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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 31ST DAY OF AUGUST 2016
PRESENT
THE HON’BLE MR.JUSTICE JAYANT PATEL AND THE HON’BLE MR.JUSTICE S.N.SATYANARAYANA WRIT PETITION No.55093/2015(T-IT) BETWEEN :
EPLANET VENTURES MAURITIUS LTD., C/O INTERNATIONAL FINANCIAL SERVICES LTD., IFS COURT, TWENTY EIGHT, CYBER CITY, EBENE, MAURITIUS, REPRESENTED HEREIN BY ITS DIRECTOR, Ms.RESMAH BIBI MANDARY
... PETITIONER
(BY SRI T.SURYANARAYANA, ADVOCATE)
AND :
THE DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) R.P. BHAVAN , 6TH FLOOR, 14/3A, NRUPATHUNGA ROAD, BANGALORE – 560 001.
... RESPONDENT
(BY SRI K.V.ARAVIND, ADVOCATE AND SENIOR STANDING COUNSEL)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER DATED 05.08.2015 (ANNEXURE-H) PASSED BY THE AAR IN AAR No.1124/2011 AND DIRECT THE AAR TO HEAR THE APPLICATION ON MERITS.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, JAYANT PATEL J., PASSED THE FOLLOWING:
ORDER
The petitioner by this petition is seeking appropriate writ to quash and set aside the order passed by the Authority for Advance Rulings (Income Tax) at Annexure ‘H’ dated 05.08.2015, whereby application made by the petitioner is disposed of as having become infructuous.
We have heard Mr.T. Suryanarayana, learned counsel appearing for the petitioner and Mr. K.V. Aravind, learned senior standing counsel appearing for the respondent.
The contention raised on behalf of the petitioner was that once an application was made for the advance ruling under Section 245Q of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and the same having been admitted, it was obligatory on the part of the Advance Ruling Authority to render the decision on merits and merely because the assessment proceedings in respect of the petitioner were concluded pursuant to the income tax return filed, it cannot be said that the application made by the petitioner had become infructuous. Learned counsel appearing for the petitioner submitted that under these circumstances, this Court may interfere and direct the authority to render the decision on merits.
Whereas, learned senior standing counsel appearing for the respondent contended that it is true that the application was filed under Section 245Q of the Act by the petitioner and it is also true that the application was admitted, but thereafter, notice under Section 143(2) of
4 the Act for assessment was issued. In response to the said notice, the petitioner – assessee appeared before the Assessing Officer, raised objections and thereafter, the order of assessment has also been passed by the Assessing Officer on 27.03.2015. He submitted that no purpose would be served in deciding the application preferred for advance ruling by the petitioner. He also submitted that once the assessment order is passed, and if either the petitioner or Revenue is aggrieved, the appropriate proceedings before the higher Forum are to be resorted to. He submitted that at the relevant point of time when the proceedings were before the Assessing Officer, the petitioner did not object to the assessment proceedings and on the contrary, it submitted reply, participated in the assessment proceedings and allowed the Assessing Officer to pass the assessment order. However, as the assessment proceedings are taken up in revision under Section 263 of the Act, petitioner is raising the grievance by pursuing the application for advance
5 ruling. He submitted that in exercise of writ power, this Court may not interfere with the decision of the Advance Ruling Authority that the application has become infructuous.
It is hardly required to be observed that the power of this Court under Article 226 of the Constitution is discretionary and while permitting any litigant to invoke such power, the Court would also examine the conduct of the petitioner. If this Court in a given case finds that the conduct of the petitioner was such that he should not be allowed to invoke the extraordinary discretionary power, the Court may decline the entertainment of the petition under Article 226 of the Constitution.
If the facts of the present case are examined further, it is an admitted position that the petitioner had applied to the competent Authority for Advance Rulings under Section 245Q of the Act and the application was pending before the said authority. It is also an admitted
6 position that pending the aforesaid application before the Advance Ruling Authority, the proceedings for assessment under Section 143(2) of the Act were initiated. If the petitioner had any grievance against the assessment proceedings or finalization of the said proceedings, nothing prevented it from raising objection for conclusion of the assessment proceedings by contending that the matter was pending consideration before the Advance Ruling Authority with reference to the aspect of liability to pay tax. However, the petitioner consciously participated in the assessment proceedings and at no point of time, did it raise any objection for continuation of the assessment proceedings before the Assessing Officer. Not only that, but thereafter, the Assessing Officer is allowed to pass the order and resultantly, he has passed the order on 27.03.2015, copy whereof is produced at Annexure ‘G’. It appears that thereafter, when the application came up for consideration before the Advance Ruling Authority, since the assessment order was already passed, Advance Ruling
7 Authority observed that the application had become infructuous and it would not be for the Advance Ruling Authority to sit in appeal over the assessment proceedings. Therefore, the Advance Ruling Authority has disposed of the application by observing that the applicant may take such recourse as is available in law and it may raise all questions available to it in law. It appears that thereafter, the petitioner must have been served with notice dated 03.08.2015 in respect of initiation of proceedings under Section 263 of the Act against the assessment order for invoking of the revisional power and under the circumstances, the petitioner has approached this Court by the present petition. The Advance Ruling Authority in the impugned order, has observed inter alia as under: “Had that been informed to assessing officer, the assessing officer would not have proceeded with the assessment proceedings, however, that was not informed. Now, in view of the assessment order passed, this application has become infructuous as it will not be for this Authority to sit on appeal over the assessment proceedings and order.”
