LG SOFT INDIA PRIVATE LIMITED vs. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF DECEMBER, 2021 BEFORE THE HON’BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.10854 OF 2021 (T–IT) BETWEEN: LG SOFT INDIA PRIVATE LIMITED EMBASSY TECH SQUARE, SARJAPUR OUTER RING ROAD, MARATHAHALLI BENGALURU-560103, REPRESENTED BY ITS DIRECTOR MR. HYUNWHO SHIN. ... PETITIONER (BY SRI. SURYANARAYANA T, ADVOCATE)

AND: 1. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI. 2. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 4 (1) (1) BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU-560 095. 3. PRINCIPAL COMMISSIONER OF INCOME TAX-4 BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU-560095. ... RESPONDENTS (BY SRI SANMATHI E I ADVOCATE) -----

2 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE FINAL ASSESSMENT ORDER DTD 30.04.2021 PASSED BY THE R-1 UNDER SECTION 143(3) READ WITH SECTIONS 144C(3) AND 144B OF THE INCOME-TAX ACT, 1961 VIDE ANNX-A FOR THE ASSESSMENT YEAR 2017-18 AND ETC., THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING THROUGH VIDEO CONFERENCE : O R D E R In this petition, the petitioner seeks quashing of impugned final assessment order at Annexure-A dated 30.04.2021, demand notice at Annexure-B dated 30.04.2021 and notice at Annexure-C dated 30.04.2021 and for other reliefs. 2. Heard learned counsel for petitioner and learned counsel for respondents. 3. In addition to reiterating the various contentions urged in the petition and referring to the documents produced by the petitioner, learned counsel for the petitioner invites my attention to the mandatory provisions of Section 144C of the Income Tax Act, 1961 (for short 'the I.T. Act') in order to point out that the statutory scheme underlying the said provision clearly indicates that under sub-section (2), after

3 the draft assessment order dated 29.03.2021 was issued to the petitioner, the petitioner had two options viz., either to file his acceptance as provided under sub-section (2)(a) or to file objections as per sub-section (2)(b) of the I.T. Act. 4. It is contention of the petitioner that the petitioner submitted his objections on 26.04.2021 to the Dispute Resolution Panel (DRP) within the prescribed period; in view of change in the mechanism of assessment being shifted to the faceless scheme coupled with the Covid-19 pandemic exigency, the petitioner could not intimate the Assessing Officer about filing of the objections before the DRP; however, petitioner intimated the same to the Assessing Officer on 30.04.2021. It is the grievance of the petitioner that the despite the petitioner submitting his objections to the draft assessment order before the DRP as well as intimating the same to the Assessing Officer, the Assessing Officer proceeded to pass the impugned assessment order without following the mandatory procedure prescribed in sub-sections (5) to (13) of Section 144C and without awaiting directions from the DRP as provided in the said provisions. It is also contended that by virtue of Government Notifications,

4 circulars etc., as well as the orders passed by the Apex Court extending the period of limitation, the inability and omission, if any, on the part of the petitioner to file objections with the Assessing Officer ought to be condoned and a lenient view is to be taken and indulgence in this regard is to be shown in favour of the petitioner, particularly when the petitioners had filed their objections before the DRP on 26.04.2021 within the prescribed period. It is therefore contended that the impugned assessment order is violative of the aforesaid mandatory provisions of Section 144C, particularly, since the petitioner had filed his objections to the draft assessment order before the DRP within the prescribed period and intimated the same to the Assessing Officer and consequently, the impugned Assessment Order and consequential notice deserve to be quashed and the DRP be directed to conclude the proceedings after considering the objections of the petitioner pursuant to which the Assessing Officer is to be directed to pass appropriate orders as provided under Section 144C of the IT Act. 5. It is further contended that in view of the aforesaid facts and circumstances, petitioner addressed

5 communications dated 04.05.2021, 07.05.2021 and 11.05.2021 to the respondents calling upon them to keep the impugned Assessment Order and all further proceedings pursuant thereto in abeyance till conclusion of the proceedings before the DRP; however, the respondents did no respond to the said requests of the petitioner, who is before this Court by way of the present petition. 6. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. 7. As rightly contended by the learned counsel for the petitioner, the undisputed material on record clearly indicates that in response to the draft Assessment Order dated 29.03.2021 issued to the petitioner, petitioner submitted objections before the DRP on 26.04.2021, within the prescribed period and intimated the same to the Assessing Officer on 30.04.2021; the explanation offered by the petitioner as regards his inability and omission to file objections with the Assessing Officer also in addition to the DRP merits acceptance, particularly in view of the

6 Government Orders, circulars etc. as well as the orders of the Apex Courts extending the period of limitation. At any rate, the petitioner had chosen to exercise the option of filing objections to the draft Assessment Order warranting the DRP to proceed further before the Assessing Officer takes further steps as provided under sub-sections 5 to 13 to Section 144C. Under these circumstances, I am of the considered opinion that the impugned Assessment Order passed by respondent No.1- Assessing Officer without awaiting directions from the DRP, before whom the matter was pending pursuant to the petitioner filing his objections within the prescribed period is clearly arbitrary, illegal and without jurisdiction or authority of law and the same deserves to be quashed and necessary directions are to be issued to the DRP as well as the Assessing Officer in this regard. 8. In the result, I pass the following: ORDER (i) The petition is hereby allowed. (ii) The impugned assessment order bearing No.ITBA/AST/S/143(3)/2021-22/1-3283 0156(1) at Annexure-A dated

7 30.04.2021, demand notice bearing No.ITBA/AST/S/156/2021-22/10327391 81(1) at Annexure-B dated 30.04.2021 and notice bearing No. ITBA/PNL/S/270A/2021-22/1032739213 (1) at Annexure-C dated 30.04.2021 are hereby quashed. (iii) The Dispute Resolution Panel (DRP) is directed to conclude the proceedings by considering the objections filed by the petitioner, in accordance with law and Section 144C of the Income Tax Act, 1961. (iv) Upon the DRP concluding the proceedings as provided under Section 144C referred to supra, respondent No.1 – Assessing Officer shall proceed further and pass appropriate orders in accordance with law. SD/- JUDGE nms