TaxTMI 
TaxTMI 
2024 (1) TMI 1314
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....No. 395/Del/2015 (in ITA No. 4652/Del/2015), CO No. 396/Del/2015 (in ITA No. 4653/Del/2015), ITA No. 5396/Del/2015, CO No. 388/Del/2015 (in ITA No. 5396/Del/2015) SH. SAKTIJIT DEY, VICE PRESIDENT AND DR. B. R. R. KUMAR, ACCOUNTANT MEMBER For the Assessees : Sh. Amit Goel, CA, Pranav Yadav, Adv., Sh. Nippun Mittal, CA & Ms. Anjali Jain, Adv. For the Revenue : Sh. Vizay B. Vasanta, CIT-DR & Sh. Sanjay Kumar, Sr. DR ORDER PER BENCH: The present appeals by the Revenue and the Cross Objections by the assessee have been filed against the orders of ld. CIT(A)-XXVII, New Delhi. 2. The common grounds raised in ITA Nos. 3128, 3131 to 3133, 3356 & 3357, 3349 to 3352, 4650 to 4653 & 5396/Del/2015. In ITA No. 3349/Del/2015, following grounds have been raised by the Revenue: "1. The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in holding that there is substantial force in the submission made by the appellant on the issue of initiating proceedings u/s 153C of Income Tax Act. 2. The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in holding that assessee company is not resident in terms of provisi....
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....ase, the proceedings initiated by learned A.O. under Section 153C are bad in law and against the statutory provisions. 3.(ii) That without prejudice to the above and in the alternative, the learned A.O. has erred in initiating proceeding under section 153C of the Act for the assessment year under consideration as the proceedings initiated and the consequent assessment is barred by limitation. 4. On the facts and circumstances of the case, the learned A.O. has erred, both on facts and in law in passing the assessment order straightaway while ignoring the statutory provisions of Section 144C of the Act, in terms of which, the learned A.O. ought to have passed a draft assessment order in the case of an eligible company, i.e. a foreign company. 5. That the assessment framed without issuance of statutory notice under Section 143(2) of the Act after filing of the return is bad in law and therefore, liable to be quashed." 4. Heard the arguments of both the parties and perused the material available on record. 5. The COs pertaining to A.Y. 2008-09, A.Y. 2009-10, A.Y. 2010-11, and A.Y. 2011-12 are being dealt together. 6. At the outset, the ld. AR preferr....
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....n 'eligible assessee', the procedure prescribed u/s 144C(1) of the Act is applicable and the Assessing Officer should forward a draft of the proposed order of the assessment to the eligible assessee if the Assessing Officer proposes to make any variation which is prejudicial to the interest of such assessee. The said provisions of Section 144C(1) of the Income Tax Act, 1961 are as under: "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." 12. It was brought to our notice that instead of following the mandatory procedure laid down u/s 144C(1) of the Income Tax Act, 1961, the Assessing Officer has completed the assessment u/s 153C without forwarding any draft of the proposed order of assessment to the assessee, which is in divergence to the procedure laid down in the Act. In this case, the Assessment Or....
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.... (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused 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. (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 of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No di....
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....icer passed under sub-Section (3) of Section 92CA of the Act. Explanatory Note to Finance (No. 2) Act: CBDT Circulars: 17. We have gone through the Circular No. 5/2010 dated 03.06.2010 which reads as under: "45. Provision for constitution of alternate dispute resolution mechanism 45.1 The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained after long drawn litigation till Supreme Court. In order to address the concern of the multinational companies and to provide mechanism for speedy disposal of their cases so as to attain finality, a new section 144C is inserted in the Income-tax Act to facilitate expeditious resolution of disputes. 45.2 The salient features of the alternate dispute resolution mechanism are as under:- (1) The Assessing Officer shall, forward a draft of the proposed order of assessment (hereinafter 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, th....
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....e point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to their interest. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete the assessment without giving any further opportunity of being heard, within one month from the end of the month in which the direction is received notwithstanding anything to the contrary contained in section 153. (14) The Board may make rules for the efficient functioning of the Dispute Resolution Panel with a view to expeditiously dispose of the objections filed, under sub-section(2), by the eligible assessee. (15) For the purposes of this section....
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....Panel Rules have been notified by S.O. No. 2958(E) dated 20th November, 2009." 18. Further, we have gone through the Circular No. 9/2013 dated 19.11.2013 where by the AO is required to forward a draft Assessment Order to the 'eligible assessee' if it is proposed to make any variation to the returned income after 1st October 2009. The said Circular of CBDT is as under: Circular No. 09/2013 File No. 142/20/2013-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated, the 19th November, 2013 Sub: Clarification in respect of Circular No. 5/2010 - F. No. 142/13/2010 - SO (TPL) dated 03.06.2010- regarding. Section 144C, providing for reference to Dispute Resolution Panel (DRP), was inserted in the Income-tax Act, 1961 by Finance (No.2) Act, 2009. Subsection (1) of section 144C reads as under: "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 (hereinafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1....
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....e through jurisprudence on the issue of non-forwarding of the draft Assessment Order and consequence thereof as per Section 144C(1) of the Act and. On this issue, the Hon'ble High Court of Gujarat in the case of CIT Vs. C-Sam (India) Pvt. Ltd. (84 taxmann.com 261) held as under: "6. These statutory provisions make & abundantly clear that the procedure laid down under Section 144C of the Act is of great importance and is mandatory Before the Assessing Officer can make variations in the returned income of an eligible assessee, as noted, sub-section (1) of Section 144C lays down the procedure to be followed notwithstanding anything to the contrary contained in the Act. This non-obstante clause thus gives an overriding effect to the procedure notwithstanding anything to the contrary contained in the Act. Sub-section (5) of Section 144C empowers the DRP to issue directions to the Assessing Officer to enable him to complete the assessment. Sub-section (10) of Section 1440 makes such directions binding on the Assessing 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....
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....rder which is being passed after 01.10.2009 irrespective of the concerned assessment year. The latter circular was thus merely in the nature of a clarificatory circular and clarified which all along was the correct position in law. Sub-section (1) of Section 144C itself in no uncertain terms provides that the Assessing Officer shall forward a draft order to the eligible assessee, if he proposes to make any variation in the income or loss which is prejudicial to the interest of the assessee on or after 01 st day of October 2009. The statute was thus clear, permitted no ambiguity and required the procedure to be followed in case of any variation which the Assessing Officer proposed to make after 01.10.2009. The earlier circular dated 03.06.2010 did not lay down the correct criteria in this regard. The assessee cannot be made to suffer on account of any inadvertent error which runs contrary to the statutory provisions. No question of law arises. Tax appeal is therefore dismissed." 15. As has been observed by Hon'ble Gujarat High Court, the provision contained under Section 144C (1) of the Act is very much clear and permits no ambiguity. Therefore, the Circulars issued by the ....
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....d. 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 Indi [2016] 388 ITR 383 (Del.), following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra), the Madras High Court in Vijay Television (P) Ltd. v. Dispute Resolution Panel, Chennai (supra) as well as the Bombay High Court in International Air Transport Association v. DCIT (2016) 290 CTR (Bom) 46, came to the same conclusion. 15. Mr. Dileep Shivpuri, learned counsel for the Revenue sought to contend that the failure to adhere to the mandatory requirement of issuing a draft assessment order under Section 144C (1) of the Act would, at best, be a curable defect. According to him the matter must be restored to the AO to pass a draft assessment order and for the Petitioner, thereafter, to pursue the matter before the DRP. 16. The Court is unable to....