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2015 (6) TMI 174 - ITAT MUMBAI

2015 (6) TMI 174 - ITAT MUMBAI - TMI - Validity of the assessment u/sec. 153 - Held that:- it is not the case of the department that the demand raised in the assessment order dated 12-03-2014 was withdrawn by the AO at the time of issuing Corrigendum dated 16-04- 2015. Further, the Corrigendum itself was issued by the AO after the expiry of time limit prescribed under third proviso to sec. 153(2A) of the Act. As per the decision of Hon’ble Madras High Court rendered in the case of Vijay Televisi .....

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impugned order is the one without jurisdiction, null and void and unenforceable. Accordingly we set aside the impugned assessment order.- Decided in favour of assessee. - I.T.A. No.1041/Mum/2015, ITA No.1278/Mum/2015 - Dated:- 29-5-2015 - S/SHRI VIJAY PAL RAO AND B.R.BASKARAN, JJ. For the Appellant : Shri Ajit Kumar Jain For the Respondent : Shri N R Chand ORDER PER B.R.BASKARAN (AM) These cross appeals have been filed by the parties challenging the order dated 09-01-2015 passed by the assessin .....

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preliminary issue. 3. The assessee company is engaged in the business of Design, Development and export of computer software, software solutions and providing information technology enabled services and related services. The assessment of the year under consideration was originally completed on 17.10.2011 u/s 144C(13) r.w.s. 143(3) of the Act by making various additions. When the assessee challenged the assessment order by filing appeal before the ITAT, the Tribunal set aside all the matters to .....

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and except to submit that AO has to pass order in conformity with the adjustments proposed by TPO and referred to Sec. 92C(4) of I.T. Act. However, Ld DR conceded that DRP in its order has not given any reasons in respect of objections filed by assessee on TPO s order proposing ALP adjustments to be made. Therefore, we are of the considered view that order passed by DRP u/s 144C of the Act is not a speaking order in conformity with principles of natural justice and provisions of I.T. Act. 9. In .....

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ing officer passed the assessment order on 12-03-2014 by following the observations made by the DRP in the original assessment proceedings. However, subsequently on 16.04.2014, the assessing officer issued following Corrigendum against the assessment order passed on 12.03.2014:- In the order passed u/s 143(3) r.w.s. 254 of the I.T Act, 1961 (Proviso 4 to sec. 153(2A) of the Act dated 12/03/2014 in the case of M/s Lionbridge Technologies Pvt Ltd A.Y 2007-08, the section under which the assessment .....

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, thereafter passed the assessment order dated 09-01-2015 u/s 143(3) r.w.s. 144C(13) r.w.s. 254 of the Income tax Act, 1961 (proviso 4 to sec. 153(2A) of the Act). 5. The assessee has filed the present appeal challenging the assessment order dated 09-01-2015, referred above. 6. The Ld Counsel appearing for the assessee submitted that the provisions of sec. 144C(1) of the Act mandates that the AO shall, in the first instance, forward a draft of the proposed order of assessment to the eligible ass .....

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3-2014 and also issued penalty notice u/s 271(1)(c) of the Act, which clearly bring out the intention of the assessing officer that he has intended the assessment order dated 12-03-2014 to be the final order only. Further the AO himself has observed in the assessment order that the time limit for completion of assessment proceedings got extended up to 31-03-2014 by virtue of third proviso to Sec. 153(2A) of the Income tax Act. Accordingly he submitted that the corrigendum issued on 16-04-2014 wi .....

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Vijay Television Private Limited Vs. DRP (2014)(46 Taxmann 100)(Mad) (c) Capsugel Healthcare Limited Vs. ACIT (ITA No.1356 and 1371/Del/12) 7. On the contrary, the Ld D.R submitted that the assessee has filed the present appeal challenging the assessment order dated 09.01.2015 passed by the assessing officer pursuant to the directions issued by the DRP. He further submitted that the assessee did not raise this legal objection before the DRP and it is being raised for the first time before the T .....

