TaxTMI 
TaxTMI 
2024 (9) TMI 157
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....filing), W.P. (C) 688/2019, W.P. (C) 1009/2019, W.P. (C) 991/2019, W.P. (C) 995/2019, W.P. (C) 993/2019, W.P. (C) 12462/2021, W.P. (C) 12844/2021, W.P. (C) 3444/2021, W.P. (C) 3377/2021, W.P. (C) 3389/2021, W.P. (C) 3472/2021, W.P. (C) 3539/2021, W.P. (C) 11896/2021, W.P. (C) 11949/2021, W.P. (C) 12204/2021 & CM APPL. 38228/2021 (Stay), W.P. (C) 12319/2021, W.P. (C) 4043/2022 & CM APPL. 12064/2022 (stay), W.P. (C) 5913/2022 & CM APPL. 17722/2022 (stay), W.P. (C) 6365/2022 & CM APPL. 19227/2022 (stay), W.P. (C) 6786/2022 & CM APPL. 20625/2022 (exemption), W.P. (C) 12735/2022 & CM APPL. 38706/2022 (stay), W.P. (C) 12784/2022 & CM APPL. 38902/2022 (stay), W.P. (C) 12785/2022 & CM APPL. 38904/2022 (stay), W.P. (C) 7547/2023, W.P. (C) 14314/2023 & CM APPL. 56688/2023 (stay), ITA 454/2024. For the Appellant Through: Mr. Aseem Chawla, SSC with Ms. Pratishtha Chaudhary, Advocate., Mr. Ruchir Bhatia, SSC with Mr. Anant Mann, Mr. Pratyaksh, JSCs, Mr. Nageswar Rao & Mr. Parth, Advocates, Mr. Ajay Vohra, Sr. Adv with Mr. Aditya Vohra & Mr. Shashwat Dhamija, Advs., Mr. Ajay Vohra, Sr. Adv with Mr. Aditya Vohra, Mr.Neeraj Jain, Mr. Shashwat, Advs. Mr. Manuj Sabharwal, Mr. Drona Negi & Mr. Ayu....
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....er remitting the matter back to the file of TPO was passed on 11.06.2014 and therefore, as per fourth proviso to Section 153(2A), prior to its amendment vide Finance Act, 2016, the limitation for passing a legally valid final assessment order expired on March 31, 2017. Whether a final assessment order passed without passing a draft assessment order as mandated under Section 144C of the Act is tenable or not? Whether it is mandatory for the assessing officer to pass a draft assessment order under Section 144C of the Act during remand proceedings? 2. JCB India Limited v. NFAC W.P. (C) 12462/2021 2018-19 • On 20.02.2020, the Petitioner filed the return of income for the subject AY declaring a total income of INR 1395,28,30,270. Petitioner's return of income was processed under section 143 (1) of the Act. • On 28.07.2021, the TPO vide its order under section 92CA (3) of the Act proposed an upward transfer pricing adjustment of INR 5,93,54,095. • On 24.08.2021, the Respondent /AO directly passed the final assessment order under section 143 (3) read with section 144B of the Act along with demand notice under section 156 of the Act and....
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....n the 2nd round of proceedings pursuant to remand by the ITAT, despite the Petitioner qualifying as 'eligible assessee' in terms of section 144C (15), draft assessment order was not passed by the Respondent, instead, assessment was straightaway finalized by way of final assessment order, which was accompanied by notice of demand and notice for initiating penalty proceedings No opportunity was provided to the Petitioner to file objections before the DRP, even though the Respondent was mandated by law to first forward draft assessment order to the Petitioner under section 144C (1), thereby violating the substantive rights of the Petitioner as codified under section 144C of the Act. 4. Telstra India Private Limited v. NFAC. W.P. (C) 11896/2021 2018-19 • That AO has passed a final assessment order dated 18.09.2021 against the petitioner without issuing the Draft Assessment Order as per mandatory provisions of s. 144C (1). The said action is jurisdictionally flawed. To clarify, there is no corrigendum in the matter. • Notice of demand under s. 156 was also issued on 18.09.2021. • On the basis of Supreme Court decision in Kalyan Kumar Ra....
