INCOME TAK APPELLATE TRIBUNAL DELHI BENCH “I-2"; NEW DELHI BEFORE SHRI. C. SUDHIR, JUDICIAL MEMBER AND. SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITANo. 1212/Del/2014 {Assessment Year: 2009-10) Mis. New Delhi Television 1t6, | Vs. | AGH, | | 207, Okhia industrial Estate, Prase- | Circle-13(1), | | fil, | ©.R. Building, New Delhi \ New Delhi | | |___ PAN:AAACNOBSSD___ 7 { (Appellant) - | (Respondent) eee | ITA No. 2658/Del/2014 —— _ (Assessment Year: 2009-10) | BCT, | Vs. | M/s. New Delhi Television Lid. | ! Circle-13(1), \ 207, Okbla Industrial Estate, C.R. Building, New Delhi | Phase-til, New Dethi | 7 __PAN:AAACNO865D_ at C.O. No. 233/Del/2014 (In ITA No, 2658/Del/2014) (Assessment Year: 2009-10) [__ Mis. New Deihi Television Ltd, | Vs. AcIT, ] } 207, Okhla industrial Estate, Phase. Circle-13(1), | 1, CR. Building, New Delni | New Deihi | ___PAN:AAAGNO865D___ = _ | | (Aopetian) (Respondent) | el _Assesseeby: _——=«d; SCS CS. Agarwal, Sr Adv__| Sh Gin _ Revenue by. Dave, Standing Counsel | — Date of Hearing 1 From 03/ » 03/7/2017 to 0 Row | Date of pronouncement ___Tnori20i7 I ORDER PER PRASHANT MAHARISHI, A. M. ITA No. 4212/Del/2014 {Assessment Year: 2009-10) 1. Appeal No 1212/Det/2014 is filed by the as: st the order of Assistant Ge issioner of income Tax, Circle: New Delhi (hereinafter referred to as theITA No. 1212/Del2014 & 2esemel2014 ©) & C0 Ne. abana ay 2006) yo, |W. New Doll Television Lid, Vs,ACIT id AC) passed uis 144 read with section 144C(13) of the Income Tax Act, 1961. it pursuance of the direction issued by the Id Dispute Resolution Panel {heréiriafter referred to as the Ld DRP] u/s. 144C(6) of the Act dated 31.42.2013 against the draft assessment order of the Id Assessing Officer wherein, transfer pricing adjustments proposed in terms of order of: Additional Director of Income Tax; Transfer Pricing Offcer-I(), New Deh (hereigafter referred to as “Transfer Pricing Officer’ TPO’) passed u/s 92CA(3) of the Income Tax Act on 30.01.2013 and other: corporate additions proposed were also “incorporated therein: The assessee is a company engaged in the business of television néws broadcasting through its three different channels. It is also producing custontized software, programmes for broadcasters. It fied its return of incorrie on 30:09.2609 declaring loss of Rs. 64,83,91,422/-. Subsequently, the return was picked up for the scrutiny and notice u/s 143(2) was issued on 19.08.2010. During the course of assessment proceedings reference ws 92CA of the Act was also made by tiie'ld AO to the Id Transfer Pricing Officer to determine the arm's length price of international transactions entered into by the assessee wi (in short ‘AE’). The Id th its Associate Enterprises nsfer Pricing Officer passed order u/s'92CA(3) “of t act ‘on 30.01.2013 proposing adjustment on account of business support segment of assessee of Rs, 1,53, '3,848/- against the price received of Rs, 7,48,87, 177 whose ALP. was determined at Rs, 9,00,61,023/-. The '4 Transfer Pricing Officer further made an adjustment on account of corporate guarantee of Rs. 10,87,56,060/- wherein, assessee has issued corporate guarantee in favour of its subsidiary {or issue of coupon bonds of US$100 million, the Id TPO computed guarantee commission at 2.20% amounting to Rs. 10,87,56,000/- considering it as international transaction, The Id Assessing Officer incorporating the above adjustment on account of transfer pricing adjustments passed a draft of proposed assessment order we 144C of the Income Tax Act on 30.03.2013 making disallowance of following sums:~ Sl [Particulars ‘Amount (hale 1, _ | Disallowance of software expenses RS. 82,45, 672 > _ | Disallowance of commission uls 40a(ia) _ Rs. 41,84,47 1100ATANo. 1212/0042014 & 268@/De12014 ‘C.O. No, 233/De/2014 (AY: 2008-10 ( ‘Ws. New Delhi Television Ltd, Vs. CAT, [3, [Disallowance wis 144 Rs. 78,40,990 | | ‘4, | Disallowance “on transmission and ~ uplinking | Rs. 7,81,23,855/- charges ws 40(a)i) Unexplained money wis 69A Rs. 642,54,22,000/- Thus, the total inoome was determined at Rs. 64,10,811,990/- against the returhied loss of Rs. 64,83,91,422/- in draft of proposed assessment order. ‘The assessee filed its objection before the Id Dispute Resolution Panel who issued direction u/s 144C(1) on 31.12.2013 which were further modified on 31.12.2013 by miscellaneous order. The Id DRP directed the Id Assessing Officer to delete following disallowances: ‘SI | Particulars ‘Amount No. | 1 _| Disallowance of software expenses Rs. 82,45,642/- 2, _| Disallowance of commission u/s 40avia) Rs. 418447 11a 3, | Disallowance on transmission and uplinking charges uls | Rs. 7,87,23,8557- | * es 40(a)4i) a] The ld DRP also directed the AO to restrict transfer pricing adjustment of Rs 12,41,29,846/- to Rs, 5,09,65,6281-. The Id Dispute Resolution Pane! during the course of hearing directed the Id Assessing Officer further enquiries and consequent to those enquiries an addition of Rs, 254,75,00,000/- was made on account of unexplained unsecured loan u/s 68 on account of failure on part of the assessee to discharge its onus of proving the genuineness of the tansaction of raising unsecured loan through its subsidiaries NOTV Networks PLC. All other adjust ments/ variations proposed by the Id AO were directed to-be retained in final assessment order. Consequently, the id Assessing Officer passed order u/s 144 read with section 144C(13) of the income Tax Act on 21.02.2014 determining the total income of the assessee at Rs. 838,33,37,197/- against the returned loss of the assessee of Rs. 64,83,91,4221- making following additions and disallowances:- si ~~ Particulars | Amount ] No. | 1 _ | Disallowance vis 174A Rs.78,40,950/-® TANo, 121Der2014 4 2658rD6U- “C0. No. 2500812014 (AY: 2004... ‘Ws, New Delhi Television i3d, Vs.ACIT, + 2 _| Transfer pricing adjustments wis S2CA(3) RS. 509,65 6297. | ‘Unexplained money u/s 69A Rs. 642,54,22,000/- 4 [Unexplained unsecured loans ws 68 T Rs. 254,75,00,000/- 8: Therefore, assessee aggrieved with the order passed by the Assessing Officer u/s 444 of the Income Tax Act has preferred appeal before us in ITA No: 1212/Del2014. 