Disposed

Dongfang Electric Corporation Ltd. v. Commissioner of Income Tax

Telangana HC7 Jan 2025WP/35796/2024

Case brief

AI extract

What is this about?

Assessee challenged rejection of its Form-1 applications under DTVSV Scheme, 2024 for three assessment years. The court found the rejection remarks cryptic and unreasoned and held that fresh reasons could not be supplied via counter affidavit. Rejections were set aside and matters remanded for fresh decision after personal hearing.

What did the court decide?

Rejection orders dated 05-12-2024 set aside; matters restored to respondent No.1 for personal hearing and fresh reasoned orders; no costs.

Dongfang Electric Corporation Ltd. Vs Commissioner of Income Tax — Income Tax | Telangana HC (2025)

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[³⁴³⁰ ]

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction)

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TUESDAY, THE SEVENTH DAY OF JANUARY TWO THOUSAND AND TWENry FIVE

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PRESENT

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THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI

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WRIT PETITION Nos. 35796. 36006 AND 36007 0F 2024

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WRIT PETITION NO: 35796 OF 2024

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Between:

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Dongfang Electric Corporation Ltd., 18, Xixin Avenue, High Tech West Park Chengdu, Sichuan, China Pan No. AADCD7492F Rep. by Authorised Signatory Mr. Rajesh Vaishnav aged about 30^years S/o. Satyanarayan Vaishnav, No 4-3-428, Hanuman Tekdi, Hyderabad.

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..PETITIONER

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AND

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1 Commissioner of lncome Tax, lnternational Taxation and Transfer^PricingSth floor, Aayakar Bhavan Basheerbagh, Hyderabad^- 500004

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2 Commissioner of lncome Tax Appeal CIT^(A), Hyderabad-10 6th^floor, Aayakar Bhavan Basheerbagh, Hyderabad - 500004

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3- Union of lndia, Rep. by its Secretary, Department of Revenue,^lVinistry of Finance, North Block New Delhi - 1 10001

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...RESPONDENTS

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Petition under Article 226 of the Constitution of lndia^praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue Writ Order or Direction more particularly in the nature of Writ of Mandamus declaring the impugned Rejection dated 05-12-2024 tor A.Y.20'13-14 passed by 1't respondent as being illegal, arbitrary, inconsistent, violative of principles of natural justice, without jurisdiction, without authority of law and violative of Articles 14, 19 (1) g and 265 of Constitution of lndia and contrary to provisions of DTVSV Scheme, 2O24 and consequently set aside the impugned Rejection daled 05-12-2024 passed by 1't respondent in^petitioner's applicationⁱⁿ Form-l dated 20-11-2024 bearing Acknowledgement No.718693360201124^fot

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t"')---

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A.Y.2013-14 filed under DTVSV Scheme, 2024 and direct the 1st respondent to accept the Form-1 of the Petitioner and issue Form-2 fol|00^percentage tax payment and waiver of interest and penalty and permit to file Form-3 and issue Form-4 for final settlement under DTVSV Scheme, 2024.

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lA NO: 1 OF 2024

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings including the Appeal pending before the 2nd respondent and revision under section 263 pending before the 1st respondent, for A.y.201314, till further orders of this Hon'ble Court.

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lA NO: 2 OF 2024

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the impugned rejection dated 05-'12-2024 and direct the 1st respondent to treat the application filed under Form-1 dated 2O-11-2024 bearing Acknowledgement No.718693360201 124 under DTVSV Scheme, 2024 as pending, till disposal of this wdt petition.