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....order and the consequent demand notices and penalty proceedings. {Turner International India (P.) Ltd. v. Dy. CIT [2017] 82 taxmann.com 125/398 ITR 177 (Delhi) & Headstrong Services India Pvt. Ltd.} Limitation has expired since A.Y is 2010-11. 6. Swarovski India Private Limited v. DCIT, W.P. (C) 12204/2021 2010-11 • Present writ petition has been filed challenging the assessment order dated 29th September 2021 passed by the assessing officer in remand proceedings and the consequent demand and penalty notices without passing a draft assessment order as mandated under Section 144C of the Act. • The petition was filed on the ground that the assessing officer erred in issuing a demand notice u/s 156 despite the fact that the addition made in the final assessment order was protective in nature. • This Hon'ble Court vide its order dated 28th October 2021, restrained the Respondent from taking any action pursuant to the impugned assessment orders, notice of demand and penalty notices. • Limitation • The order of ITAT remitting the matter was passed on April 02, 2018, and therefore, the limitation of passing a legall....
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....d final assessment order and have raised the demand as well and initiated penalty proceedings. 10. Smart Cube India Pvt Ltd v. JCIT W.P. (C) 6365/2022 2011-12 • Income-tax return (ITR) filed by the Petitioner returning income of Rs. 3,19,590 was selected for scrutiny and notice was issued under section 143(2) of the Act. • Assessing Officer (AO) passed draft assessment order (DAO) dated 27.02.2015 under section 143 (3) read with section 144C, making addition of Rs. 7,34,36,867, which included transfer pricing adjustment of Rs. 5,52,01,139 and disallowance of deduction under section 10B of the Act of Rs. 1,82,35,728. • Objections were filed by the Petitioner against the DAO before the DRP, which issued directions dated 14.09.2015 under section 144(5), confirming the additions. Pursuant to the same, the AO passed the final assessment order dated 19.10.2015 under section 143 (3) assessing the total income at Rs. 7,37,56,457. • Said final assessment order was challenged before the ITAT, which remanded the issue of transfer pricing adjustment to the TPO and the issue of disallowance of deduction under section 10B of ....
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.... • This Hon'ble Court vide its order dated 5th September 2022, restrained the Respondent from taking any coercive action pursuant to the impugned assessment orders, notice of demand and penalty notices. Limitation For AY 2007-08 • The order of ITAT remitting the matter was passed on July 25, 2019, and therefore, the limitation of passing a legally valid final assessment order expired on March 31, 2022, as per Section 153 (3) r.w. Section 153 (4) of the Act. The final assessment order was passed on March 23, 2022. For AY 2008-09 • The order of ITAT remitting the matter was passed on July 25, 2019, and therefore, the limitation of passing a legally valid final assessment order expired on March 31, 2022, as per Section 153 (3) r.w. Section 153 (4) of the Act. The final assessment order was passed on March 23, 2022. For AY 2009-10 • The order of ITAT remitting the matter was passed on July 25, 2019, and therefore, the limitation of passing a legally valid final assessment order expired on March 31, 2022, as per Section 153 (3) r.w. Section 153 (4) of the Act. The final assessment order was passed on March....
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....¢ The assessee in response to notice under section 153C filed income-tax return ('ITR') on 18.03.2014 returning income of Rs. 1,55,91,116. • Assessing Officer (AO) passed final assessment order dated 28.03.2014 under section 153C read with section 144, making addition of Rs. 29,82,57,118. • The final assessment order was challenged before the CIT(A), which allowed the appeal filed by the assessee vide order dated 26.02.2015. • The order dated 26.02.2015 was assailed by the Revenue before the ITAT on merits and the assessee also filed Cross Objections being CO No. 360/Del/2015. • The ITAT, following the decision of this Hon'ble Court in the case of Turner International India Pvt. Ltd. vs DCIT: W.P. (C) 4260/2015 held that it was obligatory on the part of the assessing officer to pass the draft assessment order in the first instance before passing of the final assessment order and no adjudication was required and done on the merits of the matter. Whether on the facts and circumstances of the case and in law the Ld. ITAT is justified in allowing the objection filed by the assessee despite the fact that section 144C (1) of the A....
