Supreme Court of India

M/S. TOYOTA MOTOR CORPORATIONversusCOMMNR. OF INCOME TAX

Citation: 2008 INSC 974
Decided: 25 August 2008
Disposal: Dismissed
Bench: ARIJIT PASAYAT

Holding

The appeal does not warrant interference; the Assessing Officer must consider all relevant materials and pass a reasoned order, but the court will not intervene at this stage.

Summary

Mis. Toyota Motor Corporation appealed against the Commissioner of Income Tax after the Assessing Officer dropped penalty proceedings under Section 263 of the Income Tax Act. The Tribunal had held that initiating the proceedings was impermissible given the materials the assessee had placed before the officer. The Delhi High Court remanded the matter, directing the Assessing Officer to pass a reasoned order, holding that the Tribunal could not substitute its own reasoning. On appeal, the Supreme Court declined to interfere, stating that the Assessing Officer must consider all relevant aspects and record reasons, but such interference was not warranted at this stage. Consequently, the appeal was dismissed.

Issues considered

Whether the Assessing Officer could drop penalty proceedings under Section 263 without recording reasons.
Whether the Tribunal could substitute its own reasoning in place of a reasoned order by the Assessing Officer.
Whether the High Court was justified in directing the Assessing Officer to pass a reasoned order.
Whether the Supreme Court should interfere with the High Court's remand order.

Legislation cited

Income Tax Act, 1961s. 263, s. 271C, s. 274

Subjects

Income TaxPenalty proceedingsSection 263Reasoned orderAssessing OfficerTribunalHigh Court remandAppellate jurisdiction

Judgment

                                     [2008] 12 S.C.R. 943


                             MIS. TOYOTA MOTOR CORPORATION                        A
                                              v.
                                COMMNR. OF INCOME TAX
                               (Civil Appeal No. 5313 of 2008)
                                     AUGUST 25, 2008
                                                                                  8
~
                   [DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM
    .   -~                        SHARMA, JJ.]

                   . Income Tax Act, 1961 - s. 263 - Proceedings under -
               Disposed of by Assessing Officer dropping the penalty              c
               proceedings - Tribunal holding that initiation of the
               proceedings were impermissible in the background of the
               materials placed by the assessee - High Court remanding
               the matter to Assessing Officer to pass a reasoned order - On
               appeal, held: Appeal does not warrant interference at this stage
                                                                                  D
               - Assessing Officer is required to take into account all the
               relevant aspects and materials and pass reasoned order.
         -;.
                    CIVILAPPELLATEJURISDICTION: CivilAppeal No. 5313
               of 2008
                    From the final Judgment and Order dated 2.04.2008 of          E
               the High of Delhi at New Delhi in ITA No. 166 of 2007
                    Soli J. Sorabjee, Sanjay Kochar, Sampath, S. Anant,
               Krishan Mahajan, Lakshmi Iyengar and Sandhya Goswami for
               the Appellant.                                                     F
         )          The Judgment of the Court was delivered by
                     Dr. ARIJIT PASAYAT, J. Heard learned counsel for the
               petitioner.
                     Delay condoned.                                              G

                    Leave granted.

                     We are not inclined to interfere with the impugned order
               of the High Court. The High Court has held that th~ Assessing
                                             943                                  H
                                                                                I-
                                                                                i-
    944       SUPREME COURT REPORTS                [2008] 12 S.C.R.

                                                                        ,.___
A Officer had disposed the proceedings stating the penalty
  proceedings initiated in this case u/s 271 C read with Section
                                                                                ,_
  274 of the Income Tax Act, 1961 are hereby dropped. According
  to the High Court, there was no basis indicated for dropping
  the proceedings. The Tribunal referred to certain aspects and
B held that the initiation of proceedings under Section 263 of the              r
  Income Tax Act, 1961 (in short, the l.T.Act) was impermissible                ~
  when considered in the background of the materials purportedly         ~--
  placed by the assessee before the Assessing Officer. What the
  High Court has done is to require the Assessing Officer to pass
c a reasoned order. The High Court was of the view that Tribunal
  could not have substituted its own reasonings which were
  required to be recorded by the Assessing Officer. According to
  the assessee all relevant aspects were placed for consideration
  and if the officer did not record reasons, assessee can not be
  faulted.
D
         We do not think it necessary to interfere at this stage. It
    goes without saying that when the matter be taken up by the                 ~
                                                                        1-
    Assessing Officer on remand, it shall be his duty to take into
    account all the relevant aspects including the materials, if any,
E   already placed by the assessee, and pass a reasoned order.
          The appeal is dismissed with the aforesaid obseivations.
    K.K.T.                                      Appeal dismissed.
                                                                                ,
                                                                                '

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