Man Truck And Bus India Private Limited v. The Assessment Unit Income Tax Dept. And ORS

DARSHAN PRAKASH PATIL

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION DARSHAN PRAKASH PATIL Date: 2025.08.20 12:50:14 +0530 WRIT PETITION NO. 5437 OF 2025 Man Truck & Bus India Private Limited .. Petitoner

Versus

The Assessment Unit, Income-tax department and Ors.

.. Respondents Mr. Adv. Harsh Shah, a/w Mr. Paras Savla, Mr. Pratik Poddar, for the Petitioner.

Mr. Akhileshwar Sharma, (through V.C.), for the Respondent. CORAM: B. P. COLABAWALLA & FIRDOSH P. POONIWALLA, JJ.

DATE:

AUGUST 18, 2025.

P. C.

1.

The above Writ Petition is filed seeking to quash the penalty imposed on the Petitioner under Section 270A of the Income Tax Act, 1961 ("IT Act") for the Assessment Year 2017-2018. 2.

According to the Petitioner, on 30th November 2017, the Petitioner had filed its return of income declaring its income as 'NIL' after a set off of brought forward loss of Rs.17.14 Crores. Subsequently, the Petitioner's case was selected for scrutiny, and notices were issued in that

regard. Thereafter, the assessment proceedings were completed and an order was passed on 24th June 2021 under Section 143(3) read with Section 144C(3) of the IT Act. Under this Assessment Order, an addition of Rs.31.15 Crores, on account of a Transfer Pricing Adjustment was made. 3.

Being aggrieved by this order, the Petitioner preferred an Appeal before the CIT (Appeals) on 22nd November 2021. However, during the pendency of the Appeal, the Petitioner entered into an Advanced Pricing Agreement ("APA") with the CBDT. In fact, the Petitioner had filed its Advanced Pricing Agreement Application with the CBDT as far back as on 26th March 2014, which finally culminated in the APA on 21st December 2021. Since the APA was entered into between the Petitioner and the CBDT, under the provisions of Section 92CD(1), the Petitioner filed its modified Return of Income on 30th March 2022. According to the Petitioner, under Sub-section (3) of Section 92CD read with Sub-section (5) of Section 92CD, the Assessing Officer was to pass his order on the modified Return of Income by 31st March 2023. No such Assessment Order has been passed till date under Section 92CD. Therefore, according to the Petitioner, the modified Return filed by the Petitioner under Section 92CD(1) has become final and deemed to be accepted by the Department.

4.

In the modified Return, the Petitioner has offered to tax a sum of approximately Rs.14.16 Crores towards Transfer Pricing Adjustment as per the APA entered into between the Petitioner and CBDT. It is in this light that the Petitioner contends that since no addition has been made by the Assessing Officer under Section 92CD(3), penalty proceedings could not lie against the Petitioner. In the alternative, it is argued that even assuming that penalty proceedings could lie, the same ought to have been calculated as per the income brought to tax in the modified Return, namely, on Rs.14.16 Crores, and not on the amount of Rs.39.15 Crores which was originally assessed by the Assessing Officer in his order dated 24th June 2021. 5.

An additional ground that is raised is that it was mandatory for the Officer levying the penalty to grant a virtual hearing to the Petitioner before passing the impugned penalty order. This was, according to the Petitioner, not done and therefore, the Penalty order is vitiated on this ground as well.

6.

Mr. Sharma, the learned Counsel appearing on behalf of the Revenue, sought time to take instructions and to file an Affidavit in Reply, if any.

7.

Acceding to Mr. Sharma's request, we direct that the Affidavit in Reply, if any, shall be filed on or before 08th September 2025, and a copy of the same shall be served on the Advocates for the Petitioner. We now place the matter on 09th September 2025.

8.

As far as interim relief is concerned, we find some force in the arguments canvassed on behalf of the Petitioner that even assuming that penalty proceedings would lie, the same cannot be on the basis of the final Assessment Order passed on 24th June 2021, but on the basis of the modified Return of Income filed by the Petitioner on 30th March 2022, and which was filed under the provisions of Section 92CD(1). The impugned penalty order seeks to levy penalty after taking into account the Transfer Pricing Adjustment of Rs.39.15 Crores rather than Rs.14.16 Crores. In these circumstances, we find that a prima facie case is made out for staying the demand under the penalty order dated 24th March 2025. 9.

Accordingly, there shall be ad-interim relief in terms of prayer clause (c) which reads thus:- "c) pending the hearing and final disposal of this Petition, this Hon'ble Court may be pleased to order and direct the Respondents to stay the operation of the impugned penalty order dated 24 March 2025 and refrain the Respondents from taking any further action,

including recovery of the said penalty, in pursuance of the impugned penalty order dated 24 March 2025." 10.

Stand over to 09th September 2025 under the caption 'for adinterim relief'. We put the parties to notice that we may dispose of this Writ Petition at that stage itself, time permitting. 11.

This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax [FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]