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Counsel for the Petitioner: SRI C.V. NARASIMHAM, APPEAR FOR SRI MOHD MUKHAIRUDDIN

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Counsel for the Respondent Nos.1 and 2: SRMJHAY K PUNNA

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(sENtoR sc FOR lTD)

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Counsel forthe Respondent No.3: SRI cADl PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL

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WRIT PETITION NO: 36006 OF 2024

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Between:

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Dongfang Electric Corporation Ltd., 18, Xixin Avenue, High Tech West park Chengdu, .Sich-uan, China Pan No. AADCD7492F R6p. by Authorised Signatory l4r .&jg:|, Vaishnav aged about 30 years S/o. Satyanarayan Vaishnav. No 4-3-428, Hanuman Tekdi, Hyderabad-

,..PETITIONER

AND

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't . Commissioner of lncome Tax, lntemational Taxation and Transfer Pricing 5th floor, AayakarBhavan Basheerbagh,^{Hyderabad - 500004}

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Commissioner of lncome Tax Appeal CIT^{(A), Hyderabad-10Oth floor,} Aayakar Bhavan Basheerbagh, Hyderabad^{- 500004}

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Union of lndia, Rep. by its^{Secretary, Departmentof Revenue, Ministry of} Finance, North Block New Delhi^{- 1 10001}

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..,RESPONDENTS

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Petition under Article 226 of the Constitution^{of lndia praying that in the} circumstances stated in the affidavit^{filed therewith, the High Court maybe} pleased to issue writ order or Direction more^{particularly in the nature of writ of} Mandamus declaring the impugned^{Rejection dated 05-12-2024'forA.Y.2014-15} passed by 1st respondent as being illegal, arbitrary,^{inconsistent' violative of} principles of natural justice, without^{jurisdiction,} without^{authority of law and} violative of Articles 14, 19^{(1) g} and^{265 of Constitutionof lndia and contrary to} provisions of DTVSV Scheme, 2024 and consequently^{set aside the impugned} Rejection dated 05-12-2024^passed by^{1sr respondent in petitioner's applicationin} Form-1 dated 2O-11-2024 bearing Acknowledgement^{No.718826700201124 lor} A.Y.2O14-15 filed under DTVSV Scheme,^{2024anddirect the 1sr respondentto} accept the Form-1 of the Petitioner^{and issue Form 2 for 100percentage tax} payment and waiver of interest and^penalty and^{permit to file Form-3 and issue} Form-4 for final settlement under DTVSV^Scheme,2024.

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lA NO: 1 OF 2024

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Petition under Section 151 CPC^praying that^{in the circumstances statedin} the affidavit filed in support of the^{petition,the High Court may be pleased to} suspend the impugned rejection dated^{05-12-2024 and direct the 1sr respondent} to treat the application filed under^{Form-1dated.2O-11-2024 bearing} Acknowledgement No.718826700201124^{underDTVSV Scheme, 2O24as} pending, till disposal of this writ^petition.

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lA NO: 2 OF 2024

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Petition under section 151 CPC^{praying that in the circumstances statedin} the affidavit filed in support of the^{petition, the High court may be pleased to stay} all further^proceedings including the^{Appeal pending before the 2nd respondent}

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q--

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and revision under section^{263 pending beforethe 1st respondent} ,^{'for A.Y.2O14'} 15, till further orders of this Hon'ble^Court.

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Counsel for the Petitioner:^{SRI C.V. NARASIMHAM, APPEARFOR} SRI MOHD MUKHAIRUDDIN

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Counsel for the Respondent^{Nos.1and 2: SRI VIJHAY K PUNNA}

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(sENroR sc FoR ITD)

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Counsel for the Respondent^{No.3:SRI GADI PRAVEEN KUMAR,} DEPUTY SOLICITOR GENERAL

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WRIT PETITION NO: 36007 OF²⁰²⁴

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Between:

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Dongfang Electric Corporation Ltd.,^{18, Xixjn-Aven-ue,High TechV.Ve.?tP.arkr} Cheigdul Sichuan, China,^{Pan No. AADCD7492F,Rep. by Authorised} Sionalorv, Mr. Raiesh^{Vaishnav, Aged about 30 years,S/o. Satyanarayan} Va=ishnav, FJo 4-3-428, Hanuman^{Tekdi, Hyderabad.}

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...PETITIONER

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AND

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Commissioner of lncome Tax,^{lnternational Taxation and Transfer Pricingsth} Floor, Aayakar Bhavan, Basheerbagh,^{Hyderabad - 500004'}

