TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1011
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....quashed. 13. On the facts and in the circumstances of the case and in law, the Ld. AO erred in issuing a notice of demand under section 156 and a notice under section 274 read with section 271(1)(c) of the Act along with the said draft assessment order, thereby not following the mandate as laid down under section 144C of the Act. The Appellant prays that the said draft assessment order be held as void-ab-initio, bad in law and illegal and consequently the entire assessment ought to be quashed." 3. Having gone through the subject matter of the additional grounds taken by the assessee, it is discernible that the same are legal grounds involving adjudication on questions of law. The Hon'ble Supreme Court in National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) has observed that "the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a nontaxable item is taxed or a permissible deduction is denied, we do not see a....
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.... 5. The contention of the assessee is that the impugned assessment order should be set aside because the statutorily prescribed procedure was not followed in as much as the AO issued final assessment order in place of draft assessment order followed by issuing notice of demand and also initiating penalty proceedings u/s.271(1)(c) of the Act. This has been countered by the ld. DR who submitted that albeit the AO inadvertently described it as an `Assessment order', but in essence it was a draft order, which was also treated by the assessee as such - filing objections before the DRP. He further submitted that although the notice of demand was issued pursuant to such a draft order, but the same was never enforced and further though penalty proceedings were initiated through this draft order, but no penalty order was actually passed. He still further submitted that if the assessee was aggrieved by the nomenclature of draft order, then it should not have agitated the matter before the DRP or should have challenged it by means of a writ petition, which it did not. Crux of his argument was that a draft order was simply wrongly described as an `Assessment order', which did not....
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....t follows that if the assessee raises objection before the DRP, it is only on the passing of the order under section 144C(13) that the assessment is treated as finalized on which notice of demand can be issued. It is overt from the above discussion that the statute has prescribed a particular procedure to be followed in case some variation is made in the returned income of an eligible assessee defined u/s 144C(15) of the Act. 8. The Hon'ble Madras High Court in Vijay Television (P) Ltd. Vs. DRP (2014) 369 ITR 113 (Mad.) was confronted with a situation in which the AO, pursuant to the order of the TPO, passed a final assessment order instead of a draft order. A question arose as to whether the order so passed could be treated as a valid order. Accepting the contention of the assessee, the Hon'ble High Court set aside the order passed by the AO by observing that: "where there was omission on the part of the AO to follow the mandatory procedures prescribed in the Act, such omission cannot be termed as a mere procedural irregularity and it cannot be cured". Thus the assessment order was quashed. Almost similar issue came up for consideration ....
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....r. The AO not only passed such "assessment order" but also directed to "issue show cause notice u/s.274 r.w.s. 271(1)(c) of the I.T. Act, on all the issues on which the additions have been made". It, therefore, transpires that on receipt of an order from the TPO, the AO simply proceeded to pass the final assessment order u/s.144C(3) of the Act. The fact that in the covering letter to the assessee, the AO described it as a `draft order' is of no consequence, when, in fact, ex facie, the order was passed as a final assessment order u/s 144C(3) followed by a notice of demand as well. It is only when the assessee filed objections against such an `assessment order' before the DRP, that the AO realized his mistake and went on to pass another `Assessment order' on 29.11.2012, this time u/s 144C(13) of the Act. Consequently, it is palpable that the AO kept on passing one final assessment order [u/s 144C(3)] after another final assessment order [u/s 144C(13)]. On going through the entire exercise of assessment, it can be seen that so many statutorily mandated procedural lapses have occurred at the end of the AO, which have the effect of vitiating&nb....
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....oration, Japan (YCJ), its Associated Enterprise (AE), under Article 25 of the DTAA between India and Japan. An application was moved not only for the year under consideration but also the succeeding assessment year. The competent authorities of both the countries have resolved the issue concerning international transactions of the assessee with YCJ. A copy of such a Resolution dated 10-09-2015 has been placed on record. It states the amount of total transfer pricing adjustment as per the rectification order dated 21-03-2013 at Rs. 16.43 crore, having transfer pricing adjustment relating to YCJ at Rs. 9,85,89,000/- and the remaining amount of Rs. 6,57,81,925/- on account of transactions with non-YCJ AEs. As per the Resolution, the amount of transfer pricing adjustment corresponding to transactions with YCJ has been reduced to Rs. 5,78,23,800/-, thereby giving relief of Rs. 4.07 crore and odd. Such a Resolution has been admittedly accepted by the assessee. 13. Now we need to see the effect of MAP proceedings vis-à-vis the quashing of the assessment order on the legal issue as discussed hereinabove. Normally, if an assessment order is....