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TMI Blog2019 (8) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 383 (SC) ii) Jute Corporation of India Ltd. Vs. CIT, 187 ITR 688 (SC) iii) Ahmedabad Electricity Co. Ltd. Vs. CIT, 199 ITR 351 (Bom.) 3. We have heard the submissions of the assessee and have perused the relevant documents filed before us as well as judicial pronouncements placed before us. Respectfully, following the binding judgments referred before us and taking totality of facts and circumstances, we are convinced that additional grounds goes to the root of the matter in deciding the issue of the assessee and hence, the additional ground is admitted for adjudication. 4. The assessee in this legal ground has challenged the assessment order dated 15.01.2013 as bad in law and void-ab-initio since it was passed in violation of Section 144C of the Act. The Ld. AR demonstrated that the assessment order dated 15.01.2013 was draft assessment order which is evident from the very heading of the order. Along with this draft assessment order, the Assessing Officer has issued notice of demand u/s.156 of the Act and penalty notice u/s.274 r.w.s.271(1)(c) of the Act and therefore, procedure laid down in Section 144C of the Act has been violated. The provisions of Section 144C spells ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable. He further directed Issue Order, demand notice along with ITNS-150, issue notice under section 271(1)(c) of the Act. He further held that the order was a proposed / draft order of assessment passed under section 143(3) r.w.s. 144C(1) of the Act and he further held that the assessee shall within 30 days of the receipt of this draft order file acceptance of variations to the undersigned or file its objections against such variations with the Dispute Resolution Panel under intimation to the undersigned. The assessee filed objections before the DRP and the Assessing Officer also issued final assessment order under section 143(3) r.w.s. 144C(13) of the Act, dated 27.02.2015." 14. That on these facts, the Ld. AR had put forth the following arguments: "8. The learned Authorized Representative for the assessee has pointed out that the draft assessment order passed in the case of assessee is actually not a draft assessment order since the demand notice along with ITNS-150 had been issued and also notice under section 274 r.w.s. 271(1)(c) of the Act was issued for initiation of penalty proceedings. He fairly admitted that though the Assessing Officer had in the said order said th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file objections before the DRP or accept the same. The assessee filed the objections before the DRP, who dismissed the same on the surmise that the order passed by the Assessing Officer was final assessment order, since the Assessing Officer had also issued the demand notice and had also issued show cause notice under section 274 r.w.s. 271(1)(c) of the Act for levy of penalty. In view of the said facts, the Tribunal observed as under:- "6. We have heard the rival contentions and perused the record. Briefly, in the facts of the case, the Assessing Officer had made reference to the TPO vis-à-vis to determine the arm's length price of international transaction entered into by the assessee with its associate enterprises. The TPO vide order dated 28.01.2014 under section 92CA(3) of the Act had proposed the adjustment to arm's length price of international transaction and had passed the said order. The Assessing Officer on receipt of said order passed order under section 143(3) r.w.s. 92C(4) and 144C of the Act. The said order of Assessing Officer was forwarded to the assessee along with letter dated 28.02.2014, wherein the Assessing Officer categorically said that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under sub-section (3) of section 144C of the Act, the Assessing Officer shall complete the assessment on the basis of draft order if the assessee intimates to the Assessing Officer the acceptance of the variation or no objections are received within period specified in sub-section (2) of section 144C of the Act. Thereafter, the Assessing Officer is empowered to pass the assessment order within one month from the end of month, in which the acceptance is received or the period of filing objections under sub-section (2) of section 144C of the Act expires. Under sub-section (5) of section 144C of the Act, it is provided that the Dispute Resolution Panel shall in case where 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. Upon receipt of the said directions, the Assessing Officer shall in conformity with the same, complete the assessment without providing any further opportunity of being hearing to the assessee within one month from the end of the month in which such direction is received, notwithstanding anything to the contrary contained in section 153 or 153B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment in compliance with the directions issued by the DRP under section 144C(3) of the Act. In the present case, without following the above mandatory procedure, the AO has passed the order of assessment on 26.03.2013 and subsequently issued a corrigendum on 15.04.2014 to rectify the mistake committed in passing the final order of assessment inter alia to treat it as a draft assessment order. This course of action adopted by the second respondent is contrary to the mandatory provisions contained in the Act and the corrigendum issued by the AO could not cure the defect. The very fact that the Assessing Officer has signed the order of assessment and also assessed the amount payable by the assessee has become complete and it cannot be simply treated as a draft assessment order or it can be rectified by issuing the corrigendum. In fact, pursuant to the order of assessment under section 143C, demand was also made for payment of the amount and such demand has not been withdrawn by the second respondent even after issuing the corrigendum. Even as per the website of the department, the demand made to the petitioner company continues till date and therefore, the final order as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the language of sub-section (1) of section 144C of the Act referred to the cutoff date of 01.10.2009 indicates the intention of Legislature to make it applicable. The Hon'ble High Court of A.P further held that the Circular No.5/2010 issued by the CBDT stating that section 144C(1) of the Act would apply only from assessment year 2010-11 and subsequent years and not from assessment year 2008-09 was contrary to the expressed language of the section and the said view of the Revenue was held to be not acceptable. The Hon'ble High Court of A.P thereafter held that the impugned order of assessment dated 23.12.2011 passed by the respondent was contrary to the mandatory provisions of section 144C of the Act is declared as one without jurisdiction, null and void and unenforceable. The Hon'ble High Court of Andhra Pradesh held as under:- "In this view of the matter we are of the view that the impugned order of assessment dt. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain rights upon an eligible assessee such as to approach the DRP with its objections to such a draft assessment order. This is for the reason that an eligible assessee's grievance can be addressed before a final assessment order is passed and appellate proceedings invoked by it. However, these special rights made available to eligible assessee under Section 144C of the Act are rendered futile, if directly a final order under Section 143(3) of the Act is passed without being preceded by draft assessment order. 6. In the above view, the assessment order dated 23rd March, 2015 passed by the Assessing Officer for the assessment year 2012-13 is completely without jurisdiction. This is so as it has not been preceded by a draft assessment order. Hence, the foundational/basic order viz. the assessment order dated 23rd March, 2015 is set aside and quashed as being without jurisdiction. Consequent orders passed on rectification application as well as on penalty are also quashed and set aside being unsustainable." 11. The learned Authorized Representative for the assessee has placed reliance on the ratio laid down by the International Air Transport Association Vs. DCIT (supra) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). In the facts of present case also, the demand got crystallized on passing of the draft assessment order, wherein the Assessing Officer had issued demand notice in ITNS-150 and had also initiated penalty proceedings. Undoubtedly, the said assessment was framed as draft assessment but in actual fact, the Assessing Officer had made the assessment in the hands of assessee by not only assessing the income but also determining the demand payable. In the case of draft assessment order, proposed additions are to be made and the assessee is show caused either to accept the same or file the objections before the DRP. However, in the present facts, there was not a proposal for making addition but final assessment order was passed. Undoubtedly, the Assessing Officer said that he is passing draft assessment order and the assessee was also at liberty to file the objections before the DRP or accept the same, but in actual fact, the order passed by the Assessing Officer was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C of the Act. Accordingly, we hold that draft assessment order passed in the case is invalid in law. Thus, the Cross Objection No.2 rai ..... 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