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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF MARCH 2015
PRESENT
THE HON’BLE MR.JUSTICE VINEET SARAN
AND
THE HON’BLE MRS.JUSTICE S SUJATHA
WRIT PETITION NO.36749 OF 2014 (T-IT)
BETWEEN
M/S ONMOBILE GLOBAL LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING ITS OFFICE AT TOWER NO.1, 94/1C AND 94/2 VEERASANDRA VILLAGE, ATTIBELE HOBLI, ANEKAL TALUK, ELECTRONIC CITY PHASE-1 BANGALORE-560100
REPRESENTED BY ITS MANAGING DIRECTOR (RAJEEV PANCHOLY S/O MAGAN PANCHOLY, AGED 58 YEARS)
PETITIONER
(BY MS.MEHTAB P. EASA, ADV. FOR SRI K R VASUDEVAN, ADV.)
AND
THE CHAIRMAN THE AUTHORITY FOR ADVANCE RULINGS (INCOME TAX) 5TH FLOOR, NDMC BUILDING, SATYA MARG, YASHWANT PLACE, CHANAKYAPURI, NEW DELHI-110021 R
2 2. THE DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION 14/3A, R.P.BHAWAN, NRUPATHUNGA ROAD, BANGALORE-560 001
THE DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE 1(1), NRUPATHUNGA ROAD, BANGALORE-560 001 ... RESPONDENTS
(BY SRI K V ARAVIND, ADV.)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDERS ISSUED BY THE R-1 DATED 30.4.2014 AND 16.1.2014 VIDE ANN-B & E AND ETC.
THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, VINEET SARAN J., PASSED THE FOLLOWING:
ORDER
By means of this writ petition, the petitioner has challenged the order dated 16.01.2014 passed by the Authority For Advance Rulings (Income Tax) New Delhi, whereby the application has been dismissed for non-prosecution and also the order dated 30.04.2014, whereby the application for restoration has been rejected.
3 2. We have heard Ms.Mehtab, learned Counsel for the petitioner as well as Sri K.V.Aravind, learned Counsel for the respondents and perused the records. With consent of learned Counsel for the parties, this petition is disposed of at the admission stage.
Brief facts of this case are that: The petitioner-Company, which is engaged in Telecommunication Value Added Services, had entered into partnership agreement with a Telecom Operator in Brazil for rendering Ring Back Tone Services to the customers of Telecom Operator in Brazil. On 09.12.2010, the petitioner filed an application before the first respondent-Authority For Advance Rulings (Income Tax), New Delhi, (hereinafter referred to as ‘the Authority’ for brevity) seeking a ruling on the applicability of withholding tax provisions of the Income Tax Act, 1961, relating to one-time premium paid by the petitioner-Company to the Telecom Operator in Brazil. The said application was admitted by the Authority on
4 17.10.2011, which according to the petitioner, was after hearing the parties.
According to the petitioner, several hearings had taken place, and prior to 16.01.2014, the last date fixed was 23.04.2012, on which date, the matter was adjourned without giving any specific date. Then on 16.01.2014, when the petitioner was not represented before the Authority, the matter was dismissed for non-prosecution. The petitioner thereafter filed an application for restoration, which was accompanied by an affidavit, wherein it was stated that the applicant did not receive any notice for hearing and thus could not attend the hearing on the date fixed i.e., on 16.01.2014. The said application was filed within the stipulated period provided under the proviso to Rule 17 of the Authority For Advance Ruling (Procedure) Rules, 1996, (hereinafter referred to as ‘the Rules, 1996’ for brevity). When the said application was taken up for hearing, it appears that the Counsel for the applicant
5 was faced with the receipt of service on the counsel by which, intimation was given for the date fixed by the Authority as 16.01.2014. The applicant-writ petitioner was thus granted time to file a better affidavit and accordingly, in the subsequent event, the applicant-writ petitioner stated in the affidavit that though the notice fixing the hearing on 16.01.2014 was delivered, but the same was misplaced at the applicant’s end and since prior to 16.01.2014 the matter was last heard on 23.4.2012, which was nearly two years back and the applicant had omitted to check the causelist, thus he was unable to be present on the date of hearing. The Authority then, vide its order dated 30.04.2014, rejected the restoration application merely on the ground that the statements made by the applicant- writ petitioner in the two affidavits were contradictory.