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....t section 144C (1) of the Act is not applicable in the case of the assessee as the income earned during the assessment year only because of underlying assets or source of income is in India? Whether on the facts and circumstances of the case and in law the Ld. ITAT is justified in allowing the cross objection filed by the assessee despite the fact that the section 144C (1) of the Act is not applicable in the case of the is eligible assessee as defined under section 144C (15) (b) of the Income Tax Act, 1961. CATEGORY B Sr. No. Case Title and No. AY 6 Swarovski India Private Limited v. DCIT, W.P. (C) 12204/2021 2010-11 Event Date Date of ITAT order (remanding for re-adjudication) 02.04.2018 Expiry of Limitation [21 months from end of 31.03.2019 as per Section 153 (3) r.w.s 153 (4)] 31.12.2020 Date of TPO order in remand proceedings (Beyond Limitation) 31.01.2021 Date of Final Assessment Order in remand proceedings (Beyond Limitation) 29.09.2021 MICROSOFT INDIA (R&D) PRIVATE LIMIITED WP (C) 1009/2019 WP (C) 993/2019 WP (C) 688/2019 WP (C) 991/2019 WP (C) 995/2019 S.No. Particulars ....
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....31 of WP 25.12.2018 Annexure P-2 on pg. 30 of WP 8.2 Address to which demand notice u/s 156 has been sent in Round II of litigation F-40, NDSE-1, New Delhi 110049 Pg. 29 of WP F-40, NDSE-1, New Delhi 110049 Pg. 26 of WP F-40, NDSE-1, New Delhi 110049 Pg. 26 of WP 807, New Delhi House, Barakhamba Road, New Delhi-110001 Pg. 31 of WP F-40, NDSE-1, New Delhi 110049 Pg. 26 of WP 9.1 Date of Dispatch of order u/s 254/ 143 (3) of the Act to incorrect old address of Andrewganj by AO 22.12.2018 22.12.2018 30.12.2018 - 27.12.2018 9.2 Date of Dispatch of order u/s 254/ 143 (3) of the Act to correct address of Barakhamba Road by AO 01.01.2019 10 Date of Letter filed with AO requesting for true copy of the final assessment order. 07.01.2019 07.01.20 19 07.01.2019 - 07.01.2019 11 Date of receipt of final assessment order 07.01.2019 Para 18-19 pg. 16 of WP 07.01.2019 Para 18-19 on pg. 16 of WP 07.01.2019 Para 18-19 on pg. 16-17 of WP 07.01.2019 Para 19 on pg. 17 of WP 07.01.2019 Para 19 on pg. 16 of WP 12.1 Date of filing Writ Petition 23.01.2019 2....
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....2018, the same was made available to the assessee only on 07.01.2019. This fact has not been denied by Revenue dept. in their counter affidavit. Para 6 on pg. 3- final assessment order- Round II passed on 30.12.2018, however the same was neither dispatched nor received within the statutory time limit. This fact has not been denied by the Revenue Dept in their counter affidavit. Para 6 on pg. 2-3 - Though final assessment order- Round II was passed on 25.12.2018, the same was made available to the assessee only on 07.01.2019. Thisfact has not been denied by Revenue dept. in their counter affidavit. MICROSOFT INDIA (R&D) PRIVATE LIMIITED W.P. (C) 3377/2021 W.P. (C) 3472/2021 W.P. (C) 3444/2021 W.P. (C) 3389/2021 W.P. (C) 3539 of 2021 S.No. Particulars AY 2006-07 AY 2007-08 AY 2008-09 AY 2009-10 AY 2010-11 1 Original Assessment order 16.09.2010 Annexure P-4 on pg. 101 of WP 21.10.2011 Annexure P- 3 on pg. 37 of the WP 19.11.2012 Annexure P- 4 on pg. 210 of WP 28.02.2014 Annexure P-4 on pg. 113 of WP 27.02.2015 Annexure P-4 on pg. 160 of WP 2 Notice u/s 274 rws 271 of the Act issued by AO 16.....
