TaxTMI 
TaxTMI 
2025 (12) TMI 1895
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....n; (c) pass such other or further orders as this Hon'ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity." 2. Heard learned Senior Counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that for the assessment year 2020-21, the petitioner has filed its return of income declaring a total income of Rs.2,97,02,48,150/- and tax liability of Rs.73,87,00,259/-. During the course of assessment proceedings, a reference came to be made to the Transfer Pricing Officer (TPO) on 24.07.2023 for determination of the arm's length price of the international transactions entered into by the petitioner. The TPO passed an order holding that no adjustment was required to be made. Despite there being no variation proposed by the TPO and the petitioner not being an eligible assessee in terms of Section 144C(15)(b) of the Income Tax Act, 1961, the 1st respondent proceeded to pass a draft assessment order dated 29.09.2023 at Annexure-B contrary to the provisions of the Act on the erroneous premise that the petitioner was a 'eligible a....
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....ting that the international transactions entered into by the Petitioner with its Associated Enterprises were at an Arms Length Price. In other words, the TPO made no variation. According to the Petitioner, by virtue of the definition of the words "eligible assessee" appearing in Section 144C(15), the Petitioner could never fall within the aforesaid definition because the TPO never made any variation. Since no variation was made, there was no occasion for the Assessing Officer to pass any Draft Assessment Order and thereafter serve it upon the Petitioner. In other words, the Assessing Officer ought to have passed his Assessment Order under Section 143 (3) without invoking the provisions of Section 144C of the I. T. Act. 4. On the other hand, in the affidavit in reply dated 14th August 2025 filed by the Revenue, it is contention of the Revenue that it is totally incorrect to submit that the Draft Assessment Order as well as the Final Assessment Order passed under the provisions of Section 144C read with Section 143 (3) are without jurisdiction. Though the Revenue admits that the TPO did not propose any variation, it contends that this would not mean that the Assessing Office....
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....er is not a non-resident or a foreign company as contemplated under Section 144C (15) (b)(ii). The question is whether the Petitioner would fall within the definition of "eligible assessee" as contemplated under Section 144C (15) (b) (i). On a plain reading of the said provision, the Petitioner can be stated to be an "eligible assessee" only if there is a case of variation referred to in the said sub-section 1 and which arises as a consequence of the order passed by the TPO under sub-section 3 of Section 92CA. In the facts of the present case, it is an admitted position that there was no variation in the income of the Petitioner by virtue of the order of the TPO. That being the position, the Petitioner cannot be stated to be an "eligible assessee" as defined in clause (b) of sub-section 15 of Section 144C of the I. T. Act. Once this is the case, the entire procedure for issuance of a draft order calling for the Petitioner's objections thereon and taking further steps as laid down under Section 144C would, therefore, not apply. 7. We are unable to agree with the contention of the Revenue that the word "variation" appearing in Section 144C(1) and 144C(15) would also include ....
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....b-section arises as a consequence of order of Transfer Pricing Officer passed under sub-section (3) of section 92CA. We have been taken through the order passed by the Assistant Commissioner of Income-tax dated 29-9-2010, wherein it is held as under: "3. The assessee is engaged in the business of manufacture of Aluminium Profiles. The details of international transactions in terms of section 92B of the Act between the assessee and its Associate Enterprise are given in Form 3CEB. Relevant details regarding international transactions were produced by the assessee and are kept on record. After discussion and based on records produced, no adjustment is being made to the arm's length price of the transactions." (Emphasis supplied) 8. From the above, it is clear that for assessment year relevant for our purpose, on account of procedure undertaken in section 92CA of the Act, there was no variation in the income by virtue of order of Transfer Pricing Officer. That being the position, the petitioner cannot be stated to be an eligible assessee as defined in clause (b) of sub-section (15) of section 144C of the Act. Procedure for issuance of draft order calling for hi....
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....led by the petitioner. In view of the which, neither of the two conditions are satisfied in the case of the petitioner and thus the petitioner for the purposes of Section 144C(15)(b) is not an "eligible assessee". Since the petitioner is not an eligible assessee in terms of Section 144C(15)(b), no draft order can be passed in the case of the petitioner under Section 144C(1). *********** 14. In view of the above, it is clear that the petitioner, not being an "eligible assessee" in terms of Section 144C(15)(b) of the Act, the Assessing Officer was not competent to pass the draft assessment order under Section 144C(1) of the Act. The draft assessment order dated 31.03.2015 is accordingly quashed." (emphasis supplied) 10. In view of the above discussion, it is clear that the Petitioner in the present case, not being an "eligible assessee" in terms of Section 144C15(b) of the I. T. Act, the Assessing Officer was not competent to pass the Draft Assessment Order under Section 144C(1) of the I. T. Act. Consequently, there was no occasion for him to thereafter pass a Final Assessment Order under Section 143 (3) read with Section 144C (3) read with Section 144B of the....