6 5. Learned Counsel for the petitioner has submitted that in terms of Rule 17 of The Rules, 1996, even if the applicant-writ petitioner had not appeared before the Authority on the date fixed for hearing, the option for the Authority was to decide the case exparte on merits and not to dismiss in default. It has further been submitted that no contradiction in the statements of the applicant in the two affidavits has been pointed out by the Authority and merely by stating that contradictory statements had been made, the same would not suffice without specifying as to what contradictions were there in the two affidavits. It is thus contended that the order dated 30.04.2014 is bereft of reasons and was thus liable to be set-aside along with the order dated 16.01.2014.
Learned Counsel for the respondents has, however, submitted that the dismissal of the case for non-prosecution vide order dated 16.01.2014 was justified, as the applicant did not appear before the Authority on the said date. He has also submitted
7 that while passing the order dated 30.04.2014, the Authority had considered the two affidavits filed by the applicant-writ petitioner before the Authority and perusal of the two affidavits would go to show that there was contradiction and as such, even if the Authority did not specify the contradictions made therein, the order cannot be said to be bad for such reason as long as the contradictions in the affidavits were there.
Having heard the learned Counsel for the parties and considering the facts and circumstances of the case, we are of the view that the orders dated 16.01.2014 and 30.04.2014 deserve to be set aside. Firstly, the order dated 16.01.2014 is an order simply dismissing the application of the petitioner for non- prosecution, whereas Rule 17 of The Rules 1996, permits the Authority to decide the matter exparte on merits. Further, no adequate reason for rejecting the application for restoration has been given in the order dated 30.04.20214. Merely by saying that the averments made in the two affidavits are
8 contradictory would not be sufficient. The Authority ought to have specified as to what was the contradiction in the two affidavits and why the same was not acceptable.
After having gone through the two affidavits, what we find is that initially the applicant-writ petitioner had stated that the notice for hearing on 16.01.2014 was not received by him. In the second affidavit, it was stated that though the said notice may have been delivered but it was misplaced and never brought to the notice of the applicant. The said averments cannot be termed as contradictory statements because the consistent stand of the applicant was that the notice was never within the knowledge of the applicant. In a case like this, where a party seeks Advanced Ruling, under the provision of the Income Tax Act, from the Authority to find out as to whether certain provisions of the Act would be applicable in the case of the applicant-writ petitioner or not, the endeavour of the Authority should be to
9 decide the case on merits and settle the issue between the parties in advance and not throw out the application on mere technicalities. The purpose of introducing the concept of Advance Ruling is to minimize the litigation so that the parties (assessee and the Department) may come to a definite conclusion as to whether the assessee would be liable to pay the tax or not.
In the present case, the application of the writ petitioner had been admitted by the Authority after hearing and finding that the matter requires consideration. Admittedly, the date fixed for hearing was after a gap of nearly two years. Dismissal of the application for non-appearance on one particular date, which in the present case appears to be for sufficient cause, per se does not appear to be justified. As such, the impugned orders deserve to be quashed.
10 10. Accordingly, this writ petition stands allowed.
The orders dated 16.01.2014 and 30.04.2014 passed by the respondent No.1-Authority are quashed. The application AAR No.1015 of 2010 is restored and shall be heard and decided by the respondent no.1-Authority on merits and in accordance with law, as expeditiously as possible. No order as to costs.
The contention raised by the learned Counsel for the respondents with regard to the applicability of Section 245RR of the Income Tax Act, 1961, shall be left open to be considered by the Authority concerned.
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JUDGE
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JUDGE
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