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TMI Blog2019 (1) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... st the appeal of Revenue. 2. The appeal filed by Revenue and Cross Objections filed by the assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The Revenue in ITA No.2098/PUN/2016 has raised the following grounds of appeal:- 1. The Ld. CIT(A) erred in law and on facts in deleting the addition on the ground the no draft order is passed u/s 144C(1) ignoring the fact that during the course of scrutiny assessment proceedings, the assessee offered the above income sue moto for taxation @ 10% and that the assessee had disclosed other income of Rs. 11,75,89,902/- and had taxed the same @ 10% and that the AO had applied 25% plus SC & EC which was applicable for the relevant period u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. 6. Briefly, in the facts of the case, the assessee is foreign company and for the year under consideration had furnished return of income declaring income of Rs. 11,75,89,802/-. The Assessing Officer at page 2 of assessment order has tabulated the transactions entered into by the assessee during the year with several concerns. During the year under consideration, the assessee had provided certain automotive engineering and project related support services to Cosma India, for which it had charged sum of Rs. 62,12,060/-. TDS was deducted @ 10.506% on the income under the head 'Engineering Charges'. The assessee during the course of assessment proceedings stated that by an error, the said income was not offered to tax in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee at Rs. 12.38 crores and along with assessment order, had also issued demand notice under section 156 of the Act. The CIT(A) observed that hence the assessment order passed by Assessing Officer was final assessment order and not draft assessment order. The CIT(A) was of the view that the Assessing Officer ought to have passed draft assessment order first, in accordance with provisions of section 144C(1) of the Act, before passing final assessment order. Since the Assessing Officer had failed to do so and hence, the assessee was denied the opportunity to defend against the addition made by Assessing Officer, before the Dispute Resolution Panel (DRP). The assessment order passed by the Assessing Officer was thus, quashed by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d furnished return of income declaring total income at Rs. 11,75,89,802/- on 25.03.2015. The said fact is mentioned in the statement of facts filed by the assessee before the CIT(A). On the other hand, the Assessing Officer starts assessment order with a remark that the assessee had furnished the return of income at nil, which is incorrect. The assessee being a Non-resident had offered the said income to tax under section 115A of the Act at 10% (plus surcharge and cess), which was applicable for the year under consideration. The assessee during the course of assessment proceedings discovered that sum of Rs. 62,12,060/- was inadvertently not offered to tax in the income tax return so filed. TDS was deducted on the same @ 10% ++. The said inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, he had violated the provisions of section 144C(1) of the Act and applying the ratio laid down by the Hon'ble Bombay High Court in International Air Transport Association Vs. DCIT (supra) had quashed the assessment order passed by the Assessing Officer. 12. The relevant provisions of the Act are in section 144C(1) of the Act, which provide that the Assessing Officer in the first instance forward a draft of the proposed order of assessment to the "eligible assessee" if he proposes to make any variation in the income or loss returned, which is prejudicial to the interest of such assessee. The term "eligible assessee" is defined under section 144C(15)(b) of the Act. As per definition, "eligible assessee" means any person (i) in whose case v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee under section 143(3) of the Act. In such facts and circumstances, variation in the income is not on account of any addition made by the Assessing Officer but is on account of voluntary offer of additional income by the assessee and it cannot be said that the Assessing Officer has made variation in the income returned, which is prejudicial to the interest of such assessee. The variation in the income is qualified by the words which is prejudicial to the interest of such assessee. 14. In the facts of present case, addition, if any is made to the returned income is on account of suo motu offer by the assessee of the receipts received by the assessee during the year under consideration from an Indian entity and by an inadvertent e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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