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....n pg. 330-347 28.06.2019 Annexure P-11 on pg. 234 of WP 28.06.2019 Annexure P-13 on pg. 300 of WP 12 Notice u/s 263 of the Act issued by the AO 04.03.2021 Annexure P-1 on pg. 30 of WP 04.03.2021 Annexure P-1 on pg. 31 of WP 04.03.2021 Annexure P-1 on pg. 29 of WP 04.03.2021 Annexure P-1 on pg. 30 of WP 04.03.2021 Annexure P-1 on pg. 30 of WP 13 Date of filing of Writ Petition 10.03.2021 16.03.2021 15.03.2021 11.03.2021 16.03.2021 14 Grounds in Writ Petition filed by assessee Pg. 20-25 of WP Pg. 20-26 of WP Pg. 19-24 of WP Pg. 19-25 of WP Pg. 20-25 of WP 15 Date of filing of Counter Affidavit Counter Affidavit filed in AY 2010-11, adopted for this year. Counter Affidavit filed in AY 2010-11, adopted for this year. Counter Affidavit filed in AY 2010-11, adopted for this year. Counter Affidavit filed in AY 2010-11, adopted for this year. 20.05.2021 16 Date of filing of rejoinder Rejoinder filed in AY 2010-11, adopted for this year. Rejoinder filed in AY 2010-11, adopted for this year. Rejoinder filed in AY 2010-11, adopted for this year. Rejoinder filed in AY 2010-11, adopted fo....
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....at the said Circular was not in existence when the TPO passed the impugned orders for the respective assessment years i.e. assessment years 2007-08 to 2009-10, under consideration. However, he admitted while passing the orders u/s 92CA of the Act for the assessment year 2010-11 that TNMM is most appropriate method for determining the Ann's Length Price. We, therefore, deem it appropriate to set aside this issue relating to the assessment years 2007-08 to 2009-10 to the file of the TPO/ AO to decide as to what is the most appropriate method by considering the facts and the guidelines available in the form of circular. As regards to the issue relating to the comparables for which the information u/s 133(6) of the Act were obtained by the TPO and which were not confronted to the assessee, we are of the view that this issue also deserves to be set aside to the file of the TPO/ AO for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee. In the present case, it was also the common contention of both the parties that the corporate issues if involved in any of the aforesaid assessment years those should also be decided....
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....18-19 and in connection with which it submitted its Return of Income on 30 November 2018. During the course of examination of that return, a notice referable to Section 143(2) came to be issued on 22 September 2019. This was followed by an intimation under Section 143 (1) making aggregate disallowances of INR 113,88,283/-. This was assailed by Telstra before the Commissioner of Income Tax (Appeals) [CIT(A)] which ultimately allowed the challenge and deleted the disallowances. On 07 April and 28 July 2021, the petitioner was served with notices under Section 92CA intimating it of a reference having been made to the TPO. The TPO issued a show cause notice on 03 September 2021 apprising the writ petitioner of various adjustments which were proposed to be made. Since the additions proposed would have been binding on the AO in terms of Section 92CA (4), the petitioner chose not to make any further submissions. This led to a final order of assessment being passed on 18 September 2021. This was assailed by way of a writ petition before this Court. On 16 December 2021, interim orders came to be passed with it being provided that the assessment orders as well as consequential demand notices....
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.... 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 opinion of the majority o....
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....the notification: Provided that no direction shall be issued after the 31st day of March, [2024] (14D) Every notification issued under sub-section (14B) and sub-section (14C) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.] (15) For the purposes of this section,- (a) "Dispute Resolution Panel" means a collegium comprising of three [Principal Commissioners or] Commissioners of Income-tax constituted by the Board for this purpose; (b) "eligible assessee" means,- (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and [(ii) any non-resident not being a company, or any foreign company.] Time limit for completion of assessment, reassessment and recomputation. 153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: [Provided that in respect of an order of assessment....
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...., as the case may be] may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, or, as the case may be, the order under section 263 or section 264 is passed by the [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,]: [Provided that where the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be,] on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.] [(3A) Notwithstanding anything contained in sub-sections (1), (1A), (2) and (3), where an assessment or reassessment is pending on the date of initiation of search under secti....
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....ided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3).] [(5A) Where the Transfer Pricing Officer gives effect to an order or direction under section 263 by an order under section 92CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or recomputation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him.] (6) Nothing contained in sub-sections (1) [, (1-A)] and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of [sub-sections (3), (5) and (5-A....
