TaxTMI 
TaxTMI 
2025 (8) TMI 1716
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....mpanies as well as consulting services to its clients. For the assessment year under dispute, the assessee filed its return of income on 30.11.2017, declaring income of Rs.23,23,62,35,620/-. Subsequently, on 29.03.2019, the assessee filed a revised return of income, declaring income of Rs.23,23,62,35,620/-, after revising certain claims. The return of income so filed by the assessee was picked up for scrutiny. In course of assessment proceeding, the A.O. having found that the assessee has entered into international transactions with its overseas Associated Enterprises (AE) made a reference to the Transfer Pricing Officer ('TPO' for short) to determine the ALP of the international transaction. Be that as it may, the A.O., ultimately, framed a draft assessment order on 22.09.2021, determining the total income at Rs.32,92,97,81,572/-. 3. Against the draft assessment order, the assessee raised objections before ld. Dispute Resolution Panel ('ld. DRP' for short). 4. After considering the submissions of the assessee, ld. DRP disposed of the objections vide directions dated 07.06.2022. In terms with the directions of ld. DRP, the A.O. finalized the assessment vide order date....
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.... relied upon. Factual position relating to the issue in dispute are undisputed. As observed elsewhere in the order, the short issue arising for consideration is, whether ld. PCIT can validly assume jurisdiction u/s. 263 of the Act to revise an assessment order passed in pursuance to the directions of the DRP. Pertinently, section 144C of the Act providing the alternate dispute resolution mechanism by way of reference to ld. DRP was incorporated in the Act by Finance (No. 2) Act, 2009 with retrospective effect from 01.04.2009. Undisputedly, not only the present assessment year is covered u/s. 144C of the Act, but the assessee has subjected itself to such procedure. Now, it is well established that section 144C is a self-contained code and provides the mechanism of not only the procedure of assessment in case of an eligible assessee, but also the remedy available to the assessee against the assessment framed u/s. 144C of the Act. Section 144C of the Act gives an option to the assessee to either approach the Commissioner (Appeals) or the ld. DRP against an assessment order. Once the assessee approaches ld. DRP, in terms with section 144C(2)(b) of the Act, ld. DRP in terms with section....
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....53(d). Now, the issue to be addressed in this case is whether, the Ld.CIT has erred in initiating proceedings u/s. 263 of the Act, when the original assessment order has been passed u/s. 143(3) r.w.s. 144C(13), on the basis of the directions of the Dispute Resolution Panel(DRP). 15. We may gainfully refer to the provision of section 263 in this regard. "263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.--For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,-- (a) an order passed [ on or before or after the 1st day of June, 1988] by the Assessing Officer....
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.... not properly followed the direction u/s. 144A. But, he is quiet silent and has nowhere mentioned that the final assessment order is passed after the direction of DRP. Admittedly, this is not a case, where draft assessment order is being revised. This is a case where final assessment order passed pursuant to the direction of DRP u/s. 144(3) is being revised by Ld.CIT. Ld. Counsel of the assessee in this regard submits that from the Finance Act, 2009, memorandum explaining the rationale behind the insertion of section 144C of the Act by the Finance Bill, 2009 as also the CBDT Circular No. 5 of 2010 dated 3 June 2010 issued explaining the said insertion, the notes on clauses, etc., it can be seen that consequential amendments have been made to various provisions of the Act as a result of insertion of section 144C in the Act. Such consequential amendments have been made to section 13 1, section 246A and section 253 of the Act. That however, no amendment is made in section 263 of the Act as a consequence of insertion of section 144C of the Act to deem such orders being capable of being revised. That therefore, the memorandum, circular, etc. support the Assessee's stand that once th....
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....ing 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. [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....
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....s, modifications and adaptations as may be specified in the notifications. Provided that no direction shall be issued after the 31st day of March, 2022 (14D) Every notification issued under sub-section(14B) and sub-section (14C) shall, as soon as may be after the notification 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 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.] 18. A reading of the said section brings to the fore following:- The assessee has option to go to the DRP by filing objection before it. As per the provisions of section 144C(5) of the Act, the Dispute Resolution Panel (DRP) shall in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the ....
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....d.CIT to the AO to call for the details of allowability of various deductions claimed by the assessee, in light of the observations discussed by him is quiet contrary to the sanguine provisions of law. Even otherwise, the order passed by the Ld.CIT is an exercise in futility inasmuch as, if the AO proceeds to pass an order by giving the assessee an opportunity of being heard, the same will be against the mandate of section 144C(13). Furthermore, it is also settled law that in assessment u/s. 144C, AO has to invariably pass a draft assessment order and give the same to the assessee for filing objection before DRP. Hence, the direction by the Ld.CIT to the AO to pass an order by-passing the provisions of passing the draft assessment order is also not sustainable in law. 20. Now, we examine the constitution of DRP. As evident from the above, the DRP constitutes a collegium comprising of three Principal Commissioners or Commissioners of Income-tax, the directions given by them is binding upon by the AO. Hon'ble Bombay High Court in the case of Vodafone India Services Pvt.Ltd. vs Union of India & Others 2013 SCC online Bom 1534 has expounded upon the proceedings at DRP as u....
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.... the subsequent CIT under section 263. 24. In light of the above discussion and case laws, the case laws referred by the Ld.CIT-DR are not applicable on the facts of the case. As, we have already noted that the submission of Ld.CIT-DR are at variance with the exposition by Hon'ble Bombay High Court in Vodafone India Services Pvt.Ltd.(supra). The Ld.CIT-DR in his submission has emphasized that proceeding before DRP is akin to appeal before Ld.CIT(A). This is quiet contrary to the Hon'ble Bombay High Court exposition noted above and the other decisions of Hon'ble Jurisdictional High court referred above. 25. The case of Devas Multimedia Pvt.Ltd.(supra) by the Hon'ble Karnataka High Court was in connection with the writ petition filed by the assessee, where assessee has objected to the notice issued u/s. 263 of the Act. Furthermore, Hon'ble High Court has expounded that writ court cannot examine the validity of notice on merits. Furthermore, the said decision has distinguished following decision of Hon'ble Bombay High Court, i) Vodafone Services Pvt.Ld.(supra) wherein Hon'ble Bombay Court has expounded that proceedings before the DRP is no....