedur provided under the procedure

Sub section (7), clause (vi) stipulates as under : 59. Sub section (7), clause (vi) stipulates as under : 59. Sub section (7), clause (vi) stipulates as under :-

Plainly reading aforesaid pr 60. Plainly reading aforesaid provision would show that ovision would show that whenever assessee requests for personal hearing so as to whenever assessee requests for personal hearing so as to whenever assessee requests for personal hearing so as to make oral submissions or to present case, it is before income make oral submissions or to present case, it is before income make oral submissions or to present case, it is before income- tax authority in any unit. Sub tax authority in any unit. Sub-section (7), clause (viii) shows section (7), clause (viii) shows that request for personal hearing is to be approv that request for personal hearing is to be approv that request for personal hearing is to be approved by the authorities referred to therein upon its opinion that the authorities referred to therein upon its opinion that the authorities referred to therein upon its opinion that the request is covered by sub request is covered by sub-clause (h) of clause (xi). Clause (xi) clause (h) of clause (xi). Clause (xi) empowers authorities with prior approval of the Board to lay empowers authorities with prior approval of the Board to lay empowers authorities with prior approval of the Board to lay down the standards, procedures and processes for effective down the standards, procedures and processes for effective down the standards, procedures and processes for effective functioning of National Faceless Assessment Centre and ctioning of National Faceless Assessment Centre and ctioning of National Faceless Assessment Centre and others, inter alia, circumstances in which personal hearing others, inter alia, circumstances in which personal hearing others, inter alia, circumstances in which personal hearing referred to in clause (vi referred to in clause (vii) shall be approved.

Legislature is not unwary of situations arising, requiring 61. Legislature is not unwary of situations arising, requiring 61. Legislature is not unwary of situations arising, requiring personal hearing and oral personal hearing and oral submission and thus has provided on and thus has provided the same under the faceless assessment scheme under the same under the faceless assessment scheme under the same under the faceless assessment scheme under section 144B. It emerges that where response is given by the section 144B. It emerges that where response is given by the section 144B. It emerges that where response is given by the assessee to show cause notice, the process under sub assessee to show cause notice, the process under sub assessee to show cause notice, the process under sub- section (7) would follow. section (7) would follow.

Learned senior counsel Mr. Pardiwa 62. Learned senior counsel Mr. Pardiwala, during the course la, during the course of hearing, had drawn attention to 'Standard Operating of hearing, had drawn attention to 'Standard Operating of hearing, had drawn attention to 'Standard Operating Procedure' ( SOP) for Assessment Unit under Faceless Procedure' ( SOP) for Assessment Unit under Faceless Procedure' ( SOP) for Assessment Unit under Faceless Assessment Assessment Assessment Scheme, Scheme, Scheme, 2019' 2019' 2019' under under under Circular Circular Circular FNo.PR.CCIT/SOP/2020 FNo.PR.CCIT/SOP/2020-21 dated 19-11-2020 providing for, 2020 providing for, under its clause T. that reaso under its clause T. that reasonable time is to be given to an nable time is to be given to an assessee to comply with principles of natural Justice. assessee to comply with principles of natural Justice. assessee to comply with principles of natural Justice. He had also referred to Circular F. No. PR. also referred to Circular F. No. PR. CCIT/NCAC/SOP/2020 CCIT/NCAC/SOP/2020-

Principles of natural justice firmly run through fabric of rinciples of natural justice firmly run through fabric of rinciples of natural justice firmly run through fabric of section 144B(1) of the Income section 144B(1) of the Income-tax Act, 1961. Whenever DAO, tax Act, 1961. Whenever DAO, FDAO is prejudicial to the interest of assessee or RDAO is FDAO is prejudicial to the interest of assessee or RDAO is FDAO is prejudicial to the interest of assessee or RDAO is prejudicial to the interest of assessee in comparison to DAO prejudicial to the interest of assessee in comparison to DAO prejudicial to the interest of assessee in comparison to DAO or FDAO, upon a res or FDAO, upon a response to show- cause notice, personal cause notice, personal hearing for oral submissions or to present its case before hearing for oral submissions or to present its case before hearing for oral submissions or to present its case before income tax authority is strongly entwined in the provisions income tax authority is strongly entwined in the provisions income tax authority is strongly entwined in the provisions on a request from an assessee unless it is absurd, on a request from an assessee unless it is absurd, on a request from an assessee unless it is absurd, strategised and/or intended to protract assessme strategised and/or intended to protract assessme strategised and/or intended to protract assessment etc. It would also emerge from various decisions, referred to above, would also emerge from various decisions, referred to above, would also emerge from various decisions, referred to above, ordinarily, such a request would not be declined. ordinarily, such a request would not be declined.

