TaxTMI 
TaxTMI 
2020 (12) TMI 820
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....ce the jurisdictional issue if found correct would go to the root of the assessment order itself, it is taken up first and we reproduce the grounds of appeal raised by the assessee regarding the legal issue which is as under: "1. For that on the facts and in the circumstances of the case and in law, the AO erred in law and on facts in passing the final assessment order without following the mandatory procedure prescribed in section 144C of the Income Tax Act, 1961 and in that view of the matter the impugned assessment order passed u/s. 143(3) r.w.s. 144C dated 27.01.2020 be declared void ab initio. 2. For that on the facts and in the circumstances of the case and in law, the Ld. AO erred in passing the final assessment order in gross violation of the provisions of 144C particularly in view of the fact that the appellant had exercised the option available under section 144C and filed objections before DRP within the prescribed time and in that view of the matter it is prayed that the impugned assessment order be held as void ab initio, bad in law and illegal and consequently the entire assessment be quashed." 3. The Ld. AR Shri Akkal Dudhwewala assailing the act....
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....in the time period prescribed in sub-section (4) of section 144C of the Act i.e. within one month from the end of the month in which the AO receives the acceptance from the assessee regarding the draft assessment order or the period of filing of objection before the DRP expires. So, according to the Ld. AR, in this case the draft assessment order has been passed on 28.12.2019 and to prove this fact, he drew our attention to page 2 of paper book which fact we find it to be correct. Thereafter, the Ld. AR drew our attention to page 12 of the paper book which we find is a letter dated 24.01.2020 and on perusal of its content we find that it is the objection filed by the assessee before the DRP (Delhi) against the draft assessment order of AO dated 28.12.2019 u/s. 144C(2)(b) of the Act. Thereafter, the Ld. AR drew our attention to page 14 of the paper book which is a letter dated 27.01.2020 addressed to the AO wherein the assessee has brought to the notice of the AO that assessee has exercised its option on 24.01.020 as envisaged under subsection (2)(b)(i) of section 144C of the Act by filing an objection before the DRP against the draft assessment order dated 28.12.2019 and also filed....
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....d. AR that there was no transfer pricing issue being adjudicated by this Tribunal at this stage and at present only the assessee's preliminary objection as to jurisdiction of the AO to have passed the final assessment order as on 27.01.2020 is the only issue being assailed, the Ld. DR, Additional Commissioner vehemently opposed the submissions made by the Ld. AR of the assessee and contended that the AO has passed the final order on 27.01.2020 in accordance to law. According to her, the AO has passed the final order on 27.01.2020 i.e. within 30 days after passing the draft assessment order on 28.12.2019 as per sub-section (2) and (3) of section 144C of the Act; and according to her the assessee might have filed the acknowledgment of filing objection before the DRP only after the AO has passed the final order u/s 144C(3) on 27.01.2020, so the final order passed by the AO is valid and thus she does not want us to interfere in the final order passed by the AO. In the alternative it was contented by Ld DR that in any case, even if there is any procedural violation then it is curable defect and so the impugned order may be set aside back to the AO for rectifying the mistake and suitable....
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....01.2020 and it will remain within the DRP's jurisdiction till it passes direction as per sub-section (5) of section 144C of the Act. In other words, since the assessee has preferred its objection before DRP on 24.01.2020, till the time the DRP passes the direction as per sub-section (5) of section 144C of the Act, (i.e. during the interregnum period 24.01.2020 till DRP direction) the AO does not enjoy jurisdiction over the assessee's case so he cannot pass the final assessment order during the interregnum period. Therefore, the action of the AO to have framed the final order before the DRP's direction is wholly without authority of law and since passed without sanction of law is non-est in the eyes of law. Thus, according to Ld AR, the contention of the Ld. DR that the action of AO to have passed the final assessment order before the DRP direction is a curable defect and it is only a procedural irregularities cannot be accepted because it is legally flawed and erroneous and so untenable. According to him, the AO has to mandatorily follow the procedure prescribed u/s. 144C of the Act and for this proposition of law he relied upon the decision of the Hon'ble Madras High Court in Vija....
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....icing Order passed u/s. 92CA(3) on 31.10.2019 7. Draft Assessment Order passed by AO u/s. 144C on 28.12.2019 8. Objections filed by assessee in Form 35A before the Dispute Resolution Panel on [within the time limit prescribed in section 144C(2)] 24.01.2020 9. Intimation given to the AO regarding the objections filed before the DRP on 27.01.2020 10. Final Assessment order u/s. 143(3)/144C(3) passed by the Assessing Officer on 27.01.2020 11. Time period for the AO to have passed final assessment order in case if assessee accepts the draft assessment order or does not file objection before DRP as per sec. 144C(3) & (4) of the Act Between 01.02.2020 to 28/29.02.2020 12. Since the assessee had filed the objection before the DRP on 24.01.2020, the AO should have await the direction DRP (refer section 144C(5) & (13) of the Act). AO to pass final order within one month from the end of the month of DRP direction 7. The short question which needs to be answered is whether the AO could have framed the final assessment order on 27.01.2020 when the admitted facts are that the assessee has received the draft assessment order on 28.12.20....
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....sed 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 variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opini....
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....see's whose income are subject to transfer pricing variation or who are non-residents or foreign companies. This code entitles these eligible assessee's to first receive a draft assessment order from the AO, and gives them the option to decide the forum to prefer objection against the draft assessment order or to accept the draft order so that they retain their right to pursue regular appeal against the final order before the Ld. CIT(A). As per section 144C of the Act once the assessee receives the draft assessment order from AO u/s 144C(1) of the Act, the AO is duty bound to thereafter give the assessee 30 days time to make-up its mind either to accept the draft order or to object to such order (draft assessment order of AO) before the DRP as per sub-section (2) (b) of section 144C of the Act. And if the assessee chooses to file objection before the DRP, then the AO is duty bound to wait for the direction of the DRP; and then only on receipt of the DRP direction u/s. 144C(5) of the Act that AO is legally empowered to pass the final assessment order as per section 144C(13) of the Act. So, we note that as per the scheme/mechanism envisaged in section 144C of the Act, once the AO pas....
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.... of receipt by assessee of the draft order. Even in such a scenario i.e. in the event the assessee accepts the draft order or does not prefer to go before the DRP within 30 days and time expires, then also the time prescribed to the AO to frame final order u/s. 144C(3) of the Act is given in sub-section (4) of section 144C of the Act which in the facts of this case AO can legally do between 01.02.2020 to 28/29.02.2020. So even if for argument sake, we accept the contention of the Ld. DR, that since the assessee having received the draft order on 28.12.2019 did not turn up before the AO within 30 days and 30 days expires on 27.01.2020 the AO is legally entitled to frame the final assessment order on 27.01.2020 u/s. 144C(3) of the Act and if the assessee turned up later on the same date i.e. 27.01.2020 before the AO after the AO had framed the final order, does not affect the legality of the order cannot be countenanced because it is erroneous. Because even if the assessee had accepted the draft order or the period of 30 days expired or as suggested by Ld. DR or in the event of the assessee's failure to bring to the notice of AO of it's filing the objection before DRP before AO has p....