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TMI Blog2016 (11) TMI 1423X X X X Extracts X X X X X X X X Extracts X X X X ..... after providing sufficient time and opportunities to the assessee in this respect there was no deprival of natural justice to the assessee. 2. The Ld. CIT (Appeals) ought to have dealt with on merits the fact that the adjustments made by the TPO are appealable before the Ld. CIT(A), 3. Without prejudice to the above, the Ld. CIT(A) ought to have dealt with the issues of Disallowance of late payment of PF, Disallowance u/s 40(a)(ia) & Interest on TDS on merits and ought not to have quashed the entire assessment order on technical ground." 2. To adjudicate on this appeal, only a few material facts need to be taken note of. There is no dispute about the fact that the assessee is an eligible assessee under section 144C of the Act and that Arms Length Price adjustment of Rs. 2,86,19,511/- was contemplated by order dated 24.01.2013 issued by Transfer Pricing Officer (TPO) under section 92CA(3) of the Act. However, instead, in the first instance, forwarding of draft of the proposed assessment, as required under section 144C(1), the Assessing Officer straightaway passed order under section 143(3) on 22.02.2013. By way of the said assessment order the Assessing officer inter alia made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order before tne Dispute Resolution Panel (DRP) within one month of receipt of draft assessment order or to opt for normal appellate route. As per the appellant, the AO by passing the impugned order has blocked an option available to the appellant. This entire submission of the appellant is found to be acceptable. It is mentioned that the Hon'ble High Court of Andhra Pradesh in the case of M/s, Zuari Cement Ltd. Vs ACIT (writ petition no.5557 of 2012) has held as under: "In the case of petitioner, admittedly the TPO suggested and adjustment of Rs. 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-sect/on (3) thereof. The Assessing Officer accepted the variations submitted by the TPO without giving the petitioner any opportunity to object to it and pass the impugned assessment order. As this has occurred after 01/10/2009, the cut off date prescribed in sub-section (1) of section 144C, the Assessing Officer is mandate to first pass the draft assessment order, communicated it to the assessee, hear his objections and then complete assessment. Admittedly this has not been done and the respondent has passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind the following guidelines from the decision of a coordinate bench in the case of Capsugel Healthcare Limited vs. ACIT (2015) 152 ITD 142 Delhi :- "7. We find that the issue is covered is now covered in favour in of the assessee by judgment of Hon'ble Madras High Court, in the case of Vijay Television Pvt Ltd Vs DRP [(2014) 46 taxmann.100 (Mad)], wherein Hon'ble High Court has, inter alia, observed 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. As rightly pointed out by the learned senior counsel for the petitioners, in the order passed on 26.03.2013, the second respondent even raised a demand as also imposed penalty. Such demand has to be raised only after a final order has been passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated as a draft assessment order. In this context, it is worthwhile to refer to the decision of the Honourable Supreme Court in the decision Deepak Agro Foods (supra) wherein in Para No.10, the Honourable Supreme Court discussed as to when an order could be construed as a final order:- "10. Shri Rajiv Dutta, learned senior counsel appearing on behalf of the appellant, submitted that in the light of its afore-extracted observations and a clear finding that the assessment order for the assessment year 1995-96 had been anti-dated, the order was null and void. It was urged that assessment proceedings after the expiry of the period of limitation being a nullity in law, the High Court should have annulled the assessment and there was no question of a fresh assessment. Thus, the nub of the grievance of the appellant is that in remanding the matter back to the Assessing Officer, the High Court has not only extended the statutory period prescribed for completion of assessment, it has also conferred jurisdiction upon the Assessing Officer, which he otherwise lacked on the expiry of the said period." 23. It is evident from the above decision of the Honourable Supreme Court that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that a notice contemplated under Section 148 of the Income Tax Act is a jurisdictional notice and it is not curable by issuing a notice under Section 292 B of the Act, if it was not served in accordance with the provisions of the Act. 27. Similarly, the Division Bench of this Court in the decision in the case of V. Ramaiah (supra) Madras held that when an order is passed under Section 158BC of the Act instead of Section 158BD, it is not valid since it is not a defect curable under Section 292B of the Act. It was also held that an order passed after the period of limitation laid down in Section 158BC is not a valid order. It was further held that when there is a prescribed procedure contemplated under the Act or in a particular section and it is violated, then it cannot be cured. In the present case, certain procedure has been contemplated under Section 144C of the Act and they have been violated by the second respondent by passing final order of assessment and therefore such order passed by the second respondent has got no jurisdiction or it can be cured by virtue of issuing a corrigendum. 28. By referring to the decision of the Division Bench of this Court dated 10.02.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer to issue notice under Section 143(2) cannot be a procedural irregularity and is not curable." 30. It is evident from the above decision of the Division Bench of this Court that where there is an omission on the part of the assessing officer to follow the mandatory procedures prescribed in the Act, such an omission cannot be termed as a mere procedural irregularity and it cannot be cured. 31. In identical case as that of the case on hand, the Division Bench of the Andhra Pradesh High Court, in an unreported decision, had an occasion to consider the scope of the validity of the demand notice issued by the assessing officer in the case of Zuari Cement Ltd. (supra), wherein it was held as under:- "A reading of the above section shows that if the assessing officer proposes to make, 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 obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessment year 2008-09 is contrary to the express language in S.144C(1) and the said view of the Revenue is unacceptable. The circular may represent only the understanding of the Board/Central Government of the statutory provisions, but it will not bind this Court or the Supreme Court. It cannot interfere with the jurisdiction and power of this Court to declare what the legislature says and take a view contrary to that declared in the circular of the CBDT (Ratan Melting and Wire Industries Case (1 Supra), Indra Industries (2 supra). The Revenue has not been able to persuade us to take a contra view by citing any authority. In this view of the matter, we are of the view that the impugned order of assessment dated 23.12.2011 passed by the respondent is contrary to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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