TaxTMI 
TaxTMI 
2024 (4) TMI 940
X X X X Extracts X X X X
X X X X Extracts X X X X
....the return of income along with applicable interest arising on such refund. 4. Petitioner filed its return of income for A.Y. 2009-10 on 25th September 2009 declaring an income of Rs. 44,59,83,972/-. Petitioner's case was selected for scrutiny assessment and the A.O. referred petitioner's case to the Transfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP) of the international transactions. The TPO passed an order under Section 92CA(3) of the Income Tax Act, 1961 (the Act) on 23rd November 2012 recommending an enhancement of Rs. 2,38,79,893/- to petitioner's returned income. 5. The transfer pricing addition was in relation to two activities of petitioner, Rs. 40,49,175/- concerning provision of technical services and Rs. 1,98,30,718/- concerning provision of back office support services. The A.O. in addition to incorporating TPO's recommendation had also proposed a total disallowance of Rs. 4,85,91,645/-. Respondent No. 1 thereafter passed draft assessment order dated 14th March 2013 incorporating the transfer pricing adjustment and disallowance. Against final assessment order that was passed petitioner filed an appeal. The Commissioner of Income Tax (Appeal) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing arm's length price of provision of back-office support services back to the file of the A.O./TPO. Therefore, in this case, there is no dispute that the provisions of Section 144C of the Act, read with Section 92CA of the Act were applicable. Section 144C (1) of the Act mandates that a draft assessment order is necessary before the A.O. can proceed to pass a final assessment order. Even in partial remand proceedings from the Tribunal, the A.O. is obliged to pass a draft assessment order under Section 144C (1) of the Act. Absent draft assessment, the order is without jurisdiction. Therefore, even on this count, the order giving effect along with demand notice dated 30th January 2023 passed by the A.O. is non-est in law and liable to quashed. Hence, the A.O. should forthwith refund the taxes paid by petitioner for the impugned assessment year in excess of what was payable by petitioner as per the return of income along with applicable interest arising on such refund. 9. Affidavit in reply opposing the petition through one Ms. Jayantika Singh, Deputy Commissioner of Income Tax - 6(1)(1), Mumbai affirmed on 14th July 2023 has been filed. The stand taken by the Revenue is that the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and it certainly makes a variation to the returned income filed by the petitioner. This even if, one proceeds on the basis that the returned income stands varied by the order of the Tribunal in the first round, to the extent the petitioner accepts it. Therefore, the Assessing Officer correctly invokes Section 144C of the Act in the impugned order. Once having invoked Section 144C of the Act, the Assessing Officer is obliged to comply with it in full and not partly. This impugned order was passed consequent to the order of the Tribunal dated 5th May, 2017 restoring some of the issues before it to the Assessing Officer for fresh adjudication. 9. This "fresh adjudication" itself would imply that it would be an order which would decide the lis between the parties, may not be entire lis, but the dispute which has been restored to the Assessing Officer. According to us, the order dated 31st January, 2018 is not an order merely giving an effect to the order of the Tribunal, but it is an assessment order which has invoked Section 143(3) of the Act and also Section 144C of the Act. This invocation of Section 144C of the Act has taken place as the Assessing Officer is of the view that it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de a copy thereof to the assessee is a mandatory requirement which gave substantive right to the assessee to object to any variation, that is prejudicial to it. In this case, the order under Section 92CA (3) of the IT Act, proposed to make an adjustment of Rs. 107,454,337/- to the arm's length price considered as Nil by Petitioner and to that extent the said adjustment was evidently prejudicial to the interest of Petitioner. Depriving Petitioner of this valuable right to raise objection before DRP would be denial of substantive rights to the assessee, for which, in our view, the Assessing Officer has no power under the statute, as the provision clearly mandates the Assessing Officer to pass and furnish a draft Assessment Order in the first instance in such a case. The legislature, in our view, has intended to give an important opportunity to Petitioner, who is an eligible assessee, which in our view, has been taken away. In our view, failure to follow the procedure under Section 144C (1) would be a jurisdictional error and not merely procedural error or a mere irregularity. The Assessment Order has not been passed in accordance with the provisions of Section 144C of the IT Act. ....