9° The Revenue aggrieved with: the direction of the id Dispute Resolution Panel has preferred appeal before us u/s 253(2A) of the Income Tax Act challenging the ‘6.0, No. 235;Dev20t4 (RY: 2000-10 © ' ‘tts New Delhi Television Lid, Ve.ACIT, no power to enlarge the scope of those grounds mentioned in the statutory provisions. 10. The rule of strict interpretation was very racently explained by Hon'ble Supreme Court in the case of GIT v. Calcutta Knitwears [2014] 362 ITR 673 {SC)" as the foremost principle in interpretation of fiscal statutes, so that where the ‘statute is clear and unambiguous, the Jiteral interpretation has necessarily to follow as decided in the context of third-party jurisdiction in a search under section 1588D after review of both English and Indian precedents, in Swedish Match AB v, SEB! {20047 122 Comp Cas 83 (SC); CIT v. Ajax Commissioner of Stamp Duties (NSW) v. Simpson {1917} 24 CLR 209 and Grundy v. Pinniger [1852] 1 L J Ch. 405, Hardship or inconvenierice cannot also justify a different interpretation in view of the judicial restraint against the plain. meaning of language employed by the Legislature. In PrakashNathKhanna v. CIT [2004] 9 SCC 686", Hon'ble Apex court explained that the fanguage employed in a statute is the determinative factor ‘of the legislative intent. The Legislature is presumed to have made no mistake. The presumption is that it intended to say what it has been said. Assuming there is a defect or an omission in the words used by the Legislature, the court cannot correct or make up the deficiency. Where the legislative intest is clear from the tanguage, the court should give effect to it {Delhi Financial Corporation v. Rajiv Anand f2004) 11 SCC 625° 14. The power of ITAT to admit an appeal u/s 253 has invited judicial scrutiny by various benches of the JTAT Jn following cases: 14.1 Hon'ble ITAT-cochin bench examining the scope of provision of section 253 in case of The Sub Registrar V DIT ITA. No, 212/c0ch/2013 & S.A. 42/c0ch/2013 order dated 24.7.2013"* has held as under “8, Now coming to the direction given ty the Director of Income-tax (intelligence) in clause 7 of the demand notice, no doubt, the Director of i %34 ITANo, 12t2Ibei2014 & 26580012014 ‘CO. No. 233~De2014 (AY: 2009-10 Ms, New Deh Televison ig, Vs. ACIT, Incorite-tax (intelligence) mentioned in the demand notice that an appeal can ‘be filed before this Tribunal under Part B of Chapter XX of the ncome-tax Act. itis well settled principles of faw that consent of a litigant party will not confer any jurisdiction on a judicial or quasi judicial authority unless and until it is ‘otherwise conferred by the legislature. Therefore, the consent / direction of the Director of Income-tax (Intelligence) will not confer any jurisdiction on this Tribunal unless itis provided for in the Inoometax Act by the Parliament. Hence, this Tribunal could not entertain the appeal filed by the Sub Registrar, Meppayur-Kozhikode, 6, Coming to the contention of the Id.DR that appeal is provided u/s 246A(q) of the Act, no doubt, an order imposing penalty.under Chapter XXi is appealable before the CIT(A) under section 246A(q) of the Act. Admittedly, section 271F A falls in Chapter XX1 of the income-tax Act. Therefore, one may claim that an appeal is provided u/s 246A(q) of the Act. We are conscious that the CITA) is equivalent in rank that of the Director of Income-tax “ (Intelligence), therefore, the appeal before CITA) may not be an effective and efficious remedy avaiable to the Sub Registrar, Meppayur-Kozhikode against whom penally was levied. However, this Tribunal being a quasi judicial authority established under the Income-lax Act, cannot travel beyond the provisions of section 253 of the Act. Therefore, merely because the remedy available u/s 246A(q) of the Act may not be effective and efficious that alone will not-give any jurisdiction to this Tribunal to entertain this appeal. 7. Further, we are of the considered opinion that wtien the provisions of section 277FA was introduced in the statute ITA No, 212/Cooh/2013 S.A, No.42/Coch/2613 book by the Finance Act, 2004 with effect from 01-04-2005 the consequential amendment to section 253 was omitted to be carried out. This omission may be unintended. One may argue that an appeal is provided against the order of penalty u/s 271 in 253(1)(a) and 253(1)(c) of the Act, therefore, all branches of section 274 i.e. from 2714 ¢o 271G are included in section. This argument may not de correct because section 271 is anhoe ITA No, 121200612014 & 2658/0120" ‘CO, No. 283De120%4 (AY. 2008-10 1s New Debi Teleion Lid, VBAGT, independent section’ anc it tas its own sub sections. Sections 271A:to 2716 are not sub sections under sedtion 271 and they are independent sections by themselves. This is obvious from section 253(1)(a) and 253(1}) itself. The legislature has mentioned’ sections 271 and 271A separately in section 253(1)(a) and 253,(1)(c) of the Act. Therefore, the legislature treated sections 271 and 271A as separate and independent sections. In other words, sections 271A to 271G are independent and separate sections and it is not part / branch of sections 271 of the Act. Therefore, argument, if any, that section 271FA is part of section 271 is not correct. This Tribunal is of the considered opinion that section 271FA is separate and independent of section 271 and therefore, the reference of section 271 in section 253(1)(a) or 253(1)(c) may not be included section 274FA. As already observed, the ‘omission {0 include section 271FA in section 253 may be unintended. Therefore, it is open.to the department fo bring to the notice of the concemed authority about the omission to provide appeal before the Tribunal for making consequential amendment fo section 253 of the Act in case the department found that the omission is unintended. 