Assessment Unit Income-Tax Vs Kawasaki Manufacturing (India) Private Limited

KAWASAKI MANUFACTURING (INDIA) PRIVATE LIMITED PLOT NO.276P2 AND 277P2, 2^ND PHASE, (INCORPORATION U/S COMPANIES ACT RULES 2014) HAROHALLI INDUSTRIAL AREA, HAROHALLI S.O. HAROHALLI, RAMANAGAR-562 112. (REPRESENTED HEREIN BY ITS MANAGING DIRECTOR MASAKAZU MATSUURA)

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&RESPONDENT

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(BY SMT. TANMAYEE RAJKUMAR., ADVOCATE)

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THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED 04.07.2025 PASSED IN WP No12184/2025 (T-IT) PASSED BY THIS COURT AND EXPUNGE THE OBSERVATION AND DIRECTION SET OUT IN PARA 9 AND 10 OF THE IMPUGEND ORDER.

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THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE T.M.NADAF

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HC-KAR

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ORAL JUDGMENT

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(PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD)

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The appellants have called in question the writ Court's order dated 04.07.2025 in Writ Petition No.12184/2025 [ I-IT ]. The writ Court has interfered with the Tribunal's order dated 21.03.2025 primarily because the order is despite objections filed by the respondent with the Dispute Resolution Panel [DRP] as contemplated under Section 144C (2) of the Income Tax Act, 1961 [for short, ' the IT Act ']. The writ Court, while quashing this order and remitting the matter to the first appellate Tribunal for reconsideration after the orders of the DRP, has also issued certain directions, and these directions are as under:

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If that be so, it would be for the Chief Commissioner of Income Tax to look into this matter and implement a system which would cater to such a requirement, such that, in case of this kind, the objections filed before the DRP

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would have been made knowledgeable to the Assessing Officer so as to stay the hands of the Assessing Officer and not pass the orders pending the decision of the DRP.

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The Chief Commissioner [International Taxation) to file an affidavit in that regard within four weeks from today."

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The writ Court's afore directions are because the concerned assessee will have to physically intimate the Assessing Officer [AO] about the objections filed with the DRP and the lack of a digital system for transmission of this information.

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Mr. E. I. Sanmathi, the learned counsel

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for the appellant, submits that the appellant's grievance as against the impugned order is premised chiefly in two grounds.

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Firstly, Section 144C (2) of the IT Act places the onus on the assessee to file objections [ if any ] with the DRP upon receipt of a draft order for the proposed variation within thirty

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[30] days and the AO, because of Section 144C(3) of the IT Act, will have to complete the assessment if no objection is raised based on the draft order within the prescribed time. This statutory requirement is jettisoned by the direction to the AO to digitally verify whether any objection is filed within the prescribed period without the assessee taking any action as required under the statute.

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Secondly, any change in the system must be at the National Level by the concerned and it would not be within the domain of the Chief Commissioner of Income Tax, International Taxation to make the changes.

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The writ Court has directed the Chief Commissioner of International Taxation to place on record the decision taken by the competent authorities for

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implementation, and in terms of this Court9s earlier order dated 18.08.2025, the Chief Commissioner of Income Tax [International Taxation] has filed an affidavit in compliance stating inter alia that the competent authorities have been appraised about the need for implementation of the direction.

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Ms. Tanmayee Rajkumar, the learned counsel for the respondent, insofar as the first ground, does not join debate, but she is categorical that given the statutory Scheme it is for the concerned assessee to file objections to the variance within the time contemplated lest there be orders based on the variance proposed in the draft orders. On the second aspect, the learned counsel submits that she should place on record that if the competent from the Revenue enable the information about the objections filed by an assessee to be seen by the concerned AO without the assessee filing such information, there would be no reason for multiple

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writ petitions filed on the ground that the final assessment orders are passed notwithstanding the objections filed by the DRP. The learned counsel also fairly submits that the reason for this petition could be a technical glitch in failing to file a copy of the objections with the AO.

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At the outset this Court must observe that

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the writ Court's impugned order does not in any manner undermine the requirement and the consequence under Section 144C (2) and (3) of the IT Act, and this Court must also observe that the writ Court, in the peculiarities of the case, has examined whether there must be any intervention with the final orders under Section 144(3) of the IT Act. As such, there is no reason for interference with the writ Court's order on the first ground. However, this Court finds considerable force in the submission that any resolution of the kind that is contemplated by the writ Court9s order would require the attention of the

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competent as it requires to be implemented, based on the exigencies, at a national level and any decision therefore must be by such authorities. Insofar as the directions to the Chief Commissioner of the Income Tax, International Taxation, the writ Court, if it is still seized of the matter, will consider the constraints that would be to a particular officer given the hierarchy in the system and pass such further directions if required, as may be just and reasonable.

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The appeal stands disposed of accordingly.

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Sd/(B M SHYAM PRASAD) JUDGE

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Sd/(T.M.NADAF) JUDGE

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SA ct:sr

Assessment Unit Income-Tax v. Kawasaki Manufacturing (India) Private Limited

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Assessment Unit Income-Tax v. Kawasaki Manufacturing (India) Private Limited

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