TaxTMI 
TaxTMI 
2019 (9) TMI 542
X X X X Extracts X X X X
X X X X Extracts X X X X
....its that in the event of this ground of appeal being upheld, all other issues raised in the appeal will be rendered academic and infructuous. He also submits that the additional ground of appeal is a purely legal issue, which was inadvertently left out at the stage of preparing the appeal papers, and prays for admission of the additional ground of appeal. Learned Departmental Representative has also been heard on these submissions. Having given our careful consideration to the rival contentions on the issue, and having perused the material on record, we are inclined to admit the additional ground of appeal and take it up, for adjudication, first. 3. The issue in appeal lies in a narrow compass of material facts. The sequence of events leading to the impugned rectification order dated 3rd October 2015, as pointed out by the learned counsel, are set out for ready reference for this purpose. It is pointed out that the original order, ascertaining arm's length price of international transactions and holding that an ALP adjustment of Rs. 2,15,62.400 was required to be made in respect of the same, was passed by the Transfer Pricing Officer on 15th January 2014. In pursuance of this TP....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icial precedents in support of this proposition. Our attention is invited to Hon'ble jurisdictional High Court's judgment in the case of CIT Vs C Sam India Pvt Ltd [(2017) 398 ITR 182 (Guj)] particularly to paragraph 7 which reads as follows: 7. The procedure laid down under Section 144C of the Act is thus of great importance. When an Assessing Officer proposes to make variations to the returned income declared by an eligible assessee he has to first pass a draft order, provide a copy thereof to the assessee and only thereupon the assessee could exercise his valuable right to raise objections before the DRP on any of the proposed variations. In addition to giving such opportunity to an assessee, decision of the DRP is made binding on the Assessing Officer. It is therefore not possible to uphold the Revenue's contention that such requirement is merely procedural. The requirement is mandatory and gives substantive rights to the assessee to object to any additions before they are made and such objections have to be considered not by the Assessing Officer but by the DRP. Interestingly, once the DRP gives directions under sub-section (5) of Section 144C, the Assessing Offic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat appeals could only be filed against the resultant assessment order and the related rectification order. The treatment to the rectification order, the argument seems to be, must, therefore, be the same as the assessment order. It is submitted that the whole scheme of DRP will be rendered redundant if the Assessing Officer is allowed to straightaway issue the assessment order, and the rectification order thereon. Our attention is thus invited to a large number of judicial precedents holding that an assessment order, without first issuing a draft assessment order, is inherently bad in law and is liable to be quashed for this reason alone. Learned Departmental Representative, on the other hand and in substance, relied upon and justified the stand of the Assessing Officer. The stand of the learned Departmental Representative was that the rectification order in respect of the assessment order was specifically appealable under section 253(1)(d) before us, and, there is no question of challenging the same before the DRP; that would be contrary to the scheme of the Act. The contentions of the learned Departmental Representative, in sum and substance, were as follows. The judicial preced....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provisions of the Income Tax Act, 1922. That has nothing to do with the question, as is sought to be canvassed, that the rectification order is to be treated as an assessment order. Similar was the position in the case of Karsandas Bhagwandas Patel (supra) before Hon'ble jurisdictional High Court. In the case of Arvind N Mafatlal (supra), Hon'ble Bombay High Court was dealing with the question whether upon merger of the princely Phaltan State, and consequent repeal of Phaltan State Income tax Act, 1941, by the virtue of Section 7 of Taxation Laws (Extension to Merged States and Amendment) Act, 1949, a rectification under section 35 of the Indian Income Tax 1922 could be made. It was in this backdrop that Hon'ble Bombay High Court had observed that "There is no substance in the contention that because the Phaltan State Income-tax Act has been repealed an order under section 35 of the Income-tax Act rectifying a mistake in an assessment order passed by the Income-tax Officer cannot be passed. Even though the Phaltan State Income-tax Act has been repealed by the Taxation Laws (Extension to Merged States and Amendment) Act, 1949, for purposes of levy, assessment and collection of inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment" and that the Assessing Officer is required to share with the assessee the draft or proposed rectification order so as to enable the assessee to approach, if so advised, the DRP. That is not, in our humble understanding, scheme of the Act. As regards the Toyota Tsusho India Pvt Ltd (supra) decision, nothing really turns on the same as there cannot indeed any appeal against the directions of the DRP and what can be challenged before the Tribunal is only the assessment order passed by the Assessing Officer as a result of DRP directions. Once the DRP gives the directions in respect of a particular assessment, it is functus officio and one can not go back to the DRP for grievance against the proper effect not being given to the DRP directions. As the law specifically provides, the order giving effect to these directions, as also orders under section 154 in respect of such order, can only be appealed in the Income Tax Appellate Tribunal. The assessee has duly availed this remedy. In view of these discussions, and bearing in mind entirety of the case, we see no merits in the plea of the assessee on this count and hold that the Assessing Officer was not required to issue a draft o....