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Commissioner of lncome^{TaxAppeal CIT (A), Hyderabad-'106th floor,} Aayakar Bhavan Basheerbagh,^{Hyderabad- 500004.}

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Union of lndia, Rep. by^its Secretary,^{Departmentof Revenue, Ministry of} Finance, North Block, New Delhi^{- 1 10001.}

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...RESPONDENTS

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Petition under Article 226 of the^{Constitutionof lndiapraying that in the} circumstances stated in the^{affidavitfiled therewith, the High Court maybe} pleased to issue Writ Order or Direction more^particularly in the^{nature of Writ of} Mandamus declaring the^{impugned Rejection dated 0511212024lor A-Y -2015-16} passed by 1st respondent as being illegal, arbitrary, inconsistent,^violativeof principles of natural iustice, without^{jurisdiction.} without authority of law and violative of Articles 14, 19^{(1) g} and^{265 of Constitution of lndia and contrary to} provisions of DTVSV Scheme, 2024 and consequently set aside the^impugned Rejection daled o't1212024^passed by¹ st^respondent in^{petitionersapplication in} Form-1 dated 2o11112024 bearing Acknowledgement No.71875982O201124^lor A.Y.2015-16 filed under DTVSV Scheme, 2024 and direct the 1st^respondent to accept the Form-l of the Petitioner and issue Form-2 for 100^percent tax^payment

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and waiver of interest and^penalty and^{permitto file Form-3and issue Form-4 for} final settlement under DTVSV Scheme. 2024.

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lA NO: 1 OF 2024

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Petition under Section l5'l CPC^praying that^{in the circumstances statedin} the affidavit filed in support of the^{petition,the High Court may be pleased to} suspend the impugned rejection dated^{O511212024anddirect the 1st respondentto} treat the application filed under Form-'t^{dated 2011112014 bearing} Acknowledgement No.718759820201124^{under DTVSV Scheme 2024 pending,till} disposal of this writ^petition.

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lA NO: 2 OF 2024

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Petition under Section 151 CPC^praying that in the^{circumstancesstated in} the affidavit filed in support of the^{petition, the HighCourt may be pleased to stay} all further proceedings including the Appeal^{pending before the 2ndrespondent} and revision under section 263^{pending before the 1st respondent' for A.Y.201 5-} 16, till further orders of this Hon'ble Court.

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Counsel for the Petitioner: SRI MOHD MUKHAIRUDDIN

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Counsel for the Petitioner: SRI C.V. NARASIMHAM,^APPEARFOR SRI MOHD MUKHAIRUDDIN

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Counsel for the Respondent Nos.1 and 2: SRI^{VIJHAY K PUNNA} (sENloR sc FoR lrD) Counsel for the Respondent No.3: SRI GADI^{PRAVEEN KUMAR,} DEPUTY SOLICITOR GENERAL The Court made the following: COMMON ORDER

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THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI

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WRIT PETITION Nos.35796 36006 AND 36007 0F 2024

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COMMON ORDER;^(per Hon'ble Si Justice Sujog^Paul)

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Sri C.V.Narasimham, learned Senior Counsel appears for Sri Mohd Mukhairuddin, learned counsel for the petitioner and Sri Vijhay K Punna, learned Senior Stalding^Counsel for Income Tax Department appears for respondent Nos-1 and 2. 2. With the consent hnally heard. 3. Regard being had to the similitude of the^questions involved, ttrese matters were analogously heard and decided by this common order.

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The facts are taken from WP.No.35796 ol 2024. The petitioner was subjected to assessment for the Assessment Year 2OI3-2O14 and assessment order^(Annexure P.4) was^passed on 78.05.2022 determining the attributable income in India to the tune of 10%. The petitioner received a notice dated 16.06.2O23 under Sectioo 263 of the lncome Tax Act, 1961^proposing revision of percentage to the tune of 25'k.

