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TMI Blog2015 (12) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... t year. The Provisions of Section 144 C makes it clear that if the assessing authority proposes to make any variation in income or loss returned by the assessee, necessarily he has to pass a draft assessment order, forward it to the assessee with all the details and after the assessee files his objections, the assessment can be completed within one month. Section also provides an option to the assessee to file the objections before the Disputes Resolution Panel which can issue a direction for guidance of the assessing authority to enable him to complete the assessment. Since the respondent failed to follow the above provision, the petitioner is before this Court. 2. According to the learned Senior counsel for the petitioner the respondent failed to follow the provisions of Section 144 C of the Income Tax Act, 1961. By the act of the respondent, the petitioner lost several opportunities. The learned Senior Counsel appearing for the petitioner further submitted that as per the C.P.D.T. instructions dated 20.05.2003, the value, once it crosses over and above a sum of Rs. 5 crores, necessarily the assessing authority has to refer the matter to the Transfer Pricing Officer so as to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely: (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5), (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and any foreign company.] Section 92 C of the Act, reads as under : " 92CA. The assessing officer may refer the case for determination of the arm's length price to the TPO where the assessing officer considers it necessary and expedient to do so." 6. While dealing with a similar circumstance, this Court in W.P. No: 1526 and 1527 of 2014, vide its order dated 29.04.2014, held as follows :- "20. Under Section 144 (C) of the Act, it is evident that the assessing officer is required to pass only a draft assessment order on the basis of the recommendations made by the TPO after giving an opportunity to the assessee to file their objections and then the assessing officer shall pass a final order. According to the learned senior counsel for the petitioners, this procedure has not been followed by the second respondent inasmuch as a final order has been straightaway passed without passing a draft assessment order. 21. .... ....... ........ 22. As mentioned supra, as per Section 144C (1) of the Act,the second respondent as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity to object to it and passed the impugned assessment order. As this has occurred after 01.10.2009, the cut off date prescribed in sub-section (1) of S.144C, the Assessing Officer is mandated to first pass a draft assessment order, communicate it to the assessee, hear his objections and then complete assessment. Admittedly, this has not been done and the respondent has passed a final assessment order dated 22.12.2011 straight away. Therefore, the impugned order of assessment is clearly contrary to S.144C of the Act and is without jurisdiction, null and void. The contention of the Revenue that the circular No.5/2010 of the CBDT has clarified that the provisions of S.144C shall not apply for the assessment year 2008-09 and would apply only from the assessment year 2010-2011 and later years is not tenable in as much as the language of Sub-section (1) of Section 144C referring to the cut off date of 01.10.2009 indicates an intention of the legislature to make it applicable, if there is a proposal by the Assessing Officer to make a variation in the income or loss returned by the assessee which is prejudicial to the assessee, after 01.10.2009. Therefore, this particular provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is a final order and it had jurisdiction to entertain objections only if it is a draft assessment order. While so, the order dated 26.03.2013 of the second respondent can only be termed as a final order and in such event it is contrary to Section 144C of the Act. As mentioned supra, in and by the order dated 26.03.2013, the second respondent determined the taxable amount and also imposed penalty payable by the petitioner. According to the learned senior counsel for the petitioners, even as on this date, the website of the department indicate the amount determined by the second respondent payable by the company inspite of issuance of the corrigendum on 15.04.2013 as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even withdraw the taxable amount determined by him or updated the status in the website. In any event, such an order dated 26.03.2013 passed by the second respondent can only be construed as a final order passed in violation of the statutory provisions of the Act. The corrigendum dated 15.04.2013 is also beyond the period prescribed for limitation. Such a defect or failure on the part of the second respondent to adhere to the statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discretion conferred under Section 92CA (1). This instruction is in fact helpful in ensuring that the discretion of the A will not be abused. It correctly interprets the law as requiring only a formation of a prima facie opinion by the AO at the stage of the reference. Therefore, the question of the CBDT supplanting the judicial discretion of the AO does not arise. It is perfectly possible that, independent of the circular, the AO might still "consider it necessary or expedient" to refer an nternational transaction of such value of the TPO for determination of the ALP. At the same time it is not as if the transactions of the valueof less than Rs. 5 crores cannot be referred to the TOP by the AO. Ultimately, any exercise of discretion by the AO is bound to be judicially reviewed by the statutory appellate authorities as well as by Courts. Therefore, it is not as if there is no check on the exercise of discretion by the AO. 39. For these reasons, we hold that the impugned Instruction No: 3 dated 20.5.2003 issued by the CBDT is consistent with the statutory objective underlying Section 92 CA (1) and acts as a guidance to the AO in the exercise of discretion in referring an inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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