8, In view of the above discussion, the appeal of the Sub Registrar, Meppayur-Kozhikode is dismissed as not maintainable before this Tribunal. However, it is made lear that it is open to the Sub Registrar, Meppayur- ‘Kozhikode to challenge the order passed by the Director of Income-tax (Intelligence) levying penalty ws 271FA of the Act before the appropriate forum in @ manner known to law.” 11.2. Hon'ble ITAT-Cochin in its later decision in case of SRO, Meppayar- Kozhihode v DIT (Intelligence) (2013) 37 Taxmann.com 36" examining scope of section 253 has held as under: “4, We have considered rival submissions on either side and also perused the material available on record, The question arises for consideration is whether this Tribunal could entertain an appeal by the Sub Registrar, Meppayur- nan onacinnsih eSEAS \ / 40uy TA No, 1242/DeN2014 & 2658002014 CO. No, 2302014 (AY: 2009-10 Ws. New Delhi Television Ltd, Ve.ACIT, Kozhikode against the. order of penalty us 271FA of the Act: We have ‘carefully gone through the provisions of section 253 of the Act. Section 253 provides for an appeal before this Tribunal against the orders mentioned therein. For tie purpose of olarity, the provisions of section 253 are teproduced hereunder . “253 Appeats to the Appellate Tribunal (1) Any assessee aggrieved by any of the following orders may appeal to the Appeliate Tribunal against such order ; C.0. No. 284DeI2014 (AY: 2009-40 (Wis, New Dati Teleisio® Ud, Vs. ACT, instant assessment - 41.2 [it is submitted thal in this case draft order dated: 31.3.2013 was framed which was titled as “Drait Order u/s 143(3) read with section 144C- of the IT. Act” However in the remand report dated 11.12.2013 (pages 118 of Appeal Set) the leaned Assessing Officer had stated that in the draft assessment order, the Jeamed Assessing Officer has expressly. invoked the provisions of section 145(3) of the Act: and assumed jurisdiction u/s 144 of the Act by rejecting the books of acodunts of the assessee and has given a specific finding in this ragara at pages: 48 and. 49 of the said order(pages 1-62 of Appeal Set). He further submitted that while passing the draft order on 31.3.2013, in the relevant column at the first page, the AO has mentioned the order. as passed us 143(3) read with section 144C of the Act, which: is mistske epparent from record. In his submission, the correct words of | | the order would be "section 144 read with section 144C(1) of the IT, | Act 1967" 41.3 | is thus submitted that Ihe leamed Assessing Officer had alleged in his report at page 118 (para 2.2) that since the leamed Assessing Officer! had expressly invoked the provisions of section 145(3) of the Act and | rejegled books of account of the appellant company, the assessment fad been made u/s 144 of the Act. itis submitted that if it is so, then 5 the said order cannot be regarded as any draft order under the Art 3 | is submited that when_an assessment is made u/s 144 of the Act, th 1 same is not subject fo section 144C of the Act since while framing an ass@ssment u/s 144 of the Act, he had to compute income to i of ts judgment and determine sum payable _on_th | assessment: whereas in order dated 313.2013 he had stated the order | {0 be craff order and no such sum was determined by him There is a conceptual difference between an.order where an assessment has | ‘been made to best of his judament and a draft order 474 _| itis submited that whore a draft assessment order is made sum of fax payable & not determined and therefore in absence of an) determination of tax, the draft order of assessment is not an order u/s 144 of the Act_ it 8 submitted that this is also evident from provisions contained in section 145(3) of the Act, whioh read as under: (3) Where the Assessing Officer is not satisfied about the comectness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer_may make _an assessment in_the manner provided in section 144. * [Emphasis supplied 415 [twill be evident from the aforesaid statutory provisions that Invocation of provisions contained in section 145(3) of the Act does not fantamount to an order of assessment u/s 144 of the Act. It only provides that assessment has fo be made in the manner provided ws CER REE 80TAN, 1212/Deu20%4 & 2658/D212014 ‘G.O, No. 233 DaV204 (AY: 2008-40 (Mis. New Deh Telowsion Lt, Vs.ACTT, The aforesaid submission is also supported by provisions contaiited in section 246A of the Act which reads as under: {1) Any assessee or any deductor aggrieved)” by any of the following orders (whether made before or after the ‘appointed day). may appeal to the Commissioner Appeals) against - 19) an order passed by a Joint Commissioner under ‘olause {i) of sub-section (3) of section 115VP or an order against the assessee] where the assessee denies his fabilty to be assessed under this Act or