Madras HC upholds Reassessment Notice on Alternate Remedy ground, directs AO to consider all objections while passing Reassessment order [Read Judgment]

The Madras High Court upheld the Reassessment Notice on the ground of alternate remedy and directed the Assessing Officer to consider all objections while passing the Reassessment order.

Mrs.Hema Muralikrishnan, the counsel for the respondent, M/s.Daimler India Commercial Vehicles Private Ltd. contended before the Single Judge was that it was in the process of setting up a plant for the manufacture of commercial vehicles and the project developmental expenditure includes Rs.805,450,136/- towards research and development and it is shown in the financial statements. Further, Form No.3CEB report from the Accountant of the respondent furnished under Section 92E relating to an international transaction, shows that during the previous year there has been no production. It is also stated that the Company has signed a Memorandum of Understanding with the Government of Tamil Nadu to set up a Truck Manufacturing facility at SIPCOT, Oragadam over 398 acres of land. The order passed by Transfer Pricing Officer noted that the writ petitioner proposes to start commercial production in the year 2012.

The Assessing Officer examined the case and found that disallowances under Section 14A require to be made in accordance with the 3rd limb of Rule 8 and accordingly computed the same. Therefore, while completing the scrutiny assessment, all materials were available with the Assessing Officer and they were considered an order was passed and the impugned proceedings is a clear case of change of opinion.

On the side of Revenue, it was argued that there is a clear failure on the part of the assessee in making full and true disclosure and while completing the scrutiny assessment, the assessing officer will not go into the details contained in Form III CEV, which will be looked into only by Transfer Pricing Officer and only in this document, the assessee has stated that production activity has not commenced during the relevant year. The Assessing Officer was of the view that commercial production commenced in the assessment year 2009-10, thus, in the absence of any opinion being formed with regard to commencement of business, it is not a case of change of opinion.

The division bench of Justice N. Kirubakaran and Justice P.Velmurugan said that when there is a hierarchy of appeals provided under the statute, the assessee must exhaust the statutory remedies. When there is an alternative statutory remedy, the writ jurisdiction of this court under Article 226 of the Constitution of India ought not to be invoked. There is no bar to entertain the writ petition when the alternative remedy is available if it is the case that the order passed by the concerned authority is prejudicially affecting their rights or interest.

The court held that the assessee is at liberty to raise all its objections during the re-assessment proceedings before the assessing officer and the assessing officer is directed to consider all its objections while passing the re-assessment order. If the respondent is aggrieved, they can always exercise their statutory appeal remedy.

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