Facts of the Case

The petitioner, M/s Dabur India Limited, filed a writ petition challenging the order dated 31st July 2021 passed by the Transfer Pricing Officer (TPO) under Section 92CA(2) of the Income Tax Act, 1961 for Assessment Year 2018–19.

The TPO issued a notice on 30th July 2021 at 4:07 PM requiring a response by 31st July 2021 at 12:00 PM, thereby granting an extremely short time period of less than one day. Due to this limited time, the petitioner submitted only partial information.

The petitioner contended that no adequate opportunity of hearing was granted before passing the impugned order.

Issues Involved

  1. Whether granting less than one day to respond to a notice violates principles of natural justice.
  2. Whether an order passed without granting proper opportunity of hearing is legally sustainable.
  3. Whether the TPO’s action under Section 92CA(2) of the Income Tax Act, 1961 was valid in law.

Petitioner’s Arguments

  • The petitioner argued that the time granted to respond to the notice was extremely short and unreasonable.
  • It was submitted that only limited information could be furnished due to lack of adequate time.
  • The petitioner contended that no proper opportunity of hearing was provided.
  • It was further argued that the impugned order was passed without application of mind and with a premeditated approach.
  • The action of the TPO was stated to be in violation of the principles of natural justice.

Respondent’s Arguments

  • The counsel for the Income Tax Department fairly submitted before the Court that the Department was willing to grant another opportunity to the petitioner to file its response to the notice dated 30th July 2021.

Court Order / Findings

  • The Delhi High Court observed the limited time granted to the petitioner to respond.
  • Considering the submission of the Department, the Court set aside the TPO order dated 31st July 2021 passed under Section 92CA(2) of the Act.
  • The petitioner was directed to file a detailed response along with supporting documents within three weeks.
  • The respondents were directed to grant an opportunity of hearing through virtual mode and decide the matter in accordance with law.
  • The authorised representative of the petitioner was directed to appear before the TPO on the specified date.

Important Clarification

  • The Court did not adjudicate on the merits of the transfer pricing adjustment.
  • The relief was granted solely on the ground of violation of principles of natural justice.
  • The matter was remanded back to the TPO for fresh consideration after granting proper opportunity of hearing.

 Link to download the order

https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:621-DB/MMH17022022CW146502021_220342.pdf

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