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II. Direct Tax Case laws:
1. Vodafone India Services (P.) Ltd. v. Union of India, WRIT PETITION NO. 1877 OF 2013, Date of Order: 29.11.2013
Requirement
of grant of personal hearing to assessee by AO before referring the
matter to TPO for determining ALP has to be read into section 92CA(1) in
cases where the assessee challenges the very jurisdiction to tax under
Chapter X (transfer pricing provisions). Since, in the instant case, AO
had already made the draft assessment order and supported it in
affidavit before HC on merits, assessee permitted to file objections
regarding applicability of Chapter X to DRP.
(i) The
assessee’s contention that the DRP does not offer an alternative remedy
because it does not have the power to quash the assessment order even if
it is satisfied that the same is without jurisdiction is not acceptable
because the DRP’s power to confirm would include the power not to
confirm and to annul the draft assessment order;
(ii) It
is clear from s. 92(1) that there must be income arising/ potentially
arising by an international transaction for the application of the
transfer pricing provisions. Grant of personal hearing before referring
the matter to the TPO has to be read into s. 92CA(1) in cases where the
very jurisdiction to tax under Chapter X is challenged by the assessee.
If, after the hearing the assessee, the AO holds that there is an
international transaction, that would be binding on the TPO;
(iii) The
department’s contention, based on CBDT Instruction No.3 dated
20.05.2003, that the action of the AO in referring the international
transaction is a mere administrative act is not acceptable. The AO is
bound to hear the assessee. The failure to do so is an illegality;
(v) In
this case it would be natural for the assessee to feel harassed as
neither the AO nor the TPO gave a hearing or dealt with the preliminary
objection. It is hoped that the revenue will be more sensitive to the
just demands of the assessee and not treat the assessee as an adversary
who has to be taxed, no matter what.
(vi) The
DRP should decide the assessee’s objection regarding chargeability of
alleged shortfall in share premium as a preliminary issue. In case the
DRP’s decision on the preliminary issue is adverse, the assessee shall
be entitled to challenge it in a writ petition if it can show that the
DRP’s decision on the preliminary issue is patently illegal
notwithstanding the availability of alternate remedy before the ITAT.
2. Kathiroor
Service Cooperative Bank versus Commissioner of Income Tax (CIB, CIVIL
APPEAL NO. 7460 OF 2013, Date of Order : 27.08.2013, Hon’ble Supreme
Court of India.
Held that vide S. 133(6), AO empowered to launch fishing and roving enquiry with a view to detect tax evasion
The
legislative intention behind s. 133(6) was to give wide powers to the
income-tax department to gather general particulars in the nature of
survey and store those details in the computer so that the data so
collected can be made use of for checking evasion of tax effectively. It
would not fall under the restricted domains of being “area specific” or
“case specific.” S. 133(6) does not refer to any enquiry about any
particular person or assessee, but pertains to information in relation
to “such points or matters” which the assessing authority issuing
notices requires. This clearly illustrates that the information of
general nature can be called for and names and addresses of depositors
who hold deposits above a particular sum is certainly permissible.
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