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2021 (2) TMI 186 - HC - Income TaxValidity of TP order - AO ought to have passed an order of draft assessment in terms of Section 144C of the Act and not an order of regular assessment quantifying the final demand and imposing penalty - HELD THAT:- The error committed is not a technical lapse as sought to be explained away, but one that is substantive. It is an admitted position that the assessment of this petitioner involves issues of transfer pricing and an order has been passed by the Transfer Pricing Officer determining the arms length price. The scheme of assessment in terms of Section 144C statutorily requires the officer to pass a draft assessment order at the first instance and put the same to the assessee for its acceptance or for filing of objections before the Dispute Resolution Panel. The language of Section 144 C makes this position more than abundantly clear. As draw support in this regard from a decision of this Court in VIJAY TELEVISION (P.) LTD. [2014 (6) TMI 540 - MADRAS HIGH COURT]confirmed by the Division Bench [2018 (10) TMI 1125 - MADRAS HIGH COURT]that reiterates the settled proposition that Section 144C sets forth a mandatory scheme of assessment and it is incumbent upon the Assessing Officer to pass an order of draft assessment at the first instance before proceeding to finalise the assessment in line with the procedure set out under Section 144C. The impugned order has been passed ‘inadvertently’ by choosing of the wrong field in the Income Tax Department software would not just be an over-simplification, but a wrong statement since a perusal of the order of assessment reveals that the assessment has been styled consciously, as an order of regular assessment only. A draft order of assessment would normally indicate, in conclusion, that the assessee has the option of either acquiescing with the proposed assessment or proceeding to file objections to the same within 30 days. This statement is conspicuously absent in the present order. Thus no hesitation in quashing the impugned order and consequential demand. The Writ Petition is allowed.
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