Section 144B of the Income 64. Section 144B of the Income-tax Act, 1961 captioned tax Act, 1961 captioned 'Faceless Assessment' commences vide its sub 'Faceless Assessment' commences vide its sub 'Faceless Assessment' commences vide its sub-section (1) with a non with a non-obstante clause and compulsively requires obstante clause and compulsively requires assessment u/ss 143(3) and 144 shall be by prescribed assessment u/ss 143(3) and 144 shall be by prescribed assessment u/ss 143(3) and 144 shall be by prescribed procedure contained in su procedure contained in sub-section (1) of section 144B in the section (1) of section 144B in the cases referred to in subsection (2) thereof. cases referred to in subsection (2) thereof.

Sub-section (9) of section 144B declares that assessment section (9) of section 144B declares that assessment section (9) of section 144B declares that assessment made under section 143(3) or under section 144(4) referable made under section 143(3) or under section 144(4) referable made under section 143(3) or under section 144(4) referable to sub-section (2) other than sub section (2) other than sub-section (8) on or a section (8) on or after 1st day of April, 2021 shall be non est if such assessment is not day of April, 2021 shall be non est if such assessment is not day of April, 2021 shall be non est if such assessment is not made in accordance with the procedure laid down under accordance with the procedure laid down under accordance with the procedure laid down under

Going by the provisions under section 144B, when 66. Going by the provisions under section 144B, when 66. Going by the provisions under section 144B, when hearing has been envisioned and incorporated, it is hearing has been envisioned and incorporated, it is hearing has been envisioned and incorporated, it is imperative to observe principles of natural justice as imperative to observe principles of natural justice as imperative to observe principles of natural justice as stipulated.

In the present matter, it is not disputed that show 67. In the present matter, it is not disputed that show 67. In the present matter, it is not disputed that show-cause notice had been is notice had been issued to the peltiot disputes 372021 to sued to the peltiot disputes 372021 to which the petitioner has responded to from time to time vide which the petitioner has responded to from time to time vide which the petitioner has responded to from time to time vide letters dated 26th March, 2021, 28th March, 2021 requesting letters dated 26th March, 2021, 28th March, 2021 requesting letters dated 26th March, 2021, 28th March, 2021 requesting for personal hearing and by sending responses dated 7th for personal hearing and by sending responses dated 7th for personal hearing and by sending responses dated 7th and 8th April, 2021. There is nothing to April, 2021. There is nothing to reflect upon that after reflect upon that after receipt of response to show receipt of response to show-cause-notice dated 26th March, notice dated 26th March, 2021, 28th March, 2021, 7th and 8th April, 2021, prescribed 2021, 28th March, 2021, 7th and 8th April, 2021, prescribed 2021, 28th March, 2021, 7th and 8th April, 2021, prescribed procedure has been followed. The petitioner appears to be procedure has been followed. The petitioner appears to be procedure has been followed. The petitioner appears to be losing out on an opportunity as would be available to losing out on an opportunity as would be available to losing out on an opportunity as would be available to it under clause (xxiii)(b) read with under clause (xxiii)(b) read with sub section (7) sub sub section (7) sub-clause (vii).

In the circumstances, when an assessee approaches 68. In the circumstances, when an assessee approaches 68. In the circumstances, when an assessee approaches with response to show cause notice, the request made by an with response to show cause notice, the request made by an with response to show cause notice, the request made by an assessee, as referred to in clause (vil) of sub section 7 of assessee, as referred to in clause (vil) of sub section 7 of assessee, as referred to in clause (vil) of sub section 7 of section 144B, would have to be taken into account and it B, would have to be taken into account and it B, would have to be taken into account and it would not be proper, looking at the prescribed procedure would not be proper, looking at the prescribed procedure would not be proper, looking at the prescribed procedure with strong undercurrent to have hearing on a request after with strong undercurrent to have hearing on a request after with strong undercurrent to have hearing on a request after notice, to say that petitioner would have opportunity notice, to say that petitioner would have opportunity notice, to say that petitioner would have opportunity pursuant to section 144C in the present pursuant to section 144C in the present matter, would matter, would

In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed.