AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 345
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....gainst the said draft assessment order as per provisions to section 144C of the Act, straightway framed the final assessment order, which was not sustainable in the eyes of law. The ld. counsel has further submitted that the Assessing Officer, however, vide letter dated 21.12.2018 withdrew the said final assessment order dated 29.11.2018 along with calculation sheet, demand notice and penalty notice u/s. 274 of the Act. Further, that the Assessing Officer vide the said letter dated 21.12.2018 enclosed a subsequent draft assessment order dated 21.12.2018. The ld. counsel, in this respect, has submitted that once the Assessing Officer had passed the final assessment order, the Assessing Officer had become functus officio and thereafter the Assessing Officer did not have jurisdiction to withdraw the final assessment order dated 29.11.2018 and that the draft assessment order, if any, passed subsequently was invalid, null and void. The ld. counsel has further submitted that even the assessee filed objections before the DRP against the said invalid draft assessment order, however, the ld. DRP declined to entertain and adjudicate upon the said objections holding the said draft assessment ....
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....nd, therefore, we find ourselves unable to deal with the invalid draft assessment order. 3.8 In view of our decision at Para 3.7 above, there is no need of DRP directions on Ground of objections between No. 2 to 5." 3. A perusal of the above DRP order would reveal that DRP has categorically held that it had no jurisdiction over such a draft assessment order passed subsequent to withdrawal of the final assessment order. The ld. counsel has also relied upon the following case laws to stress the point that passing of the draft assessment order is sine qua non before passing of the final assessment order and further that once the final assessment order has been passed, the subsequent order/draft order etc. will not have any validity: "1. Decision of the Mumbai Bench of the Tribunal in the case of Jazzy Creations Pvt. Ltd. v/s. ITO reported in [2017] 83 taxmann.com 244 2. Decision of the Delhi Bench of the Tribunal in the case of Olympus Medical Systems India Pvt. Ltd. v/s. DCIT [ITA No. 8892/Del/2019] 3. Decision of the Delhi Bench of the Tribunal in the case of Perfetti Van Melle India Pvt. Ltd. v/s. ACIT [ITA No. 9116/Del/2019] 4. Decis....
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.... complete, notwithstanding anything to the contrary contained in section 153 [or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." 6. A perusal of the aforesaid provision would show that the Assessing Officer before passing of the final assessment order is mandatorily required to forward a draft of the proposed order of assessment (draft order) to the eligible assessee if he proposes to make any adjustment, and to give opportunity to the assessee to file objections against such draft order either to the Assessing Officer himself or to the DRP. In this case, the Assessing Officer straightway passed the final assessment order, without passing any draft assessment order. As held by the various Benches of the Tribunal as noted above, a final assessment order without passing of the draft assessment order, being not in accordance with law, is liable to be quashed and further that the subsequent proceedings after passing of the final assessment order would also be vitiated and would not have any sanctity of the law. Reliance, in this respect, can be pla....
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.... or according to the intent and purpose of this Act". The key really is that even if the draft assessment order has a wrong description as an "assessment order", as long as it is "in substance and effect, in conformity with, or according to the intent and purpose of this Act", no objection can be taken to the same. However, given the fact that the resultant tax demand is raised, penalty proceeding initiated and entries made, the order passed by the Assessing Officer was a final assessment order in substance and in effect. The subsequent letter dated 30th December 2010, issued by the Assessing Officer, was only a cover up exercise to convert a regular assessment order into a draft assessment order. However, once a regular assessment order is framed and issued- as, in our considered view, was issued on 24th November 2010, there cannot be any occasion to turn the clock back and issue a draft assessment order. As to what is the impact of an assessment order being directly issued, in a situation in which the assessee is an eligible assessee who ought to have been issued a draft assessment order, we find the following guidance from the decision of a coordinate bench in the case of Capsug....
