TaxTMI 
TaxTMI 
2018 (4) TMI 1785
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....d in favour of the assessee by the DRP. 3. At the outset, ld. counsel for the assessee, Mr. Tarandeep Singh, submitted that assessee has also filed an 'additional ground' which in fact is clarification of ground no.2 raised by the assessee in the original appeal memo, whereby assessee is challenging the impugned orders that it is void ab initio passed in contravention of the provision of Section 144C. In the said ground it has been highlighted that in this case the Assessing Officer instead of passing a 'draft assessment order' as required u/s 144C has passed final assessment order u/s 143(3) on 2nd November, 2012 which was not in accordance with the provision of Section 144C(1) r.w.s. sub-section (2) and (3) thereto, and therefore, in view of the various judgments of Hon'ble Jurisdictional High Court, the said order is unsustainable in law and consequentially the entire proceedings and order needs to be quashed. 4. Highlighting the brief facts and background of the case, he submitted that assessee is wholly owned subsidiary of Oracle System Corporation, USA. It has filed its return of income for the Assessment Year 2006-07 on 27.11.2006 at an income of Rs. 1,59,40,87,230....
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....ted out that this was a final assessment order duly accompanied with notice of demand u/s.156 and also a show cause notice u/s. 274 r.w.s. 271 of the Income Tax Act. The said order however cannot be reckoned as legally sustainable order as it has not been passed in terms of procedures enshrined in Section 144C. As per the said provision, the Assessing Officer has to first pass a proposed draft assessment order if he proposes to make any variation in the income or loss return; and it is after the receipt of such order the assessee is eligible to file either his acceptance for the variation to the Assessing Officer or file objection to such variation before the DRP within 30 days of receipt of the draft assessment order. Once, the assessee has intimated to the Assessing Officer either the acceptance or makes no objection within the specified period then Assessing Officer completes assessment on the basis of the draft assessment order. Thus, here in this case, there is a clear violation of Section 144C (1); (2) and (3). After having passed the final assessment order on 2-11-2012, immediately after five days of completion of final assessment order, the Assessing Officer on 07.11.2012 h....
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....d by the Hon'ble Jurisdictional High Court by the Division Bench in the case of Turner International Pvt. Ltd. vs. DCIT, reported in (2017) 82 Taxmann.com 125 (Del), wherein their Lordships while interpreting the provision of Section 144C(1) held that; failure of Assessing Officer to adhere to the mandatory requirement of Section 144C(1) would result in invalidation of the final assessment order and consequently the entire demand and penalty proceedings. Again similar principle has been reiterated in a very detailed manner by the Hon'ble Jurisdictional High Court in the case of JCB India Ltd. vs. DCIT, in WP(C) No.3399/2016 vide judgment and order dated 17.09.2017, wherein again their Lordships have held that such a defect is not curable even u/s.292B. Thus, in the wake of such binding precedence of Hon'ble Jurisdictional High Court, the impugned final assessment order passed by the Assessing Officer has to be declared as invalid being barred by limitation. 7. On the other hand, learned DR, appearing on behalf of the Revenue submitted that here in this case though the final assessment order was passed on 02.11.2012, but immediately thereafter the Assessing Officer re....
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.... there was an argument by the Department that the DRP has entertained the said order as draft assessment order, and therefore, once the petitioner company had approached the DRP treating the order passed by the Assessing Officer as draft assessment order then petitioner company is estopped from questioning the same very order though it is a final order. This particular argument has specifically been rejected by the Hon'ble High Court. He further relied upon the decision of ITAT Mumbai Bench in the case of Lionbridge Technologies Pvt. Ltd. vs. DCIT, reported in (2015) 171 TTJ 684 (Mum.), wherein in that case where the assessment was restored back by the Tribunal to the stage of passing of the draft assessment order and thereafter the Assessing Officer had passed a fresh assessment order without adhering to provision of Section 144C (1), within the time limit prescribed, then such an assessment order is not enforceable in law. Thus, in the light of the judicial precedence and without there being any contrary decision of Jurisdictional High Court on this point, the impugned final assessment order needs to be quashed on the ground that the earlier order passed by the Assessing Offi....
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....ce u/s. 274. The said assessment order clearly was a final assessment order and was not in accordance with procedure laid down in Section 144C sub Section (1), (2) & (3), which for the sake of ready reference is reproduced hereunder: 144C "(1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a ) file his acceptance of the variations to the Assessing Officer; or (b ) file his objections, if any, to such variation with,- (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- (a ) the assessee intimates to the Assessing Officer the accep....
