Law:

Section:

Section 144C of the Income-tax Act, 1961, read with rule 3 of the Income-tax (Dispute Resolution Panel) Rules, 2009 - Dispute resolution panel, reference to - Assessment years 2002-03 to 2007-08 - Whether mere potential of bias against one of members of Dispute resolution panel will render section 144C unconstitutional - Held, no - For relevant assessment year, reassessment proceedings were initiated against assessee - Assessing Officer forwarded draft assessment order to dispute resolution panel - During pendency of proceedings before panel, assessee came to know that one of members of panel was a Commissioner holding post of Director of Income-tax (International Taxation)-II (DIT-II), who was ceased of various proceedings against assessee - Assessee objected to constitution of collegium and submitted that there was a conflict of interest if DIT-II continued to sit in collegium since he was involved in reassessment proceedings - Panel, without considering objection of assessee, issued orders to Assessing Officer - Being aggrieved by aforesaid orders, assessee filed writ petition challenging vires of section 144C as well as rule 3(2) of Rules and also prayed for quashing of order passed by Panel - Whether when there was nothing to indicate that jurisdictional Commissioner was interested in his personal capacity in outcome of assessment order or directions issued by panel to Assessing Officer were based on extraneous considerations and on other hand DIT-II was only discharging its statutory functions provided under Act, on principles of doctrine of necessity, bias stood excluded - Held, yes - Whether further, alleged bias against one member of Panel does not make provision ultra vires and, therefore, provision of section 144C and rule 3(2) could not be held to be ultra vires - Held, yes FACTS The assessee was a Korean company and was engaged in business of offshore engineering construction and power projects in India. It was doing various businesses with the public sector undertakings including ONGC. It had a liaison office at Mumbai and since 1987-88, assessment orders were being passed by the Assessing Officer. The assessment orders for the assessment years…

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