an intimation under sub-section (1) or sub-section (18) of fsection 143 ‘or sub-section (1) of section 2004, where the assessee or the deductor objects] to the making of adjustments, or any. ‘fder of assessment [under sub-section {3) of section 143 Jexcept_an_order_passed_in pursuance. of directions of the Dispute Resolution Panel Jor an order referred to_in sub-section (12) of section 1448A]T"™] or section 144, to the income assessed, or 4 fe amount of tax determined, or to the amount of foss computed, or to the status under which he is assessed” {Emphasis supplied] 41.6 [In light-of the above, the first submission of the appellant is that order dated 37.3.2013 was an order u/s 143(3) of the Act read with section 144C of the Act and was a draft order of assossment. The finding that the said order was an order u/s 144 of the Act is factually and tegally misconceited and hénoe untenable. at .|is bared by limitation and deserves to be quashed altogether. The Without prejudice for the sake of an argument assuming the said ordér | was an order u/s 144-of the Act, then the instant order dated 21.2.2074 | afpellan! also seeks 0 place retiance on the judgment of Hon'ble | Gujarat High Court in the case of CIT vs. Purshottamdas T. Patel reported in 209 ITR 52 wherein it-has been hold as under. “in our opinion, this decision, far from helping the Revenue, goes against it, The Supreme Court has in torms stated that assessment is one integrated process involving aot only the assessment of the fotal income but also the determination of the tax. it has further observed that the latter is as crucial as the former. Therefore, unless the total income is determined and the determination of tax is also done, it cannot be said that |" the process of assessment is complete. What section 153 requires is that the assessment should be completed within the prescribed time-limit. The words "Order of assessment" cannot be construed to mean assessment of total income only. Those words would | mean an Order in wnting vinereby the total income of the assessee Is assessed and the tax payable by him is 3)31. ITANo, 1212/0eu2014 8 2688/Dai/2014 C.0. No. 2838/2044 {AY: 2009-10 Ws, New Dethi Televson Ud, V8. ACT, these things # passed, it can be said thal Here is ‘complete’ Order-of assessment, These two steps may be taken -simultaneously or separately, but it cannot be gainsaid that both of them wil have to be taken within the time prescribed by the Act. Admittedly, in this case the second step was not taken within the prescribed time. After determining the total income, the Income-tax. Officer ‘possibly left the matter fo his subordinates for the purpose of calculating the tax payable by the assesseo on the basis of the assessed fotal income. Even if we assume in favour of the Assessing Officer that he approved the said aloulation when the papers were put before him for signing the demand notice, and that he signed the same, the fact remains thal that step was taken by him after the prescribed period was over. The Tribunal was, therefore, right in holding that the assessment in this respect was time-barred.” [Emphasis supplied] _ {in view of this, he vehemently Submitted that the claim of Revenue that accounts of the assessee are incortect and incomplete is grossly incorrect. He therefore, stated that order cannot be passed u/s 144 of the Act but only can be passed u/s 143(3) of the Act. He therefore, submitted that final order is also wrongly titled as passed us 144 of the Act but in fact; it should have been passed u/s 143(3) of the Act. He therefore submitted that merely wrong mention of the section in the heading of the order is not relevant. He submitted vehemently that appeal of the assessee is ‘maintainable under the provision of section 253(1)(d) of the Act ‘We have carefully considered the rival contentions and perused the orders of the Id Assessing Officer ie. draft assessment order as well as the final order passed u/s 144 of the Act and the direction issued by the Id Dispute Resolution Panel, The simple issue involved in this contest is that whether the order passed by the Id ‘Assessing Officer canbe challenged by the assessee before the coordinate bench of not, Admittedly, the assessee has preferred reference to Dispute Resolution Panel uls 144C of the Income Tax Act. The provisions of section 144C relates to reference to Dispute Resolution Panel. According to that section the Id Assessing Officer shall first forward a draft of the proposed order of assessment to the eligible assessee which is defined u/s 144C(15)(b) of the Act. In the present case, there is no dispute that the assessee is an eligible assessee in terms of that section. The C0, No. 2810242014 (AY. 2008-10 {ws Hen Deli Tetegion i, Ve ACT, assessee, oF income has not been computed in accordance with the standards notified under sub-section (2) the Assessing Officer may make an assessment in the manner provide jon 144." ‘Therefore the statue has given a mandate to the assessing officer to pass the order in manner provided u/s 144 of the act when requirement of section 145(3) is satisfied, , Further with respect to the argument of the Id AR that white making an assessment of the assessee the id AO should took only at the “sion of Income tax act and ‘should not be concemed about the violation or irregularities in the other laws, we are not impressed in the facts of the present case. Its the case of the company, which is statutorily required to maintain its books of accounts and to prepare its profit and loss account in the manner so provided in the Companies act. The Companies