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.... been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016).] Explanation 1.- For the purposes of this section, in computing the period of limitation- (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or (ii) the period during which the assessment proceeding is stayed by an order or injunction of any court; or (iii) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) [, under clause (i) of the first proviso] to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer; or (iv) the peri....
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....rmation is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the [Assessing Officer; or (xii) the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee,- ....
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....mitation under sections 149, [* * *] 154, 155 and 158BE and for the purposes of payment of interest under section 244A, this proviso shall also apply accordingly: [Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under sections 149, 154 and 155, and for the purposes of payment of interest under section 244A, the provisions of the fourth proviso shall apply accordingly.] Explanation 2.- For the purposes of this section, where, by an order referred to in clause (i) of sub-section (6),- (a) any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for anoth....
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....ection 92CA. For this class of assessees, it prescribes a collegium of three commissioners, once objections are preferred. The Dispute Resolution Panel's powers are coterminous with the Commissioner of Income-tax (Appeals), including the power to confirm, reduce or enhance the variation proposed and to consider the issues not agitated by the assessee in the objections. In fact, under section 144C, the Dispute Resolution Panel can issue directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment and the Dispute Resolution Panel can confirm, reduce or enhance the variations proposed in the draft order. It is specifically stipulated in section 144C that every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. This is akin to the Assessing Officer giving effect to an order passed by the appellate authority or the courts. 18. Consequently, section 144C envisages a change of forum and it leads to complete cessation of the jurisdiction of the Assessing Officer on passing of the draft order. Thereafter the Assessing Officer is to give effect to either the direction of the Dispute Resolu....
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....Act, at the highest, was a procedural irregularity and not an illegality. This issue is no longer res integra. It is now settled law that failure to adhere to the mandatory procedure prescribed under section 144C of the Act would vitiate the entire proceedings and the same cannot be treated as an irregularity/curable defect. 23. In ESPN Star Sports Mauritius S.N.C. ET Compagnie v. Union of India [2016] 388 ITR 383 (Delhi) this court, after discussing the judgments of the Andhra Pradesh High Court, High Court of Bombay as well as the Madras High Court in Vijay Television Pvt. Ltd. v. DRP [2014] 369 ITR 113 (Mad) has held that failure to pass a draft assessment order under section 144C (1) of the Act would render the final assessment order without jurisdiction, null and void and unenforceable. The said view was reiterated by this court in Turner International India Pvt. Ltd. v. Dy. CIT [2017] 398 ITR 177 (Delhi) W. P. (C) Nos. 4260 and 4261 of 2015 as well Nokia India Pvt. Ltd. v. Addl. CIT WP (C) No. 3629 of 2017. The relevant portion of the judgment in Turner International India Pvt. Ltd. (supra) is reproduced hereinbelow (page 180 of 398 ITR) : "The question whet....
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....efect. According to him the matter must be restored to the Assessing Officer to pass a draft assessment order and for the petitioner, thereafter, to pursue the matter before the Dispute Resolution Panel. The court is unable to accept the above submission. The legal position as explained in the above decisions is unambiguous. The failure by the Assessing Officer to adhere to the mandatory requirement of section 144C (1) of the Act and first pass a draft assessment order would result in invalidation of the final assessment order and the consequent demand notices and penalty proceedings." 17. The Court ultimately opined as follows: - "24. Consequently, in the present case, in complete contravention of section 144C, the Assessing Officer wrongfully assumed the jurisdiction and passed the final assessment order without passing a draft assessment order and without giving the respondent-assessee an opportunity to raise objections before the Dispute Resolution Panel. 25. Keeping in view the aforesaid, this court is of the opinion that no question of law, let alone a substantial question of law, arises in the present appeal. 26. This court is of the vi....
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....ment. Thus, the nub of the grievance of the appellant is that in remanding the matter back to the Assessing Officer, the High Court has not only extended the statutory period prescribed for completion of assessment, it has also conferred jurisdiction upon the Assessing Officer, which he otherwise lacked 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 Assessing Officer and by doing so, the statutory period prescribed for completion of the 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 ....
