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2014 (9) TMI 127 - ITAT MUMBAIPower of DRP to delegate its power to the AO - Taxability of income from contract business in India – Violation of section 144C(8) – Held that:- The maxim of delegatus non potest delegare would be squarely applicable, which envisages that when a power has been conferred upon a person, then he must exercise that power alone, unless expressly empowered to delegate it to another - when the statute prescribes a particular body or authority to exercise power, then it must be exercised by that body or authority alone - The provisions of statute, as contained in sub-section (8) of section 144C, clearly prohibits the DRP to delegate its power to the AO i.e., to set aside the variation or issue any direction to carry out any further enquiry by the AO - there is a clear cut violation of section 144C(8) by the DRP- there is a further violation by the AO in the final assessment order, as he went step further in interpreting the direction of the DRP, by carrying out further enquiry and recording the statement of project manager, Shri K.G. Ramesh - right from the stage of issuance of the direction by the DRP to the stage of passing of the final assessment order, there has been a gross violation of statutory provisions and the powers given therein - the DRP is a quasi-judicial authority and, therefore, while dealing with the lis it is obliged to ascribe cogent and germane reasons as to why the assessee's objections are not maintainable and there should be absolutely clarity on the directions to the AO, because the law does not envisage for providing further opportunity to the assessee at the stage of passing of final assessment order - the order / direction of the DRP, as a whole, is not in consonance with sub-sec. (5) r/w sub-sec. (8) of section 144C. If an authority has not carried out the function or exercised power, as provided in the statute or it has transgressed the statutory power, then it amounts to gross irregularity of exercising of power and such an irregularity is not fatal, so as to declare the entire proceedings as null and void resulting into quashing of the entire order - A distinction has to be made between illegal assumption of jurisdiction provided in the statute and irregular exercise of statutory power - If a jurisdiction is to be assumed under a statute by a particular authority to act or to initiate action or there is an issue of limitation within which certain action is to be taken or an order is to be passed, then any violation of such a statutory provisions or assumption of jurisdiction or taking any action after the period of limitation, is an illegal exercise of statutory function or provision, which cannot be obliterated or cured and such an action has to be quashed at the threshold. Insofar as the issue of P.E. is concerned, they have expressed their opinion, however, they have ultimately left to the AO to decide the issue after taking into consideration various evidences filed by the assessee - instead of deciding or clearly adjudicating the issue, the matter has been delegated to the AO which should not have been done – relying upon M/s. Vodafone India Service Pvt. Ltd. (formerly known as 3 Global Services Pvt. Ltd.) Versus Union of India, Ministry of Finance, Addl. Commissioner of Income-tax, Asst. Commissioner of Income-tax [2013 (9) TMI 680 - BOMBAY HIGH COURT] - the TPO's lack of jurisdiction to proceed with the issue which were not in the realm of international transaction as per objections of the assessee, would not render the entire proceedings as void – thus, the matter is to be remitted back to the DRP for consideration – Decided in favour of assessee.
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