TMI Blog2015 (12) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment order dated 27.03.2015 relating to PAN/GIR No. AABCR1863L for assessment year 2012-2013 and the Corrigendum to Assessment Order dated 9.4.2015 bearing No: AABCR1863L/12-13/99 are being challenged on the ground that the circular issued by the department in accordance with Section 144 C of the Income Tax Act has not been complied with. The international transactions involved by the petitioner in this writ petition are referred to in paragraph 5 of the affidavit filed in support of the writ petition. The said international transactions were certified to be at arm's length, based on Transactional Net Margin Method as defined. The Transfer Pricing Report and the Transfer Pricing Documentation had been filed with the respondent during the assessment 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with, (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2). (4) The Assessing Officer shall, notwithstanding anything contained in section 153 50[or section 153B], pass the assessment order under sub-section (3) within one month from the end of the month in which, (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution 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) object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such direction is received. (14) The Board may make rules52 for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. The following sub-section (14A) shall be inserted after sub-section (14) of section 144C by the Finance Act, 2013, w.e.f. 1-4-2016 : (14A) The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the Commissioner as provided in sub-section (12) of section 144BA. (15) For the purposes of this section, (a) Dispute Resolution Panel means a collegium comprising of three Commissioners of Income-tax constituted by the Board54 for this purpose; (b) eligible assessee means, (i) any person in whose case the variation referred 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake, on or after 01.10.2009, any variation in the income or loss returned by an assessee, then, notwithstanding anything to the contrary contained in the Act, he shall first pass a draft assessment order, forward it to the assessee and after the assessee files his objections, if any, the assessing officer shall complete assessment within one month. The assessee is also given an option to file objections before the Dispute Resolution Panel in which event the latter can issue directions for the guidance of the Assessing Officer to enable him to complete the assessment. In the case of the petitioner, admittedly the TPO suggested an adjustment of ₹ 52.14 crores u/s.92CA of the Act on 20.09.2011 and forwarded it to the Assessing Officer and to the assessee under sub-section (3) thereof. The assessing officer accepted the variation submitted by the TPO without giving the petitioner any opportunity 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mandatory provisions of S.144C of the Act and is passed in violation thereof. Therefore, it is declared as one without jurisdiction, null and void and unenforceable. Consequently, the demand notice dated 23.12.2011 issued by the respondent is set aside. 32. As against this order of the Division Bench of the Andhra Pradesh High Court, the Revenue went on appeal before the Honourable Supreme Court. The record of proceedings of the Supreme Court indicate that the Special Leave Petition was dismissed on 27.09.2013. 33. The decision of the Division Bench of the Andhra Pradesh High Court deals with an identical issue as that of the present case. In this case, against the order passed by the second respondent on 26.03.2013, the petitioner filed objections before the DRP, the first respondent herein and the first respondent refused to entertain it by stating that the order passed by the second respondent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while doing so this Court had also laid down the rigors of the said Circular. No doubt, this Court observed, in the process that the said Circular acted as a guideline to the Assessing Officer. However, much mileage cannot be drawn by the appellant from those observations as these observations were made while dealing with the contention of the petitioner in the said petition. That instruction completely takes away the discretion of the Assessing Officer in relation to an international transaction if the aggregate value thereof exceeded ₹ 5 crore. This contention was turned down in the following words :- 37. The other ground on which the instruction is challenged is that it completely takes away the discretion of the AO in relation to an international transaction of the value exceeding ₹ 5 crores. A reading of the impugned instruction indicates that it acts as a guideline to the AO in the exercise of 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 ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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