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TMI Blog2018 (4) TMI 1785X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. At the outset, ld. counsel for the assessee, Mr. Tarandeep Singh, submitted that assessee has also filed an 'additional ground' which in fact is clarification of ground no.2 raised by the assessee in the original appeal memo, whereby assessee is challenging the impugned orders that it is void ab initio passed in contravention of the provision of Section 144C. In the said ground it has been highlighted that in this case the Assessing Officer instead of passing a 'draft assessment order' as required u/s 144C has passed final assessment order u/s 143(3) on 2nd November, 2012 which was not in accordance with the provision of Section 144C(1) r.w.s. sub-section (2) and (3) thereto, and therefore, in view of the various judgments of Hon'ble Jurisdictional High Court, the said order is unsustainable in law and consequentially the entire proceedings and order needs to be quashed. 4. Highlighting the brief facts and background of the case, he submitted that assessee is wholly owned subsidiary of Oracle System Corporation, USA. It has filed its return of income for the Assessment Year 2006-07 on 27.11.2006 at an income of Rs. 1,59,40,87,230/-. The said return was selected for scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice u/s. 274 r.w.s. 271 of the Income Tax Act. The said order however cannot be reckoned as legally sustainable order as it has not been passed in terms of procedures enshrined in Section 144C. As per the said provision, the Assessing Officer has to first pass a proposed draft assessment order if he proposes to make any variation in the income or loss return; and it is after the receipt of such order the assessee is eligible to file either his acceptance for the variation to the Assessing Officer or file objection to such variation before the DRP within 30 days of receipt of the draft assessment order. Once, the assessee has intimated to the Assessing Officer either the acceptance or makes no objection within the specified period then Assessing Officer completes assessment on the basis of the draft assessment order. Thus, here in this case, there is a clear violation of Section 144C (1); (2) and (3). After having passed the final assessment order on 2-11-2012, immediately after five days of completion of final assessment order, the Assessing Officer on 07.11.2012 had passed corrigendum order dated 07.11.2012, which reads as under: "To, The Principal Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 125 (Del), wherein their Lordships while interpreting the provision of Section 144C(1) held that; failure of Assessing Officer to adhere to the mandatory requirement of Section 144C(1) would result in invalidation of the final assessment order and consequently the entire demand and penalty proceedings. Again similar principle has been reiterated in a very detailed manner by the Hon'ble Jurisdictional High Court in the case of JCB India Ltd. vs. DCIT, in WP(C) No.3399/2016 vide judgment and order dated 17.09.2017, wherein again their Lordships have held that such a defect is not curable even u/s.292B. Thus, in the wake of such binding precedence of Hon'ble Jurisdictional High Court, the impugned final assessment order passed by the Assessing Officer has to be declared as invalid being barred by limitation. 7. On the other hand, learned DR, appearing on behalf of the Revenue submitted that here in this case though the final assessment order was passed on 02.11.2012, but immediately thereafter the Assessing Officer realized his mistake and rectified the same by issuing a corrigendum on 07.11.2012, whereby he has clearly clarified that the earlier order should be read as draf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proached the DRP treating the order passed by the Assessing Officer as draft assessment order then petitioner company is estopped from questioning the same very order though it is a final order. This particular argument has specifically been rejected by the Hon'ble High Court. He further relied upon the decision of ITAT Mumbai Bench in the case of Lionbridge Technologies Pvt. Ltd. vs. DCIT, reported in (2015) 171 TTJ 684 (Mum.), wherein in that case where the assessment was restored back by the Tribunal to the stage of passing of the draft assessment order and thereafter the Assessing Officer had passed a fresh assessment order without adhering to provision of Section 144C (1), within the time limit prescribed, then such an assessment order is not enforceable in law. Thus, in the light of the judicial precedence and without there being any contrary decision of Jurisdictional High Court on this point, the impugned final assessment order needs to be quashed on the ground that the earlier order passed by the Assessing Officer on 02.11.2012 was the final assessment order, without following the procedure laid down u/s.144C(1) and consequently, the impugned order is bad in law as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sake of ready reference is reproduced hereunder: 144C "(1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a ) file his acceptance of the variations to the Assessing Officer; or (b ) file his objections, if any, to such variation with,- (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- (a ) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b ) no objections are received within the period specified in sub-section (2)." 