act provides that balance sheet and profi and loss. should be true and fair and must necessarily disclose certain details, The Income tax Act also prescribes in case of companies to prepare the annul accounts as pet the provision of the companies act 1956 . How importantit is that can be ascertained by looking at the provision of section 116 JB of the act. Therefore itis too naive to say that Id AO must shut his eyes in the case of the company if it does not prepare its annual accounts. in accordance with the provision of the companies act. Wherever there is such requirement , the legislation on its own wisdom has given different treatment! ‘concessions to such companies such as electricity companies , NBFC , bank etc. The various authorities relied up on by the Id AR also does not say so. Therefore, in case of the companies it is mandatory to prepare their accounts in accordance with the provision of the companies act uniess exempted. The provision of section 212 of Companies Act 1956 provides with respect to the cisclosure of the paiticuars of the subsidiary are as under:- “212. (1) There shall be attached to the balance sheet of a holding company having a subsidiary or subsidiaries at the end of the financial year as at which the holding company s balance sheet is made out, the following documents in respect of such subsidiary or of each such subsidiary, as the case may be : (a) a copyof the balance sheet of the subsidiary; \ 34 = ~46 ITA No, 42127042014 & 25seDaIz0%4 16.0, No. 238/DeU2014 (AY: 2009-10 ‘Mis. New Delhi Taloveion 16, Vs.ACIT, (0) a copy of ts profit and toss account; (6) 2 c0py of the report of its Board of directors; (0) a copy of the report of its auditors; fe) '@ statement of the holding company s interest in the subsidiary es ‘speoified in sub-section {3); {9 the statement referred to in sub-section (5), it any, and (9) the seport referred to in sub-section (6); if any. (2) (a) The balance sheet referred to in clause (a) of sub-section (1) shall ‘be made aut in accordance with the requirements of this Act, (i) a8 at the end of the financial year of the subsidiary, where such financial year coincides with the finencial year of the holding company, (i) as at the end of the financial year of the subsidiary last before that of the holding company where the financial year of the subsidiary does not coincide with that of the holding company} (0) The profit and loss account and the reports of the Board of directors and of the auditors, referred to in clauses (b), (¢) and (d) of sub-section (1), shall be made out, in accordance with the requirements of this Act, for the financial year of the subsiaiary referred to in clause (a) (o) “(Where the financial year of the subsidiary does not coincide with that of the hotding company, the financial year aforesaid] of the subsidiary shall not ‘end on a day which precedes the day.on which the holding company s financial year ends by more than six months. {d) Where the financial year of a subsidiary is shorter in duration than that of its holding company, references to the financial year of the subsidiary’ in clauses (a), (b) and (c) shall be construed as references to two or more financial years d the subsidiary the duration of which, in the aggregate, is not less than the duration of the holding company s financial year, (3) The statement referred f0 in clause (e) of sub-section (1) shall specify hp aITANe, 1212/Deia014 & 2eserDei/201 (a) -the extent of the holding company s interest in the subsidiary at the end of the financial year or of the last of the financial years of the subsidiary referred to in sub-section (2); (0) the net aggregate amount, so far as it concems members of the +holding company and is not.dealt with in the company’s accounts, of the subsidiary s profits after deducting its losses or vice versa {) for the financial year or years of the subsidiary aforesaid; and 4il) for the previous financial years of the subsidiary since it became the holding company s subsidiary; (0) the net aggregate amount of the profits of the subsidiary after deducting its losses or vice versa {for the financial year or years of the subsidiary aforesaid; and (i). for the previous financial years of the subsidiary since it became the holding company’s subsidiary; 30 far as those profits are geait with, or provision is made for those osses, in the company s accounts. (4) Clauses (b) and (c) of sub-section (3) shail apply only to profits and fosses of the subsidiary which may properly be treated in the holding company s accounts as revenue profits or losses, and the profits or losses attributable to any shares in a subsidiary for the time-being held by the holding company or any other of its subsidiaries shall not (for that or any other purpose) be treated as aforesaid so far as they are profts or losses for the period before the date on or as from which the shares were acquired by the company or any of its Subsidiaries, except that they may in a proper case be so treated where (2) the company is itself the subsidiary of another body corporate; and (b) the shares were acquired from that body corporate of @ subsidiary of it and for the purpose of determining whether any profits or losses are fo be treated as profis or losses for the said period, the profit or joss for any financial year of the subsidiary may, if it is not practicable fo apportion it with t. Ea Wy W 16qr a ITA No. 121270212014 & 2888iDK20%4 : 1.0. No. 28DeV2014/AY: 2008-10, ‘Ws, New Oath Teloveln is, Vs ACT, Feagonable avcuracy hy. reference to the facts, be treated as accrising from day to-day during that