AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 674
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....5. The fundamental question that we have to first consider is whether an order under section 172(4) can be said to be an 'assessment order' because the requirement of serving a draft order on the assessee is only in respect of an 'assessment order'. Section 144C(1) categorically states that the Assessing Officer is required to "forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee" and thus give an eligible assessee option of approaching the Dispute Resolution Panel before the final assessment order is passed. Unless, therefore, the impugned order passed under section 172(4) can be treated as an 'assessment order', the requirements of Section 144C cannot come into play. 6. This issue is no longer res integra. In the case of Emirates Shipping Line FZE v. Asstt.DIT [2012] 349 ITR 493/211 Taxman 82/23 taxmann.com 400 (Delhi), Hon'ble Delhi High Court had an occasion to adjudicate on the question whether an order passed under section 172(4) can be treated as an assessment order for the purposes of subjecting a completed assessment to reopening under section 147 of the Act. I....
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....for the year. But, under s. 172(7) of the Act a right is given to the assessee to claim before the expiry of the assessment year relevant to the previous year in which the date of departure of the ship from the Indian port falls, that an assessment according to the provisions of the Act, in a regular manner be made. Thus a right is given to the assessee to opt for a regular assessment although a "rough and ready" or a "summary assessment" has already been made under s. 172(4) of the Act. It is a valuable right. If the assessee exercises the right conferred on him under s. 172(7) of the Act, the ITO is bound to make an assessment of the total income of the previous year of the assessee and the tax payable on the basis thereof "should be determined in accordance with the other provisions of the Act" and any payment made under the section (earlier) "shall be treated as a payment in advance of the tax" leviable for that assessment year and the difference between the sum so paid and the amount of tax found payable by him on such assessment, shall be paid by the assessee or refunded to him. The "ad hoc" assessment made under s. 172(4) of the Act is superseded and a "regular assessment" i....
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....ute Resolution Panel shall issue the directions referred to in subsection (5), after considering the following, namely:- (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. Explanation.-For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the va....
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....ction 144C(2)(b) or when the time limit for raising such objections expires, the Assessing Officer can go ahead to pass the final assessment order as proposed. While, in terms of the provisions of Section 144C(4) and 144C(15), the limitation period for passing the assessment orders gets suitably extended for this exercise so far as the assessment orders under sections 143, 144, 147, 148 and 153A etc. are concerned, there is no such enabling provision for extension of limitation period. This aspect of the matter becomes even more significant in case the assessee indeed opts for making a reference to the DRP because in such a case, in order to make the provisions workable, the limitation period for passing the assessment order has to suitably get extended for taking care of the period of time taken by the DRP in adjudicating upon the objections of the assessee and for the period of time taken by the Assessing Officer to give effect to such directions but then there is no provision in the statute for so extending the limitation period so far as the orders under section 172(4) are concerned. The time limit for passing order under section 172(4) is set out in section 172(4A) which provi....
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.... construction which reduces the statute to a futility has to be avoided" and that "a statute or any enacting provision therein must be so construed as to make it effective and operative on the principle expressed in maxim ut res magis valeat quam pereat i.e., a liberal construction should be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention of the parties. [See Broom's Legal Maxims (10th Edition), p. 361, Craies on Statutes (7th Edition) p. 95 and Maxwell on Statutes (11th Edition) p. 221.]" Unless the relaxation on the period of limitation for passing the assessment orders is read as including the relaxation on the period of limitation for all the assessment orders, and the references to Section 153 and 153B as illustrative rather than exhaustive, the provisions of Section 144C cannot be treated as including all the cases of assessment orders, and not merely for assessment orders under sections 143(3) and 153A. The interpretation that relaxation in time limit for passing the assessment orders is only under sections 143(3) and 153A as the intention of Section 144C was only to cover the assessments under sections 143 and 153A wi....
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....view of the above discussions, in our humble and limited understanding, the way forward is that while upholding the plea of the assessee in principle that the Assessing Officer ought to have first forwarded him a draft assessment order under section 172(4) before passing the impugned final assessment order under section 172(4), we also hold that the references to Sections 153 and 153B, appearing in Section 144C(4) and 144 C(15), as illustrative rather than exhaustive and in effect, thus, a reference to section 172(4A) is to be read into these provisions as well. We do feel that this kind of a litigation before judicial bodies, i.e. whether or not an assessee is eligible for approaching the DRP in respect of order under section 172(4), could be easily prevented by more thoughtfully drafting the relevant provision. Either it could be made clear, in the stature itself, that the option of DRP is only with reference to a specific type of assessment orders such as under section 143(3) or 153A or the relaxation on time limit for passing the orders, which could be carried before the DRP, could be more general rather than confined to time limit for specific type of orders as in Section 153 ....
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....ly because an order under section 172(4) is not an assessment order at all. While we have not approved this line of reasoning, we cannot be oblivious to the fact that the Assessing Officer may have had a bona fide belief that the provisions of Section 144C will not apply to the orders under section 172(4). As a matter of fact, as we have noted earlier in this order, while the scheme of the Act does indicate that an order under section 172(4) is covered by the scheme of Section 144C, the provisions of Section 144C(4) and 144C(15) donot indicate corresponding references. There is, thus, clearly an element of wholly avoidable ambiguity in the phraseology employed in Section 144C, which is in sharp contrast with the fact situation being dealt with in the judicial precedents cited before us. The subject matter of dispute before us is not as to what is the consequence of not issuing a draft assessment order, when it was admittedly required to be issued on the facts of a case, but whether such a draft order was required to be issued in the first place. In such a situation and the relevant material facts being qualitatively different, in our considered view, it would meet the ends of justi....