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....rigendum dated April 15, 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 September 27, 2013, the orders, which are impugned in these writ petitions are liable to be set aside. 34. Accordingly, the orders, which are impugned in these writ petitions are set aside and both the writ petitions are allowed. No costs. Consequently, connected miscellaneous petitions are closed." Commissioner of Income-tax v. C-Sam (India) Pvt. Ltd.: "5. Section 144C of the Act refers to the Dispute Resolution Panel. Sub-section (1) of section 144C provides that in case of an eligible assessee, the Assessing Officer shall notwithstanding anything to the contrary contained in the Act forward a draft of the proposed order of assessment to the 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 the assessee. Under sub-section (2....
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....ssing Officer. As per sub-section (13) of section 144C, the Assessing Officer is required to pass the order of assessment in terms of such directions without any further hearing being granted to the assessee. 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 Dispute Resolution Panel on any of the proposed variations. In addition to giving such opportunity to an assessee, decision of the Dispute Resolution Panel 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 Dispute Resolution Panel. Interestingly, once the Dispute Resolution Panel gives directions under su....
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....e Resolution Panel is binding on the Assessing Officer. Before issuing any directions, the Dispute Resolution Panel is required to give opportunity of hearing. After such directions are received from the Dispute Resolution Panel, the Assessing Officer proceeds to complete the assessment under section 144C(13) of the Act. If the Assessing Officer proceeds to complete the assessment pursuant to the directions issued by the panel under section 144C(13), he is not required to give further opportunity of hearing to the assessee. This is broadly the scheme of section 144C. xxxx xxxx xxxx 17. In the case of International Air Transport Association, the Division Bench of this court has held that the order passed by the Assessing Officer without there being any draft assessment order is illegal and without jurisdiction. The same view has been reiterated in the case of Zuari Cement Ltd. v. Asst. CIT W. P. (C) No. 5557 of 2012, dated February 21, 2013 (AP) by the Division Bench of the Andhra Pradesh High Court which also held that the failure to pass a draft assessment order under section 144C (1) of the Act would result in rendering the final assessment as one without jurisd....
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....would be prejudicial, it was obliged to forward a draft of the proposed order of assessment to the assessee concerned. 22. The assessee in terms of sub-section (2) was entitled to submit objections in respect of the proposed variations. In case such objections were filed, the assessee was required to forward the draft order along with those objections to the Deputy Commissioner in terms of Section 144B(4). That provision empowered the Deputy Commissioner to frame such directions as it thought fit for the guidance of the AO to enable it to complete the assessment. A direction issued by the Deputy Commissioner was made binding on the AO by virtue of sub-section (5) of Section 144B. 23. The appeal in Sarabjit Singh originally came to be placed before a Division Bench of the Court and which saw the learned Judges differing on whether a failure to comply with Section 144B(4) would amount to a procedural irregularity or would render the final order of assessment null and void. 24. B.N. Kirpal, J., expressed the view that non-compliance with that provision would be a mere irregularity and that any final order passed as a consequence thereof would not be a nullity. Mahinder Narain....
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....he records relating to the draft order, issue, in respect of the matters covered by the objections, such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment: Provided that no directions which are prejudicial to the assessee shall be issued under this sub-section before an opportunity is given to the assessee to be heard. (5) Every direction issued by the Deputy Commissioner under sub-section (4) shall be binding on the Assessing Officer...."" 27. While dealing with the issue of whether such a transgression would render the assessment illegal or be a mere irregularity, D. K. Jain, J. in Sarabjit Singh held as follows:- "18. It is well settled that a proceeding is a nullity when an authority taking it has no jurisdiction either because of want of pecuniary jurisdiction or of territorial jurisdiction or of jurisdiction over the subject-matter of the proceeding. A proceeding is a nullity when the authority taking it has no power to have seisin over the case (see Sant Baba Mohan Singh v. CIT, [1973] 90 ITR 197 (All). 19. In the present case, it is not the stand of the assessee nor can it be....
