By TIOL News Service

MUMBAI, OCT 24, 2016: THE issue is - Whether exercise of extraordinary jurisdiction by the High Court is warranted in case of a petition filed by an assessee, who has, by participation in the proceedings before the AO consequent to transfer of its case, accepted the impugned orders. NO IS THE VERDICT.

Facts of the case:

During the subject year, a search and seizure action u/s 132 was carried out by the Office of the CIT at Bhopal on the assessee company and its group at various places including Raipur. Consequent to the same, a show cause notice was issued to the assessee, inviting its objections to the proposed transfer u/s 127(2) of the assessee's income tax assessment proceedings from Mumbai to Raipur (in the charge of CIT at Bhopal), for proper coordinated investigation. After rejecting the assessee's objections, the CIT, Mumbai by an order u/s 127(2), transferred the assessee's case with its group companies from Mumbai to Deputy CIT, Raipur for the purposes of coordinated investigation. Consequent to the same, the Dy CIT, Raipur issued notices u/s 153A and called upon the assessee to file its return for the A.Ys 2007-08 to 2012-13. A further notice u/s 142(1) r/w/s 153A/143(2) was also issued to the assessee for six A.Ys 2007-08 to 2012-13. Although the assessee had filed its return for the six A.Ys, it was imposed with a penalty by the AO at Raipur for delay in complying with the notice u/s 153A. On appeal, the order imposing penalty was set aside by the CIT(A).

In the meantime, the assessee made representations to the CBDT seeking centralization of its case alongwith its group companies to Mumbai. The same was however, denied by the CBDT. The impugned order of the CIT, Mumbai and the consequent proceedings taken by the AO at Raipur were challenged by the assessee before the High Court of Chhattisgarh. Consequent to the same, the High Court issued notices to the Revenue for admission as well as for grant of interim relief to the assessee. In the meantime, the order for transfer of case, was stayed by an adinterim order. Thereafter, the High Court of Chhattisgarh dismissed the Petition as withdrawn.

On appeal, the High Court held that,

++ in the present facts, the assessee moved the High Court only on 27 February 2015. Although, adinterim stay was granted on 3 March, 2015, the Petition was not admitted by the High Court. In fact, it was awaiting admission till 14 September 2016, when the Petition was withdrawn with liberty to file a fresh petition. Thus, it cannot be said that the High Court of Chhatisgarh was satisfied with the reasons for delay stated by the assessee in its petition filed before the High Court as it had no occasion to examine it. The copy of the petition filed by the assessee before the High Court is seen, wherein the only reason offered is that rectification application to the order of transfer was pending and representations made to the CIT were awaiting disposal. Mere filing of a rectification application and representation to the order for transfer of case, which has since become effective, and when the Officer concerned is functus officio, will not by itself be an explanation sufficient to explain the delay. This delay has to be explained by the assessee moving the Court for exercise of Court's extraordinary writ jurisdiction under Article 226 of the Constitution of India. It is a prerogative writ and not a writ of course. In such cases, it is for the assessee to explain the delay. It is the assessee who seeks the extraordinary remedy. It is not for the Revenue to explain the prejudice caused to them in view of the delay, without the assessee first sufficiently explaining the reason for the delay. Perusal of a copy of the Writ Petition filed before the High Court shows that no prayer to set aside the order of the CBDT appears to have been made by the assessee. The assessee had filed the petition in the High Court, when the AO has u/s 153A already exercised jurisdiction vested in him;

++ from the factual events, it is observed that the delay on the part of assessee is accompanied with waiver of its right to challenge the impugned orders of transfer, as they have acquiesced in them as is evident from its conduct. It must be borne in mind that the order u/s 127(2) was a reasoned order, preceded by a show cause notice. Therefore, if the assessee was aggrieved by the order, it ought to have challenged the same immediately before the AO at Raipur who exercised his jurisdiction consequent to the transfer. In fact, in this case, the assessee not only failed to challenge the impugned orders immediately after they were passed but in fact, let the AO at Raipur act upon the transfer by responding to the notices issued by the AO at Raipur. This is evident from filing of return consequent to the notice u/s 153A, filing a reply on merits to notice u/s 142(1) r/w/s 153A and 143(2) and also particularly in penalty proceedings by challenging the same under the Act before the CIT(A). Therefore, the contention of the assessee that it had not participated in the assessment proceedings, consequent to the impugned order of transfer u/s 127(2), cannot be accepted. Participation in proceedings does not mean awaiting an order consequent to participation in the proceedings. It is also to be noted that it is an admitted position between the parties that time to pass an Assessment Order u/s 153A would have normally expired on 31 March 2015. However, in view of the adinterim stay granted by the High Court of Chhattisgarh pending admission, the period between 3 March 2015 to 14 September 2016 would stand excluded. This would now leave the AO period of only 60 days to complete the assessment in terms of Section 153B from 14 September 2016. In the above circumstances, this is not a case where we should exercise our extraordinary jurisdiction to entertain the petition filed by the assessee, who has, by participation in the proceedings before the AO at Raipur consequent to transfer, accepted the impugned orders.

(See 2016-TIOL-2574-HC-MUM-IT)