year and be apportioned accordingly. (5) Wiiere the financial yéar or years of a subsidiary referred to in sub-section (2) do not coincide with the financial year of the holding company, a statement containing information on the following matters shall also be attached to the balance sheet of the holding company {a) whether there fas been any, and, if 80, what change in the holding company s intorest in the subsidiary between the end of the financial year or of the fast of the financiel years of the subsidiary and the end -of the holding company s financial year ; () detzils of any material changes which have occurred between the ‘end of the financial yeas or of the last of the financial years of the subsidiary and the end of the holding company s financial year in respect of {i) the subsidiary s fixed assets; (i) its investments; {i) the moneys lent by it; i) the moneys borrowed by it for any purpose other than that of meeting current liabilities. (8) I, for any reason, the Board of directors of the holding company is unable to obtain information on any of the matters required to be specified by sub- section (4), a report in witing to that effect shall be attached fo the balance sheet of the holding company. {7) The documents referred to in clauses (e), (f) and {g) of sub-séction (1) shall be signed by the persons by whom the balance sheet of the holding company is required to be signed. 9/8) The Centtal Government may, on the appli ion or with the consent of the Board of directors of the company, direct that in relation to any subsidiary, es RE N 7qb ATANo. 12121082014 & 2ese/Dev2014 ©. No, 2302014 (AY: 2609-4 {Wis Now Debi Teli Lig, Ve.ACTT, the provisions of this section shail not apply, or shall apply oniy fo such extént as may be specified in the direction. (9) If any. such person as is referred to in sub-section (6) of section 209 tails to take all reasonable steps to comply with the provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to °“ften} thousand rupees, or with both Provided thal in any proceedings against a person in respect of an offence under this section, it shail’be a defence to prove *[**] that @ competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty : Provided further that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully. (10) If eny person, not being @ person referred to in sub-section (6) of section 209, having been charged by the “*["] {managing director, manager,] or Board of directors, as the case may be, with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine. which may extend to {ten} thousand rupees, or with both Provided that no person shall be sentenced io imprisonment for any such offence unless it was committed wilfully.” 38, On reading of the above provision, it is apparent that the balance sheet of the holding company is. the assessee, must have details of the subsidiary as prescribed, The requirement of reconeiling the financial year of the subsidiary and holding company is also mandatory, further the profit and loss account, report of the board of directors,-and of auditors of those subsidiaries are required to be prepared — aR TEARS K 9839. 40, FTANo. 1212/Dev2014 & zeserDev20% C.D. Ne 233/022014 (AY: 2008-40 Ws. tiew Osi Television Lid, Vs CIT, ‘ agcording to the provisions of the companies Act, 1956. It is also mandstory in case of foreign subsidiaries. Further, a-statement is required to be prepared of the holding ‘sompany’s interest in the subsidiary, as well as other details shiall be Signed by the ‘person'by whom the balance sheet of the company is required to be signed. The provision of sub-secion 9 also prescribe a punishment with imprisonment up to°6 months along with the fine or with the fine only for non-compliance of this section. In view of this the importance of compliance with this provision of the companies act cannot be undermined. Admittedly no such disclosure was made in the annual report of the assessee. Further according to the provision of section 211 every balance sheet of a company should be in a prescibed format containing the requisite details. The profit and loss account of the company shall also give a true and fair view of the profits of the company, Every proft and (oss account and balance sheet of the company shall comply with the accounting standards and if it does not comply then it shall disclose the deviation from the accounting standards and the reasons of such deviation. In view of the above provisions the argument of the assessee that non-disclosure of the details of the subsidiary in the annual accounts does not make them incomplete ‘and incorrect. Admittedly no such compliance was made by the assessee, Further, itis surprising to note that assessee has contended that it has been granted ‘exemption for making such disclosure as required u/s 212 of the companies Act. To show this it was pointed out before us the relevant annual accounts of the company for the year ended on 31.03.2009 wherein in the Director's report placed at page No. 1787 to 1761 at page No. 13 of the financial statement signed on 30.04.2009 by one Dr. Pranoy Roy, Chairman as under: “Financial Statements of the subsidiary companies. The Ministry of Corporate Affairs, Government of India, has granted approval wis_212(8) of the Companies Act_1956 for the financial year ended on 1.03.2009, waiving the publication of individual balance sheets, profit and foss accounts, Director's Reports and Auditor's reports of the subsidiaries and ‘other documents otherwise required to be atlached to be company's accounts. However, the annual accounts.of the subsidiary companies and the41 100 ‘ao, 121270012914 & 2658 G0. to. 4022014 (AY: 20 ; ‘Ws, New Debi Teesson Ue a ACCT, ‘élated detailed inférmation will be made available to the membérs' of the holding and subsidiary companies Seeking such information at any’ paint of time.