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V.Mr.P. Firm, (1965)(56 ITR 67). Accordingly he submitted that merely because the AO omitted to name the order dated 12-03-2014 as Draft assessment order , the same shall not become final assessment order. The Ld D.R submitted that the provisions of sec. 144C(1) of the Act mandates the assessing officer to pass initially draft assessment order only and hence the AO cannot ignore the said mandate. Hence the assessment order dated 12.03.2014 passed by the AO should be construed as Draft assessment .....

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t proceedings. He further submitted that the third proviso to sec.153(2A) prescribes two year period for completion of assessment consequent to the directions given by the ITAT. He submitted that the Tribunal has passed the order in January, 2012 and it is not clear from the record as to whether the Commissioner has received the order by March, 2012 or not. Accordingly he submitted that the observation made by the AO that the time limit is available up to 31.3.2014 requires verification. 9. We h .....

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ine the correctness of the said observation at this stage. Accordingly we do not find any merit in the contentions of Ld D.R urged in this regard. Accordingly, the assessing officer has to complete the assessment on or before 31.3.2004 in order to give effect to the order of the Tribunal. 10. The Ld D.R further contended that the provisions of sec. 144C(13) overrides the provisions of sec. 153 and hence the limit of completing the assessment by 31.3.2014 shall not apply to the present proceeding .....

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how that the same shall take effect only after the receipt of the directions issued by the Dispute Resolution Panel u/s 144C (5) of the Act. 11. Now we shall analyse the facts prevailing in the instant case. The assessing officer proceeded to frame fresh assessment order in order to give effect to the order dated 25-01-2012 passed by the Tribunal, i.e., as noticed earlier, the Tribunal has set aside the assessment order and restored back the same to the file of the assessing officer, since the T .....

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e Notice of Demand and also the Penalty notice u/s 271(1)(c) of the Act. These two notices clearly bring out the fact that the assessing officer has passed the final assessment order only on 12-03-2014. We have already noticed that the assessing officer himself has observed that the time limit for completing the present assessment was 31.3.2014 as per the third proviso to sec. 153(2A) of the Act. Hence, it appears that the assessing officer has rushed to complete the assessment by that date and .....

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s restored to the file of the assessing officer at the stage of draft assessment order . Hence the assessing officer was required to forward a copy of the draft order in terms of sec. 144C(1) of the Act and thereafter the procedure prescribed for filing objections, if any, before the DRP by the assessee might have been followed. Apparently the assessing officer has failed to follow the mandate of the provisions of sec. 144C(1) of the Act. 13. The next question that arises is Whether the Corrigen .....

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sing officer has to necessarily follow the mandate of provisions of sec. 144C(1) of the Act and hence the assessment order passed on 12-03- 2014 should be construed as Draft assessment order only. With regard to the time limit for completing the assessment, he placed strong reliance on the provisions of sec. 144C(13) in order to contend that the time limit prescribed in sec. 153 is not applicable to the assessment order passed u/s 144C(13) of the Act. 14. We are unable to agree with the contenti .....

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, admittedly, the draft order was not forwarded to the assessee within the time limit prescribed under the third proviso to sec.153(2A) of the Act, i.e., prior to 31.3.2014. 15. In the case of M/s Zuari Cement Ltd (supra), the assessing officer had passed the final assessment order without forwarding the draft assessment order as per the provisions of sec. 144C(1) of the Act. The Hon ble Andhra Pradesh High Court held that the said assessment order is contrary to them mandatory provisions of sec .....

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fficer passed the assessment order on 26.3.2013 without passing a draft assessment order as per the provisions of sec. 144C(1) of the Act. Later the AO issued a corrigendum on 15.04.2013 modifying the final assessment order passed on 26.03.2013 to be read as Draft assessment order . The Hon ble Madras High Court noticed that the AO had issued Demand notice raising tax demand upon the assessee. Further, the High Court noticed that the AO has failed to withdraw the demand raised upon the assessee .....

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