The aforesaid shows that the conduct of the petitioner, if examined further, the petitioner voluntarily participated in the assessment proceedings and did not object at any point of time for continuation or conclusion of the assessment proceedings. Once the petitioner has surrendered to the jurisdiction of the Assessing Officer that too without raising any objection for continuation or conclusion of the assessment proceedings and thereafter, if the assessment order is passed by the Assessing Officer and based on the same, if the competent Authority for Advance Rulings has disposed of the application as having become infructuous, we do not find that such a view taken by the Authority can be said as unreasonable or arbitrary.
Further, as observed by us, once a litigant has accepted the jurisdiction of a particular authority and has not resisted the proceedings before a particular quasi- judicial authority, he cannot be heard to say that he should
9 also be simultaneously permitted to pursue the proceedings, which has actually become infructuous.
Learned counsel for the petitioner attempted to rely upon the object of constitution of the Authority for Advance Rulings and the mechanism provided therefrom for contending that the purpose of advance rulings under the Act is to make the tax payer aware about his/her liability to pay tax and to avoid proliferation of litigation and he submitted that the said object would be frustrated if the Advance Ruling Authority is allowed to dispose of the matter as having become infructuous and therefore, this Court may consider the said aspect.
In our view, there cannot be any second opinion on the aspect that the purpose of the Advance Ruling Authority is to have certainty about the liability to pay tax and to avoid further litigation, but at the same time, if by conduct of the petitioner, it was not desirous to invoke such power, but was rather keen to have the
10 assessment proceedings go on and also to have conclusion of the assessment proceedings and by conduct, the petitioner has not objected to the assessment proceedings, we do not find that the purpose of advance ruling mechanism can be stretched to the extent of diluting the voluntary conduct on the part of the petitioner as sought to be canvassed. Hence, the said contention cannot be accepted.
Learned counsel for the petitioner also relied upon the decision rendered by a coordinate Bench of this Court in the case of M/s. Onmobile Global Limited vs. The Chairman, the Authority for Advance Rulings (Income Tax) in writ petition No.36749/2014 disposed of on 06.03.2015 and contended that it is obligatory on the part of the Advance Ruling Authority to decide the application on merits once it is admitted and it could not have been dismissed for default and hence, it can also be
11 said that the Advance Ruling Authority could not dispose of the application as having become infructuous.
We have considered the said decision. This Court had recorded at para No.8 that there were two affidavits filed by the applicant-petitioner therein. In the initial affidavit, the applicant had stated that notice for hearing on 16.01.2014 was not received and in the second affidavit, it was stated though the said notice may have been delivered, but it was misplaced and was never brought to the notice of the applicant. There were contradictory statements of the applicant, but this Court found that there was consistent stand on the part of the applicant that the notice was never within the knowledge of the applicant. Therefore, in view of the said peculiar circumstance, this Court observed that dismissal of the application for non-appearance of the applicant on a particular date, which was by a sufficient cause, was not justified and therefore, the orders passed by the Advance
12 Ruling Authority impugned in the said matter were set aside. The said decision cannot be read to lay down any principle that in all matters, irrespective of the facts and circumstances or irrespective of the conduct of the applicant or the subsequent circumstance of passing of the assessment order, the Advance Ruling Authority should decide the application on merits. On the contrary, if such is pleaded, the resultant situation would be to take away the judicial discretion available to the Advance Ruling Authority.
Further, in the present case, as reproduced hereinabove, the Advance Ruling Authority itself when found that it cannot sit in appeal over the order of the Assessing Authority while deciding the matter, it has disposed of the application as having become infructuous. Such a view cannot be said to be as unreasonable, which may call for interference.
In view of the above, considering the peculiar conduct of the petitioner coupled with the aspect that the view taken by the Advance Ruling Authority cannot be said to be unreasonable, no case is made out for interference. Hence, the petition being meritless is dismissed.
Sd/- JUDGE
Sd/- JUDGE