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....n the amended section 274 (2) as against the unamended condition of minimum imposable penalty exceeding Rs. 1,000, which he had validly acquired on a reference made by the Income-Tax Officer prior to April 1, 1971. The apex court observed that where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue in spite of the change of jurisdiction of the Tribunals or forums. It was, therefore, held that since a valid reference had been made to the Inspecting Assistant Commissioner before the amendment took effect, he continued to have jurisdiction to impose the penalty. As noticed above, the procedure prescribed under section 144B (forwarding of the draft assessment order with objections by the assessee to the Inspecting Assistant Commissioner), does not change the forum of assessment. Jurisdiction to pa....
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....ing Assistant Commissioner. He cannot vary or depart from the directions given by the Inspecting Assistant Commissioner. If the assessee's contention is accepted and if it is held that even after making such a reference, the assessee is entitled to file a revised return, it may mean redoing the entire exercise over again. It may also happen that as a result of such redoing, the reference already made to the Inspecting Assistant Commissioner may become unnecessary and has to be called back. The Act, however, does not provide for such a situation. 10. Sub-section (5) has to be construed and understood in the context of Section 139, indeed in the context of the entire enactment. It has to be construed and understood in a reasonable manner. Once the Income Tax Officer has done all that he has to do under the Act and makes a draft order and then refers to the Inspecting Assistant Commissioner as required by Section 144-B, permitting the assessee to file a revised return would involve duplication of work and multiplicity of proceedings. By saying so, we are not rendering sub-section (5) nugatory. All that it means is that the said right has to be exercised before the making ....
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....l irregularity. 34. It was then contended by the respondents that even if the Court were to come to the conclusion that the final orders of assessment would not sustain, it would be well within the realm of its jurisdiction to remand the matter to the AO for passing an order afresh. It was contended in this respect that it would be open for the Court to adopt the aforesaid process notwithstanding the ordinary time frames constructed by Section 153 being breached bearing in mind sub-section (6) thereof. It was submitted that no statutory prescription would preclude the Court from exercising its extraordinary powers so as to enable the AO to draw proceedings afresh and notwithstanding the prescription of limitation which applied. 35. To buttress the aforesaid contention, Mr. Agarwal drew our attention to the following observations as rendered by the Supreme Court in Grindlays Bank Limited v. Income Tax Officer, Calcutta and Others (1980) 2 SCC 191:- "7. The next point is whether the High Court possessed any power to make the order directing a fresh assessment. The principal relief sought in the writ petition was the quashing of the notice under Section 142 (1) of the I....
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.... have been open to him to urge that the notice was unreasonable and invalid and he was prevented by sufficient cause from complying with it and therefore the assessment order should be cancelled. In that event, the fresh assessment made under Section 146 would not be fettered by the bar of limitation. Section 153 (3) (i) removes the bar. But the appellant preferred the constitutional jurisdiction of the High Court under Article 226. If no order was made by the High Court directing a fresh assessment, he could contend as is the contention now before us, that a fresh assessment proceeding is barred by limitation. That is an advantage which the appellant seeks to derive by the mere circumstance of his filing a writ petition. It will be noted that the defect complained of by the appellant in the notice was a procedural lapse at best and one that could be readily corrected by serving an appropriate notice. It was not a defect affecting the fundamental jurisdiction of the Income Tax Officer to make the assessment. In our opinion, the High Court was plainly right in making the direction which it did. The observations of this Court in Director of Inspection of Income Tax (Investigation) Ne....
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....ional check and an oversight mechanism in respect of variations or additions which were proposed by the AO in a draft order of assessment. It thus required the AO to forward the record pertaining to a proposed variation or addition along with any objections preferred by the assessee to the Deputy Commissioner. It was the proposed additions or variations which consequently fell for scrutiny of the Deputy Commissioner in light of the objections preferred by the assessee. 37. The power of the Deputy Commissioner was, despite being binding upon the AO, principally contemplated to be a check upon the adjudicatory function assigned to the AO. The power of the Deputy Commissioner was quasi-judicial provided it be proposed to be exercised prejudicial to the interest of the assessee. The power of that authority was thus essentially confined to an examination of the tentative decision of the AO to vary the return or propose additions. The power of the Deputy Commissioner was neither co-terminus nor intended to be co-equal to that of the AO. The Deputy Commissioner was essentially contemplated to exercise a power of review, supervise and aid the process of assessment. 38. In contrast to....
