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2021 (9) TMI 709 - HC - Income TaxRevision u/s 263 - final assessment order made pursuant to directions of DRP u/s 144C read with Section 143(3) - whether the draft assessment order communicated to assessee u/s 144C of the Act is an order amenable to revision u/s 263? - HELD THAT:- It is well established by a series of decisions that the fulcrum on which the power u/s 263 is exercised, rests on the orders made under the Act, being erroneous and the orders prejudicial to the interest of the Revenue. Let us juxtapose the scheme u/s 144C of the Act with an order being erroneous and prejudicial to the interest of Revenue, and deliberation of scheme in this behalf, we observe that, whether the draft assessment order is erroneous or not is examined by DRP and the element of prejudice insofar as the Revenue is concerned does not arise visa- vis the draft assessment inasmuch as no demand could be raised on the draft assessment order proposed by the AO and objected to by the assessee. As taken note of the requirement of prejudice considered by the Tribunal in the decisions referred to above. The circumstances in the said orders are slightly different. For the purpose of appreciating that the order is erroneous insofar as it is prejudicial to the interest of Revenue is sine qua non for taking recourse to the power under Section 263. The appellant had reasons to believe that a few matters required reconsideration by the Assessing Officer, the remedy is not by interdicting a draft assessment order proposed in Annexure-B, but a different mechanism is available as per the scheme of the Act. Tribunal noticed that from the scheme of the Act the draft assessment order is only a proposed assessment order and there is no demand notice attached to the draft assessment order. In cases covered by Section 144C of the Act, the assessment order comes into picture only after an assessment order is passed pursuant to draft assessment order or in compliance with the directions of the DRP. Draft assessment order by itself cannot levy tax on the assessee. There is no question of loss of revenue in the draft assessment order. It is further held that Section 263 has no application for revising the draft assessment order proposed by the AO. Also the scheme of the Act and the view of the Tribunal are similar, namely that invocation of power under Section 263 of the Act to interdict a draft assessment order proposed by the Assessing Officer is unavailable to Principal Commissioner of Income Tax. We hasten to add, for, at that stage, the condition required for invoking Section 263, namely the order being erroneous insofar as it is prejudicial to the interest of Revenue, does not arise. Hence the reasons are in accordance with the scheme of the Act envisaged on one hand by Section 144C and on another by Section 263. Decided in favour of the assessee.
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