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2023 Supreme(Kar) 1307
IN THE HIGH COURT OF KARNATAKA
B.M. Shyam Prasad, J.
United Spirits Limited – Petitioner
Versus
Assistant Commissioner of Income Tax – Respondent
Writ Petition No. 13953, 13934, 13946 of 2020
Decided On : 17-08-2023
Subject
Tax Law - Income Tax
Act Referred
INCOME TAX ACT: S.14(a), S.143(3), S.153, S.153(2)(a), S.153(3), S.153(5), S.153(6), S.153(7), S.154, S.244(a), S.253, S.254, S.264
Headnote
(B) Legal Principles - For an assessment to be validly reconsidered under income tax laws, statutory timelines must be adhered to rigorously; notices issued after expiration are deemed impermissible. (Paras 10-12)
(C) Dissenting Opinion - Respondent's submissions on validity of actions taken post-ITAT’s order lacked sufficient legal grounding in the face of statutory mandates regarding time-limits.
Advocate Appeared:
For the Petitioners: Percy Pardiwala, Tanmayee Rajkumar
For the Respondent: E.I. Sanmathi
| Table of Content |
|---|
| 1. overview of petitioner and assessment years (Para 1 , 2 , 3) |
| 2. cit appeals outcomes and itat's directions (Para 4 , 5 , 6) |
| 3. petitioner's refund applications and computations (Para 7 , 8 , 9) |
| 4. substituted provisions of section 153 of the it act (Para 10 , 11 , 12 , 13 , 14) |
| 5. court's inquiry on itat orders and timeliness of assessment (Para 15 , 16 , 17) |
| 6. differentiating full assessments versus limited reconsiderations (Para 18 , 19 , 20) |
| 7. legislative intent and amendments regarding assessment timelines (Para 21 , 22 , 23 , 24) |
| 8. panel's order on refund claims and considerations (Para 25 , 26 , 27 , 28) |
ORDER :
1. The petitioner has impugned the notices dated 05.11.2020 and 06.11.2020 issued by the first respondent to extend an opportunity of hearing after the Income Tax Appellate Tribunal's (ITAT) common Order dated 31.03.2015 in (a) ITA No. 1277/Bang/2010, (b) ITA No. 424 & 605 (Bang) /2013 and (c) ITA No. 652 & 653(Bang) 2013. The petitioner further seeks directions to the respondents to refund certain amounts with applicable interest corresponding to the three assessment years.
2. A brief conspectus of facts leading to these impugned notices is stated thus. The petitioner is a public limited company, and the petitioner has filed its return on income with the claims for refund for the corresponding assessment years as follows:
| Assessment Years | 2007-08 In Rs. | 2008-09 In Rs | 2009-10 In Rs |
| Declared Income | 346,41,78,725/- | 525,86,44,940/- | 496,63,97,797/- |
| Refund Claimed | 2,74,12,043/- | 21,14,04,480/- | 21,82,43,000/- |
The Assessing Officer (AO), after a scrutiny assessment under Section 143(3) of the INCOME TAX ACT , 1961 (for short, the 'IT Act'), has passed respective Assessment orders (1) dated 31.12.2009 (for the Assessment Year 2007- 08), 29.12.2010 (for the Assessment Year 2008-09) and 30.12.2011 (for the Assessment Year 2009-10) making various dis-allowances.
(1) A copy of the respective order is produced as Annexure - A in each of the petitions.
3. The AO in the aforesaid Assessment orders has disallowed the following for the respective Assessment Years.
| Depreciation on building (Section 32 of the IT Act) | Rs. 2,45,116/- |
| Section 14A of the IT Act | Rs. 27,64,15,000/- |
| Bad Debts and Bad Advances written off | Rs. 1,48,85,308/- |
| Non consideration of brought forward loss | Rs. 16,13,58,199/- |
| Taxable Income | Rs. 391,70,82,437/- |
| Balance tax payable (including interest) | Rs. 22,70,56,315/- |
(ii) For the Assessment Year 2008-09
| Disallowance of Foreign Exchange Fluctuation Loss | Rs. 5,68,45,363/- |
| Section 14A of the IT Act | Rs. 41,20,34,568/- |
| Bad Debts and Bad Advances written off | Rs. 95,39,284/- |
| Disallowance of amalgamation of expenses | Rs. 1,69,59,640/- |
| Taxable Income | Rs. 575,40,27,792/- |
| Balance tax payable (including interest) | Rs. 7,53,16,766/- |
(iii) For the Assessment Year 2009-10
| Section 14A of the IT Act | Rs. 53,53,60,238/- |
| Bad Debts written off | Rs. 16,43,981/- |
| Taxable Income (R/O) | Rs. 550,34,02,020/- |
| Balance tax payable (including interest) | Rs. 9,89,96,390/- |
4. The petitioner, being aggrieved by the aforementioned Assessment Orders, has filed appeals before the Commissioner of Income Tax (Appeals) (for short, 'the CIT (Appeals)') challenging the dis-allowances by the A.O. The CIT (Appeals) by its order dated 06.10.2010 has dismissed the appeal for the AY 2007-08 (against the order dated 31.12.2009), and the CIT (Appeals) by its order dated 18.02.2013 has partly allowed the appeal for the AY 2008-09 (against order dated 29.12.2010) deleting the disallowance with respect to foreign exchange fluctuation loss while upholding the disallowance under Section 14A of the IT Act and disallowance of bad debts/advances written off. Similarly, the CIT