-The annual accounts of the subsidiaries companies will also bé kept ‘open for inspection by any investor in its Registered office and those of the respective subsidiary companies," . (Extracted from: the Director's Report dated 20.04.2009 of assesseé for the financial yeat ended 31:03,2009) (undertine supplied by us) Now the id Departmental Representative has submitted before us the copy of approval obtained by the assessee u/s 212(8) of the companies Act 4956 for the Financial year ended on 34.03.2008 from the Ministry of Corporate Affairs. To our utter surprise the approval of the Ministry of Corporate Affairs was granted’ to assessee only on 3.07.2009 but in the Ditector’s report dated 30.04.2009 Chairman of the company Dr. Pranoy Roy has disclosed to ali the regulatory authorities such as SEBI and stock exchanges that approval fas already been granted by the ‘Ministry of Corporate Affairs. in fact the application for such approval was made only ‘on 8" May 2009, Further, the above exemption was also subject to the following six conditions: |. The company will present in the annual report the consolidated financial statement of itis subsidiaries duly audited by the statutory aucitors, The consolidated financial statement will be prepared in strict compliance with the accounting standard and fisting agreement as prescribed by SEBI 111. Following information in aggregate for each subsidiary should be disclosed in one page of the consolidated balance sheet respectively: (a) capital (b) reserves (¢} tatal assets (d) total liabilities (e) details of investment exempt in case of investment in the subsidiaries (f) turnover (g) profit before taxation (h) provision for taxation {() profit after taxation (j) proposed dividend IV, The holding company shall undertake in its annual report that annual accounts of the Subsidiary companies and the related detailed information will bbe made available to the holding and subsidiary companies investors seeking 30042. lol Tio. s2t2mbainte & 2ngemnsta014 * avs Non Beh Teen ig Von, ‘such information at any point of time. The annual accounts of the subsidiary sompanigs will also be kept for inspection by any investor in its head “office and. that of the subsidiary companies concerned and a note to the above effect will be included in the annual report to the holding company. V. The holding as well as subsidiary companies. in question will ‘regularly file such data 40 the various regulatory and government authorities as may be required by them, VI. company will give indian cupees equivalent of the figures given in foreign currency appearing in the accounts of the subsidiary companies along with exchange rate as on 31:03.2009." ven the condition No. {| af the above permission was also not satisfied. The condition No. V of the above permission also clearly states that holding company ie. assessee as well as its subsidiaries should regularly file such data to various authorities and govt authorities as may be required by them. Therefore, the above approval by the Miristry of Corporate Affairs has not authorized the company to not to submit the relevant details of its subsidiary company to the Id Assessing Officer, Therefore, non-fumishing of such information along with the requisite details of its subsidiaries and non-compliance with the accounting standard, which is mandatority to’be followed by the company, fas definitely rendered the accounts of the assessee as incorrect and incomplete. Therefore, we do not find any infirmity in the order of the Id Assessing Offer in invoking the provisions of section 145(3) of the income Tax Act and then proseeded in making an assessment in the manner provided u/s 144 of the Act. Its unfortunate that before making an application for exemption the assessee has disctosed in its one of the most important statement i.e, Director's feport, the ‘company has annolnced that it has been granted approval even when there was no application was made te the concerned authority and such a biatant violation of Jaw involving the fiscal and corporate liability of the assessee go unnoticed so far. However, the tribunal in the present case except expressing anguish cannot cross the limits laid down by the law. It is for other regulatory and supervisory agencies to get alarmed with such an act, In view of these glaring facts we donot have anyv2 3 ITA No. 1212iDev2014 s 2688/D0N2 CO. Ho, 22UBeNaN1§ (AY: 200840 1 ils ew Delhi Televisa Ud, Veacr, hesitation to. say that the conduct of the assessee shows that aSséssee had-never an intention to..disclose the details of its subsidiary companies’ and its finaricial transactions fo ts stakeholder and to regulatory authorities including thé ‘incomie tax Authorities. Our statement also gets foriied by our other observaiions inthis order. ‘The provision of section 444 of the Act prescribes four conditions under wwhich the id AO can make the best judgment assessment. The provisions are as under:- “BEST JUDGMENT ASSESSMENT Seotion 144 If any person~ (a) fails fo make the return required under sub-section({) of section 139 and has not made a retum or a revised return under sub-section(4) or sub-seefion(6) of that section, or (0) fails fo comply with all the terms of @ notice issued under sub- section(t) of section 142, or falls to comply with a direction issued under sub-segtion(2A) of