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....fter a final order has been passed determining the tax liability. The very fact that the taxable amount has been determined itself would show that it was passed as a final order. In fact, a notice for demand under Section 156 of the Act was issued pursuant to such order dated 26.03.2013 of the second respondent. Both the order dated 26.03.2013 and the notice for demand thereof have been served simultaneously on the petitioner. Therefore, not only the assessment is complete, but also a notice dated 28.03.2013 was issued thereon calling upon the petitioner to pay the tax amount as also penalty under Section 271 of the Act. Thereafter, the petitioner was given an opportunity of hearing on 12.04.2013. Subsequently, the second respondent realised the mistake in passing a final order instead of a draft assessment order which resulted in issuing a corrigendum on 15.04.2013. In the corrigendum it was only stated that the order passed on 26.03.2013 under Section 143C of the Act has to be read and treated as a draft assessment order as per Section 143C read with Section 93CA (4) read with Section 143(3) of the Act. In and by the order dated 15.04.2013, the second respondent granted thirty da....
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....ed on the expiry of the said period." 23. It is evident from the above decision of the Honourable Supreme Court that if an order is passed beyond the statutory period prescribed, such order is a nullity and has no force of law. In that case before the Honourable Supreme Court, the period for assessment proceedings expired and thereafter, fresh assessment orders have been issued by anti-dating it. In those circumstances, it was held that the High Court ought not to have remanded the matter back to the assessment officer and by doing so, the statutory period prescribed for completion of assessment has been extended by conferring jurisdiction upon the Assessing Officer, which he otherwise lacked on the expiry of the said period. In that case, the Honourable Supreme Court also held that there is a distinction between an order which is a nullity and an order which is irregular and illegal. Where an authority making order lacks inherent jurisdiction, such an order will be null and void ab initio, as the defect of jurisdiction goes to the root of the matter and strikes at his very authority to pass any order and such a defect cannot be cured even by consent of the parties. ....
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....the orders, which are impugned in these writ petitions are liable to be set aside." 12. In the aforesaid judgment, the Hon'ble High Court had dealt with precisely the same situation, wherein the Assessing Officer had passed the assessment order on 26.03.2013 which was a final assessment order and later on the Assessing Officer had issued a corrigendum on 15.04.2013, i.e., within the period of 30 days as given in the demand notice stating that the final assessment order dated 26.03.2013 should be read as draft assessment order. In the said judgment, one of the argument taken by the Revenue before the Hon'ble High Court which has been taken by the learned DR also before us, that once the assessee has approached the DRP, then assessee is estopped from questioning the same order even though it was final assessment order. The Hon'ble High Court has turned down such a plea of the Revenue. Further the Hon'ble High Court referring to the judgment of Hon'ble Supreme Court in the case of Deepak Agro Foods vs. State of Rajasthan and others, reported in (2008) 16 VST 454 (SC), held that if an order has been passed beyond the statutory period prescribed then such an order....
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....esh High Court was affirmed by the Supreme Court by the dismissal of the Revenue's SLP (C) [CC No. 16694/2013] on 27th September, 2013. 13. In Vijay Television (P) Ltd. v. Dispute Resolution Panel [2014] 369 ITR 113 (Mad.), a similar question arose. There, the Revenue sought to rectify a mistake by issuing a corrigendum after the final assessment order was passed. Consequently, not only the final assessment order but also the corrigendum issued thereafter was challenged. Following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra) and a number of other decisions, the Madras High Court in Vijay Television (P) Ltd. v. Dispute Resolution Panel (supra) quashed the final order of the AO and the demand notice. Interestingly, even as regards the corrigendum issued, the Madras High Court held that it was beyond the time permissible for issuance of such corrigendum and, therefore, it could not be sustained in law. 14. Recently, this Court in ESPN Star Sports Mauritius S.N.C. ET Compagnie v. Union of INdia [2016] 388 ITR 383 (Del.), following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra) , the Madras H....
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....iti Financial Consumer Finance India Pvt. Ltd.) where it was held: "Section 292B of the Act cannot be read to confer jurisdiction on the AO where none exists. The said Section only protects return of income, assessment, notice, summons or other proceedings from any mistake in such return of income, assessment notices, summons or other proceedings, provided the same are in substance and in effect in conformity with the intent of purposes of the Act." The Court further observed that Section 292B of the Act cannot save an order not passed in accordance with the provisions of the Act. As the Court explained, "the issue involved is not about a mistake in the said order but the power of the AO to pass the order." 15. The sequitur of the aforesaid judgments of the Hon'ble Jurisdictional High Court, which can be culled out are as under:- • Firstly, Assessing Officer has to follow the mandatory procedure of Section 144C (1), i.e., to pass a draft assessment order and if such a draft assessment order has not been passed and instead final assessment order has been passed, then such a final assessment order is null and void; • Secondly, merely....