11. From the plain reading of the aforesaid provision, it is clear that the Assessing Officer has to forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was issued pursuant to such order dated 26.03.2013 of the second respondent. Both the order dated 26.03.2013 and the notice for demand thereof have been served simultaneously on the petitioner. Therefore, not only the assessment is complete, but also a notice dated 28.03.2013 was issued thereon calling upon the petitioner to pay the tax amount as also penalty under Section 271 of the Act. Thereafter, the petitioner was given an opportunity of hearing on 12.04.2013. Subsequently, the second respondent realised the mistake in passing a final order instead of a draft assessment order which resulted in issuing a corrigendum on 15.04.2013. In the corrigendum it was only stated that the order passed on 26.03.2013 under Section 143C of the Act has to be read and treated as a draft assessment order as per Section 143C read with Section 93CA (4) read with Section 143(3) of the Act. In and by the order dated 15.04.2013, the second respondent granted thirty days time to enable the assessee to file their objections. On receipt of the corrigendum dated 15.04.2013, the petitioner company approached the first respondent, but the first respondent declined to issue any direction to the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Honourable Supreme Court, the period for assessment proceedings expired and thereafter, fresh assessment orders have been issued by anti-dating it. In those circumstances, it was held that the High Court ought not to have remanded the matter back to the assessment officer and by doing so, the statutory period prescribed for completion of assessment has been extended by conferring jurisdiction upon the Assessing Officer, which he otherwise lacked on the expiry of the said period. In that case, the Honourable Supreme Court also held that there is a distinction between an order which is a nullity and an order which is irregular and illegal. Where an authority making order lacks inherent jurisdiction, such an order will be null and void ab initio, as the defect of jurisdiction goes to the root of the matter and strikes at his very authority to pass any order and such a defect cannot be cured even by consent of the parties. 24. This decision squarely applies to the facts of this case. In this case, the order passed by the second respondent lacks jurisdiction especially when it is beyond the period of limitation prescribed by the statute. When there is a statutory violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was a final assessment order and later on the Assessing Officer had issued a corrigendum on 15.04.2013, i.e., within the period of 30 days as given in the demand notice stating that the final assessment order dated 26.03.2013 should be read as draft assessment order. In the said judgment, one of the argument taken by the Revenue before the Hon'ble High Court which has been taken by the learned DR also before us, that once the assessee has approached the DRP, then assessee is estopped from questioning the same order even though it was final assessment order. The Hon'ble High Court has turned down such a plea of the Revenue. Further the Hon'ble High Court referring to the judgment of Hon'ble Supreme Court in the case of Deepak Agro Foods vs. State of Rajasthan and others, reported in (2008) 16 VST 454 (SC), held that if an order has been passed beyond the statutory period prescribed then such an order is nullity and has no force in law and consequently the corrigendum issued by the Assessing Officer cannot nullify the period of limitation. Further Hon'ble Court also observed that the assessment order dated 26.03.2013 has to be reckoned as the final assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrigendum after the final assessment order was passed. Consequently, not only the final assessment order but also the corrigendum issued thereafter was challenged. Following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra) and a number of other decisions, the Madras High Court in Vijay Television (P) Ltd. v. Dispute Resolution Panel (supra) quashed the final order of the AO and the demand notice. Interestingly, even as regards the corrigendum issued, the Madras High Court held that it was beyond the time permissible for issuance of such corrigendum and, therefore, it could not be sustained in law. 14. Recently, this Court in ESPN Star Sports Mauritius S.N.C. ET Compagnie v. Union of INdia [2016] 388 ITR 383 (Del.), following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra) , the Madras High Court in Vijay Television (P) Ltd. v. Dispute Resolution Panel (supra) as well as the Bombay High Court in International Air Transport Association v. DCIT (2016) 290 CTR (Bom) 46, came to the same conclusion. 15. Mr. Dileep Shivpuri, learned counsel for the Revenue sought to contend that the failure to adhere to the mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same are in substance and in effect in conformity with the intent of purposes of the Act." The Court further observed that Section 292B of the Act cannot save an order not passed in accordance with the provisions of the Act. As the Court explained, "the issue involved is not about a mistake in the said order but the power of the AO to pass the order." 15. The sequitur of the aforesaid judgments of the Hon'ble Jurisdictional High Court, which can be culled out are as under:- * Firstly, Assessing Officer has to follow the mandatory procedure of Section 144C (1), i.e., to pass a draft assessment order and if such a draft assessment order has not been passed and instead final assessment order has been passed, then such a final assessment order is null and void; * Secondly, merely by issuing a corrigendum, final assessment order passed cannot be converted into a draft assessment order especially when such corrigendum has been passed beyond the period of limitation; and * Lastly, if the draft assessment order has not been passed in accordance with the procedure laid down in Section 144C (1) and instead final assessment order has been passed though within the limitat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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