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....rate and distinct regime of assessment which would, hypothetically speaking, constitute an amalgam of decisions taken by the TPO and the AO. 42. Undisputedly, the adjudication rendered in the context of Arm's Length Pricing by the TPO binds the AO in terms of Section 92CA. The view that the AO may take with respect to aspects other than an international transaction constitute a separate and independent exercise. Since the ultimate assessment made under Section 144C is a fusion of two views, comprising of decisions taken by two separate authorities and is a composite blend and merger, it clearly stands on a pedestal distinct and distinguishable from Section 144B. 43. That Section 144C constitutes a distinct and special assessment mechanism cannot possibly be disputed. It is multi-tiered and comprises of various in-built corrective and revisory components which work together to forge an ultimate order of assessment recognised under the Act. This in light of the view taken by the AO being recognised to be a draft which is subject to challenge, the view of the TPO being binding upon the AO and the directions of the DRP compelling the AO to frame an order of assessment in terms th....
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....ommissioner were inclined to reject the objections preferred by the assessee. We thus find ourselves unable to construe the Proviso as empowering the Deputy Commissioner to enhance the proposed variation. This too is a facet which carves out a distinction between Sections 144B and 144C. 49. Regard must also be had to Section 144A and which independently empowers the superior authority to intervene and guide ongoing assessments. This, as Mr. Vohra rightly argued, was a power which always inhered in the supervising authority and existed alongside Section 144B as it stood at the relevant time. The guidance of the Deputy Commissioner, which was spoken on in Section 144B, as noticed hereinabove, though binding on the AO, was more in the nature of an internal safeguard created by the statute as opposed to the challenge and corrective procedure constructed by Section 144C. 50. We thus find ourselves to construe or countenance Sections 144B and 144C as being pari materia or similar. Sarabjit Singh, thus not only fails to sustain the contentions which were addressed, it also leaves us unconvinced to doubt the correctness of the unfluctuating position which precedents have taken with r....
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....or the respondents fairly conceded that the said period is no longer available today and has come to an end by efflux of time. It was in the aforesaid light that Mr. Agarwal sought to draw sustenance from sub-section (6) of Section 153 to contend that the same would enable the AO to carry out an assessment by virtue of the "finding or direction contained in.....an order or direction of any court...". 55. We find ourselves unable to sustain that submission since Section 153(6) essentially seeks to override and overcome the statutory prescription of limitation created by sub-sections (1), (1A) and (2) thereof. This is evident from the section itself proclaiming that nothing contained in those sub-sections would apply to the classes of assessments specified therein. That power is further cabined with sub-section (6) stipulating that the invocation of that provision would be subject to the provisions of sub-sections (3), (5) and (5A). The provision on a plain reading thus neither lifts the period of limitation prescribed by sub-sections (3) and (4) nor does it extend the period which would otherwise be available to the AO to conclude the assessment. 56. More fundamentally, a dire....
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.... on other issues should lead to the decision of the suit itself. That is to say, the finding shall be one which is necessary for the disposal of the suit. The scope of the meaning of the expression "finding" is considered by a Division Bench of the Allahabad High Court in Pt. Hazari Lal v. Income-tax Officer, Kanpur. There, the learned Judges pointed out: "The word "finding', interpreted in the sense indicated by us above, will only cover material questions which arise in a particular case for decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the, final decision in the appeal, has been the subject of controversy between the interested parties or on which the parties concerned have been given a hearing." We agree with this definition of "finding". But a Full Bench of the same High Court in Lakshman Prakash v. CIT construed the word "finding" in a rather comprehensive way. Desai, C.J., speaking for the Court, observed: "A finding is nothing but what one finds or decides and a decision on a question even though not absolutely necessary or not called for is a finding." If that be....
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....as the expression "direction" can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is, empowered to give under the sections mentioned therein. The words "in consequence of or to give effect to" do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to the scope of the findings and directions." 57. As is manifest from the above, a finding was explained to mean a conclusion arrived at on a material question necessary for the disposal of a cause laid before an appellate authority and essential for according relief in an assessment year. A direction was defined as one which the appellate authority was empowered to issue under the Act. 58. However, a direction in terms as suggested by the respondents would clearly not fall within either of those two expressions since what we are essentially invited to do is to extend the period of limi....