TMI Blog2018 (12) TMI 1655X X X X Extracts X X X X X X X X Extracts X X X X ..... pts of making correction by issue of letters/notices, the Assessing Officer made a mistake of not withdrawing original demand notices and penalty notices. AO made the assessment order and issued demand notice and penalty notices as if the same is the final assessment order. Normally, the draft assessment order is never issued along with demand notice and penalty notice. Assessing Officer wanted the assessee to treat the said order as draft assessment order. Demand notice and penalty notices are issued only at the time of issue of the assessment order. Thus, Assessing Officer violated the provision of section 144C. Further, in the process of making/correcting the lapses, Assessing Officer made another mistake of not withdrawing the said d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invalid in law. 3] Without prejudice to the above additional grounds of cross objection, the assessee company submits that the adjustment on account of working capital ought to have been granted while computing the operating margins of the comparables. 4] Without prejudice to the above additional grounds of cross objection, the assessee company submits that in case, any addition is required to be made on account of transfer pricing, the same should be restricted international transactions entered into with the Associated Enterprises and not on entity level. The assessee company submits that the additional grounds of cross objection raised are legal in nature and as all the facts are on record, the assessee requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer/TPO, copy of the said order is placed at pages 168 to 208 of the Paper Book. On the receipt of the order of the Tribunal, the matter was referred by the Assessing Officer to the TPO for second round of the TP proceedings/adjustment. In the second round, the TPO recommended the lesser amount of adjustment of ₹ 16.89 crores (rounded off). Incorporating the said adjustment of ₹ 16.89 crores (rounded off), the Assessing Officer passed an assessment order dated 29.12.2009 and issued notice of demand u/s 156 of the Act along with the penalty notices. On 26.02.2010, the First Appellate Authority passed an order of adjudication. Meanwhile, the Assessing Officer informed the assessee that the assessment order dated 29.12.2009 needs t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al No.622 of 2016, order dated 03.12.2018. He also submitted that the Pune Bench of the Tribunal also decided the same issue in favour of the assessee vide ITA No.2599/PUN/2016 in the case of ACIT vs. M/s. East West Seeds Ltd. for the assessment year 2009-10, order dated 14.11.2018. 6. On the other hand, ld. DR for the Revenue strongly defended the order of the Assessing Officer and the CIT(A). 7. We have heard both the parties on this legal issue and find there is no dispute about the facts of making the assessment order dated 29.12.2009 accompanied by the demand notices and the penalty notices. When the demand notice u/s 156 of the Act is issued and served on the assessee, the same constitutes an assessment order fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted the assessee to treat the said order as draft assessment order. Demand notice and penalty notices are issued only at the time of issue of the assessment order. Thus, Assessing Officer violated the provision of section 144C of the Act. Further, in the process of making/correcting the lapses, Assessing Officer made another mistake of not withdrawing the said demand notice and penalty notices. Thus, the Assessing Officer made a mess of the statutory procedures and the same renders to the illegality of the order made by the Assessing Officer. 9. Considering the above, we are of the opinion the legal issue raised by the assessee in ground nos.1 and 2 of the Cross Objection are required to be allowed in favour of the assessee and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der utilization of capacity which is not in accordance with the provisions of the Rule 10B(1)(e)(iii) of the Income-tax Rules, 1962 as well as the decision of Hon ble ITAT in case of Global Vantedge Pvt. Ltd. (2010-TIOL-24-ITAT-DEL). 5. Without prejudice to the above, the Hon ble CIT(A) erred in neither specifying the quantum of adjustment on account of under utilization of capacity, which is to be allowed to the Assessee nor suggesting any methodology for determining such quantum of adjustment. 6. The CIT(A) erred in not giving a decision and holding that no interference was called for since no conclusive findings were given by ITAT with respect to use of multiple year data even though the assessee was not able to show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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