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....e corrigendum dated 15.04.2013, the petitioner company approached the first respondent, but the first respondent declined to issue any direction to the assessment officer on the ground that the first respondent has got jurisdiction only to entertain such an appeal if the order passed by the second respondent is a pre-assessment order. Therefore, it is evident that the first respondent declined to entertain the objections raised by the petitioner company on the ground that the order passed by the second respondent is not a draft assessment order, rather it is a final order. Thus, the first respondent had treated the order dated 26.03.2013 of the second respondent as a final order and therefore it refused to entertain the objections filed on behalf of the petitioner company. 22. As mentioned supra, as per Section 144C (1) of the Act, the second respondent-assessing officer has no right to pass a final order pursuant to the recommendations made by the TPO. In fact, the second respondent assessing officer himself has admitted by virtue of the corrigendum dated 15.04.2013, that the order dated 26.03.2013 is only a final order and it was directed to be treated as a draft assessm....
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....cially when it is beyond the period of limitation prescribed by the statute. When there is a statutory violation in not following the procedures prescribed, such an order cannot be cured by merely issuing a corrigendum. 25. In the decision rendered by the Honourable Supreme Court of India in the case of (L. Hazari Mal Kuthiala (supra), which was relied on by the learned standing counsel for the respondents, it was held that the mistake or defect on the part of the Commissioner to consult the Central Board of Revenue did not render his order invalid since the provision about consultation in terms of Section 5 (3) of Patiala Act was merely directory and not mandatory. In the present case, the procedure that was required to be followed by the second respondent to pass a draft assessment order is mandatory and it is prescribed by the statute. Therefore, this decision relied on by the learned standing counsel for the respondents cannot be made applicable to this case. 26. The learned senior counsel for the petitioners relied on the decision of the Allahabad High Court in the case of Shital Prasad Kharag Prasad (supra) wherein the Division Bench of the Allahabad High Co....
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.... the Revenue has attempted to nullify the scheme of things of limitations legally propounded under the Act...." 29. In yet another decision of the Division Bench of this Court in the case of Smt. R.V. Sarojini Devi (supra), which was relied on by the learned senior counsel for the petitioners, it was held as follows:- "Under Section 158BC of the Act empowers the assessing officer to determine the undisclosed income of the block period in the manner laid down in Section 158BB and 'the provisions of Section 142, sub-sections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be apply. This indicates that this clause enables the Assessing Officer, after the return is filed, to complete the assessment under Section 143 (2) by following the procedure like issue of notice under Section 143 (2)/142. This does not provide accepting the return as provided under Section 143 (1) (a). The Officer has to complete the assessment order under Section 143 (3) only. If an assessment is to be completed under Section 143 (3) read with Section 158BC, notice under Section 143 (2) should be issued within one year from the date of filing of the block return.....
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..../2010 of the CBDT has clarified that the provisions of S. 144C shall not apply for the assessment year 2008-09 and would apply only from the assessment year 2010-2011 and later years is not tenable in as much as the language of Sub-section (1) of Section 144C referring to the cut off date of 01.10.2009 indicates an intention of the legislature to make it applicable, if there is a proposal by the Assessing Officer to make a variation in the income or loss returned by the assessee which is prejudicial to the assessee, after 01.10.2009. Therefore, this particular provision introduced by Finance (No. 2) Act, 2009, would apply if the above condition is satisfied and other provisions, in which similar contrary intention is not indicated, which were introduced by the said enactment, would apply from 01.04.2009 i.e., from the assessment year 2010-2011. It is not disputed that the memorandum explaining the Finance Bill and the Notes and clauses accompanying the Finance Bill which preceded the Finance (No. 2) Act, 2009 clearly indicated that the amendments relating to S. 144C would take effect from 01.10.2009. In our view, the circular No. 5/2010 issued by the CBDT stating that S. 1....
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....dent payable by the company inspite of issuance of the corrigendum on 15.04.2013 as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even withdraw the taxable amount determined by him or updated the status in the website. In any event, such an order dated 26.03.2013 passed by the second respondent can only be construed as a final order passed in violation of the statutory provisions of the Act. The corrigendum dated 15.04.2013 is also beyond the period prescribed for limitation. Such a defect or failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the corrigendum dated 15.04.2013. By issuing the corrigendum, the respondents cannot be allowed to develop their own case. Therefore, following the order passed by the Division Bench of the Andhra Pradesh High Court, which was also affirmed by the Honourable Supreme Court by dismissing the Special Leave Petition filed thereof, on 27.09.2013, the orders, which are impugned in these writ petitions are liable to be set aside. 8. Learned Departmental Representative, on the other hand, submits that this lapse on the part of the Asses....