TMI Blog2017 (1) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... thout allowing the assessee the opportunity of being heard by the DRP, i.e., prior to it being finalized. That there is no vested right against procedure is well-settled. Again, it is nobody’s case that the same was done to purchase time, or that in the event the said opportunity was allowed, the assessment would get barred by time. In fact, no such contention could in law be raised as s. 144C(13) itself excludes the operation of s. 153 (or s. 153B), stipulating time limit for passing orders order the Act, setting it at one month after the receipt by the AO of the directions by the DRP. There is no question of the assessment getting time barred or having crossed the bar of time by which it could have been passed. Once the Revenue itself admits the order passed to be a draft assessment order, it cannot in law proceed to collect the demand raised, so that the raising of demand would be without the sanction of law. The decision in Vijay Television (P.) Ltd. (2014 (6) TMI 540 - MADRAS HIGH COURT ) is judicially binding on us. The same is directly on the point, and is therefore squarely applicable. In fact, in the present case there is no attempt by the AO to rectify his mistake. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is liable to tax in the case of a non-resident only in case of a permanent establishment (PE) in India; which is admittedly absent, the Indian company being a separate person. The second ground on which the assessment is assailed is that it is without jurisdiction. The assessee being a foreign company, is an eligible assessee under section 144C of the Act and, accordingly, the AO was bound to pass a draft order, against which the assessee could raise objections before the Dispute Resolution Panel (DRP), which are required to be disposed by it, and whose decision is binding on the AO. The procedure prescribed having not been observed, the assessment fails, as expressed by the Hon ble Jurisdictional High Court in Vijay Television (P) Ltd. v. DRP [2014] 369 ITR 113 (Mad). The ld. DR would submit that the term eligible assessee is defined under section 144C (15) as a person in whose case a variation is proposed under section 92CA and a foreign company, so that only where both the conditions are satisfied would the person concerned qualify to be an eligible assessee. Further, even if considering the assessee as one, so that the AO ought to have followed the procedure envisage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the word means , and followed by the sub-clauses (a) and (b), and not, for example, by the words to the effect or signifying a person satisfying the conditions as set out in the said sub-clauses. As such, a foreign company is an eligible assessee, independent of the variation to its returned of income being by way of a transfer pricing adjustments - the other condition set out in s. 144C(15)(b)(i), or otherwise. The next question to consider is the consequence of the AO failing to observe the procedure set out in s.144C, falling under Chapter-XIV, titled Procedure for assessment . Toward this, the assessee has relied on Vijay Television (P.) Ltd. (supra) by the Hon'ble jurisdictional High Court, which is binding on us. The same has been perused, so as to discern it s ratio. In that case, the AO passed the assessment order without first passing a draft assessment order proposing additions, to enable the assessee to, at its option, file objections with the DRP, whose opinion in the matter, after hearing the assessee, would be final as far as AO is concerned, so that he would pass the final assessment order in conformity with the directions issued by the DRP. The AO in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irregularity, which does not impinge on the jurisdiction on the AO to pass the assessment order, which he assumes on the issue of notice u/s. 143(2), even as observed by the Hon ble jurisdictional High Court itself in a number of cases, reference to one of which, i.e., R.V. Sarojini Devi v. IAC [2000] 242 ITR 329 (Mad) stands made in the decision itself (also refer Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC)). Reference in this regard may be made to the decision in Guduthur Bros. v. ITO [1960] 40 ITR 298 (SC), wherein the Apex Court clarified that the AO assumes jurisdiction to assess on issue of a valid notice, and which obtained till the same remained to be disposed of. The proceedings completed without allowing the assessee an opportunity of being heard was an illegality, vitiating the proceedings, which would relate back in time, having occurred during the course of the assessment proceedings itself. The impugned order was to be set aside, and the proceedings to commence from the stage the illegality or the irregularity had occurred. In the present case too, the order has been passed by the AO by, in effect, without allowing the assessee the opportunity of being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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