that section, or (0) having made a retum, fails to comply with all the terms of a notice issued under sub-section(2) of section 143,the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of boing heard, make the assessment of the total income or foss fo the best of his judgment and determine the sum payable by the assessee on the basis ofsuch assessment Provided thetsuch opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further thatit shall not be necessary to give such opportunity in a case where a notice under sub-section(i) of section 142 has been issued rior fo the making of an assessment under this Section.” n\n rs45, WB TTA Ne. 12121022014 § 2e5tDeU2014 10.0, No. 233DeU2014 (AY: 2003-10 Mis. New Delhi Television lig, Vs ACT, tis undisputed faci that the assessee was issued the riotice ws’ 142(1) of the _ Income Tax Act, 1961 on séveral occasions but the details were fiot complied with ih full, The first such notice was issued on 22.02.2011 wherein the assesses was required to furnish the copies of balance sheet, profit and loss account, tax audit report etc. Naturally Annual accounts did not contain the information with respect to the subsidiaries of the assessee. The subsequent second notice was also issued on 46.02.2013 wherein the assessee submitted the details in part Further, the Assessing Officer required the assessee to fumish the complete details about the investment wherein, the assessee failed to submit before the Id AO such as share subscription agreement along with the share certificate issued, the evidence in support of identity and creditworthiness of the investor and genuineness of the transaction as well as the bank statements of the investor and investee company. This is evident from the fact that some of the documents were filed before the Id DRP as additional evidence. The noncompliance with the notice u/s 442(1) is evident fram the Volt and Ill of the paper book submitted by the’ assessee running from page No. 379 fo 741 , which are the additional evidences, filed before the Id DRP. Therefore, we ate of thé opinion that the assessee has failed to comply with all the terms of the notice issued u/s 142(1) of the Act and therefore, the AO rightly assumed powers u/s 144 of the Act. Acoording to provisions of section 144(1)(b) if the assessee fails to comply with the all the terms of the notice issued u/s 142(1) then the Id Assessing Officer after taking into account all revenant material which he has gathered make the assessment of the total income or loss of the assessee to the best of his judgment. in the case where the notice u/s 142(1) has been issued to the assessee prior to the making of an assessment under the section, no further opportunity is required to be given to the assessee. As during the course of assessment proceeding the assessee has failed to comply with all the term of the notice issued ws 142(1) the Assessing Officer cannot be found at fault for invoking the provisions of section 144 of the Act. Therefore , the Wd Assessing Officer not satisfied with the completeness and ‘correctness of the account of the assessee is duty bound to make an assessment in the manner provided u/s 144 of the Act and further as the assessee has failed to N . ¥ 10347. 3 TIAN, 1212/Dros BaeseADeNIONS 1.0. Ho. 233Det-2014 (AY: 2009-10 {Wis Naa Dal Television tid, Vea, comply: with all the terms of the notice u/s 142(1) the assessment is correctly ‘proposed to be made by the AO u/s 144 of the Act. 7 it}s algo pertinent to note that despite there being a finding in the draft assessment ofder f assuming the jurisdiction wis 144 of the Act it was not challenged by the ‘aésesseé before the ld DRP. However the invocation section 145(3) was challenged. ‘On specific quety by the bench on any objection raised by the assessee on this aspect the assesses could not point out any such objection raised before the Id DRP. Theréfore, it is apparent that assessee was not Serious about assumption of jutisdiction by the Id AO uls 144 of the Act in the draft assessment order tif the revenue challenged the maintainability of the appeal before us. Therefore, as the ‘AO has assumed jurisdiction uls 444 of the Actin the draft assessment order, which is unchallenged before the Id DRP , then the AO does not have any option other than to pass a final assessment order u/s 144 of the Act. Even before us the first ground of appeal , assessee admits that the order is passed u's 144 of the Act. Now it is required to be seen whether such an order passed uls 144 of the act pursuant to the direcion of the Id DRP is an appeatable order before the tribunal. According to the provisions of section 253 of the Act the assessee aggrieved by certain specified order is entited to file an appeal to the appellate tribunal against such order. The such specified order are as under:- “(a) an-order pessed by a Deputy Commissioner (Appeals) before the 1st day of October, 1998 or, as the case may be, a Commissioner (Appeals) under section 154, soction 250, section 271, section 271A or section 272A; or (b) an order passed by an Assessing Officer under clause {¢) of section 158BC, in respect of search initiated under section 132 or books of account, ‘otfier documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; or (ba} an order passed by an Assessing Officer under sub-section (4) of section 115VZC ; or (clan order passed by a Commissioner under section 124A *or under clause (vi) of sub-section (5) of section 806 or under section 26 oF under section 271 or under section 272A or an order. passed by him under section 754 ae ran ae \ 104 14