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Learned counsel for the petitioner informed that against the said notice, WP.No.33230 of 2023 and batch were filed, which were subsequently withdrawn with liberty to avail the remedy

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ili

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under the Direct Tax Viuad^Se Vishrrcs^{Scheme, 2o24 ( Scheme} of 2024). Learned counsel further^{submits that the petitioner} preferred an application online in^{prescribed form under Section} 91 of the said scheme. The^{petitioner has paid the requisite} amount before filing the application under^{Section9 1 of the} scheme, which can be^{gatheredfrom part-E of the application} (Annexure P.3). By taking this Court to^{part-Fof said application,} which as per contention of^{petitioner is an auto generatedamount} determined by the Department,^{an amount of Rs.-2,07,58,934} /^- was refundable. The^{petitionerwas shocked toreceivethe} rejection order captioned as^"rejection remarks".^{Learned counsel} for the petitioner submits that^{"rejectionremarks" are not properly} worded. It gives an impression as if^{the Scheme of 2024 does not} override the Scheme DTVSV^{of 2O2O(Schemeof 2O2O), whereas, a} plain reading of Section 90 of Schem e of 2024^{makes it clear that} it is pregnant with a non-obstante clause,^{whichhas an overriding} effect not only on income tax, but,^{also on any other law which} was in force. Thus, it has^over riding^{effect even on the Scheme of} 2020. Section^gaQl was^{heavily relied upon to submit that tax is} very much refundable, if conditions are satisfied.^{Thus, the} impugned order is bad in law.

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6- It is submitted^{that the impugned order is soughtto be} supported by^{assigningdifferentand supplementary reasons in} the counter, which^{cannotbe taken into account in view of the} Constitution Bench^{Judgment of SupremeCourt in Mohindhr} Siagh GiIl and^{Another v. Chief Election Commissioner,New} Delhi and othersr.

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karned Senior^{Standing Counsel forIncomeTax} supported the^{impugnedorder and submits that the counter} shows the^{decision taken by"rejection remarks"is} in consonance with^law.

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The^{parties have confinedtheir argumentsto the extent} indicated above.

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g. We have heard the^{parties at lengthand pemsed the record'} The imPugned order^readsthus:

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(Rejection rematks:

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The assessee's Issues^{retated todisputesand taxes} settled in DTVsV 202O,^{but violates conditionsof the} same including no refund^{of taxespaid.DTVsV 2024} does not override the^{DTVsV2O2O and has to be read} harmoniously with it.^Hcnce ,^{the form I is rejected'}

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Rejection date:

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05-Dec-2O24"

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t (19?8) I Supreme Coun Cases 405

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Before dealing with the contents of the "rejection remarks", we deem it proper to deal with the argument of learned Senior Standing Counsel for Income Tax based on the counter frled in this matter. In Mohindhr Singh Gill's case supra, the Constitution Bench made it clear that validity of al order of a statutory authority must be .yudged on the basis of reasons assigned in the order and new reasons cannot be provided by filing counter affidavit in the Court. The relevant portion reads thus:

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'a. The second equallv relevalt matter is that when a statutory functionary makes an order based on certain grounds. its validity must be iudged bv the reasons so mentioned and cannot be supplemented by fresh rqanons in the shape of affldavit or otherwise. Otherwise , an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additiona.l grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji:

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"Public orders, pubticly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the oflicer making the order of what he meant, or of what was in his mind, or what he intended to do. Pubiic orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively w'ith reference to the language used in the order itselL "

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Orders are not like old wine becoming better as they lqrow older."

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(Emphasis Supplied)

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The lau, laid down by Constitution Bench in Mohindhr Singh GiII's case supra is still a good law. Thus, the reasons assigned in the counter, which does not form part of rejection order will not instill life or improve the rejection order. Thus, we are not inclined to enter on those reasons and deem it^proper to examine the reasons given in the "rejection remarks"

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We may hasten to add that first line of 'rejection remarks" is not happily worded. It is difficult to gather exact meaning of the first line. It is incomprehensible. However, the first line gives an impression as if something is settled pursuant to Scheme of 2O2O cannot result into refund of taxes paid. Assuming that this is the meaning arising therein, this needs to be examined in view of Section 90 of the Scheme which reads thus

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"90. Subject to the provisions of this Scheme, where a declarant liles under the provisions of this Scheme on or before the last date, a declaration to the designated authority in accordance with the provisions of section 91 in respect of tax arrear, then, notwithstandinq anvthing contained in the Income-tax Act or anv other law for the time being in force, the amount payable by the declarant under this Scheme shall be as mentioned in the Table below..."

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(Emphasis Supplied)

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The second reason in the "rejection remarks" is that the Scheme of 2024 does not override the Scheme of 2O2O. This

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reason is also required to be relooked in the light of^language employed in Section 90 reproduced hereinabove. In^{the considered} opinion of this Court, the impugned order is too^{sketchy,too short} and too crSptic in nature. The ?easons' are^held to^{be heart beat} of the tonclusions'. In the absence of reasons,^conclusions cannot sustain^judicial scrutiny. The Supreme Court in Kranti Associates (Pl Ltd. v. Masood Ahmed Khan2 emphasized^the need of assigning reasons in administrative,^{quasi judicialand} judicial orders. Relevant para reads thus:

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"47. Summarising the above discussion,^{this Court holds:}

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(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions alfect anyone prejudicially.

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(b) A quasi-judicial authority must record reasons in support of its conclusions.

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(Q Insistence on recording of rcasons is meant to serve the wider principte of^justice that^justice must not^{only be done} it must also appear to be done as^well.

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(@ Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of^judicial ald^{quasi-judicialor} even administrative power.

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(e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by^disregarding extraneous considerat ions.

'(2oro)^{9 scc496}

(f Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

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(g) Reasons facilitate the process of judicial review by superior courts

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(h) The ongoing judicial trend in all countries committed to rule of law and constitutiona-l governance is in favour of reasoned decisions based on relevant facts. This is virtually the tifeblood of^judicial decision-making justifoing the principle that reason is the soul ofjustice.

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(tJ Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for susraining the litigants' faith in the justice delivery system.

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fuJ^{Insistence on reason} is a requirement for both^judicial accountability and transparency.

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(k) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is in:possible to know whether the person deciding is faithful to the (loctnne of precedent or to principles of incrementalism.

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(/) Reasons in support of decisions must be cogent. clear and succinct. A pretence of reasons or "rubber-stamp reasons. is not to be equated with a valid decision-making process.

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(m) lt cannot be doubted that transparency is the sinc qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges an<t decisionmakers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor [(1987) 100 Harvard Law Review Z3l-3Zl .)

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(n) Since the requirement to record reasons emanates lrom the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and

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was considered part of Strasbourg Jurisprudence. See Rurz Toijav. Spoin[(1994) 19 EHRR 553] EHRR, ar 562 para 29 aad Angav. Uniuersitg of Oxford [200i EWCA Civ a05 (CA)] , wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for^judicial decisions".

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(o) In all common law jurisdictions^judgments piay a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of"due process."

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If the impugned order is tested on the anvil of principles laid down in Kranti Associates (Pl Ltd. (supra), it cannot sustain judicial scrutiny because of its cryptic nature and non-disclosure of reasons. Thus^orejection remarks" in ali the matters are set aside. The matters are restored back in the file of respondent No.l, who, shall give personal hearing to the petitioner and pass a fresh ordi:r, in accordance with law, without getting mechanically influenced by previous order and counter filed.

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Learned Senior Counsel for the petitioner intended to take us to the calculation part and the refund part and the related provision. We are not inclined to enter into this aspect in these proceedings. It may be remembered that the scope of judicial review under Article 226 of the Constitution is basically on the decision making process and relating to the reasons assigned in the impugned order. If impugned order suffers from non application of mind and does not conta.in adequate reasons, the

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I \

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proper course is to set aside the order by^{directingthe authorit5i} concerned to rehear the^party and^{pass a fresh order. Thus we} are not inclined to undertake the^{aforesaid exercise suggestedby} learned counsel for the petitioner^{(see Kalinga Miaing Corpn. v.}

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Unioa of India3).

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