TMI Blog2020 (10) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... This was not a case where the assessee was merely throwing some collateral challenge to the assessment order dated 18/12/2009. The assessee had frontally challenged this order by instituting an appeal against the same. Therefore, all these decisions could not have been ignored by the ITAT by merely observing that these were the decisions in Writ Petitions instituted by the Assessees. - Decided in favour of assessee. - TAX APPEAL NO. 77 OF 2015 AND TAX APPEAL NO. 78 OF 2015 - - - Dated:- 19-10-2020 - M. S. SONAK DAMA SESHADRI NAIDU, JJ. Mr. Vishal Kalra, Advocate for the Appellant. Ms. Susan Linhares, Standing Counsel, with Ms. S. Pinto, Advocate for the Respondent. JUDGMENT : (Per M. S. Sonak, J.): Heard the learned Counsel for the parties. 2. The learned Counsel for the parties submit that both these Tax Appeals can be disposed of by a common Judgment and Order, since, the decision in Tax Appeal No.77/2015 will govern the decision in Tax Appeal No.78/2015. The learned Counsel agree that in case Tax Appeal No.77/2015 is decided in favour of the Assessee, then, Tax Appeal No. 78/2015 will also have to be decided in favour of the Assessee. However, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, to provide the Assessee with a draft assessment order before the assessment order would be made under Section 143(3) of the said Act. 7. The Commissioner (Appeals) called for a remand report from the AO, which was duly submitted by the AO on 2/2/2012. It is the case of the Assessee that the remand report form, with the provision of Section 144C of the said Act, was not complied with by the AO in this matter. 8. On 20/03/2012, the Commissioner of Income Tax (CIT) issued a notice under Section 263(1) of the said Act, purporting to exercise his revisional jurisdiction in the matter of the assessment order dated 18/12/2009 made by the AO. This notice states that the AO, by failing to provide the draft assessment order in terms of Section 144C(1) of the said Act to the Assessee, had violated the principles of natural justice and, therefore, the assessment order dated 18/12/2009, was erroneous and deserved to be set aside. 9. The Assessee, on 19/3/2012, filed a detailed response to the notice dated 23/2/2012 objecting to the very initiation of the revisional proceedings. The Assessee pointed out that the assessment order dated 18/12/2009 was not merely illegal, but was void a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Act presupposes the existence of an order which may be erroneous, but not an order which is void ab initio or a nullity. In support of this proposition, Mr. Kalra relies upon the following decisions : (i) Keshab Narayan Banerjee vs. Commissioner of Income-tax [1998] 101 Taxman 512 (Cal) (ii) P. Abdulkadar Hamza vs. Commissioner of Income-tax [2001] 116 Taxman 455 (Ker); (iii) Commissioner of Income-tax [1990] 48 Taxman 297 (Delhi); (iv) Westlife Development Ltd. vs. Principal Commissioner of IncomeTax-5, Mumbai [2016] 49 ITR (T) 406 (Mumbai); (v) Inder Kumar Bachani (HUF) vs. Income Tax Officer MANU/LU/0488/2005; and (vi) Paul John, Delicious Cashew Co. vs. The Income Tax Officer MANU/IN/0421/2004 16. Mr. Kalra also referred to some of the decisions which take the view that assessment orders made without following the provisions of Section 144C of the said Act (wherever applicable) are a nullity and consequently unsustainable. These decisions are : (a) M/s. Zuari Cement Ltd. vs. The Assistant Commissioner of Income Tax; Tirupathi WP No.5557 of 2012 dated 21/2/2013 by AP High Court.; (b) Control Risk India (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessment order dated 18/12/2009 was prejudicial to the interest of the Revenue because the said assessment order could have been easily set aside by the appellate authorities on the ground of breach of procedure. She submits that accordingly the two preconditions for the exercise of the revisional jurisdiction under Section 263 of the said Act were fulfilled and there was nothing wrong in the exercise of the revisional jurisdiction by the CIT in these matters. On this basis, Ms. Linhares submits that the substantial questions of law are required to be answered against the Assessee and in favour of the Revenue. 21. The rival contentions now fall for our determination. 22. In this case, there is no dispute that the provisions of Section 144C of the said Act were applicable and, further, such provisions were not complied with by the AO before passing the assessment order dated 18/12/2009. 23. Section 144C(1) of the said Act provides that the Assessing Officer shall, notwithstanding anything to the contrary contained in the said Act, in the first instance, forward a draft of the proposed order of assessment (hereinafter in this section referred to as the draft order) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing of the assessment order. 31. In this case, there is no dispute that the provisions of Section 144C, read with Section 92CA of the said Act were applicable. There is no dispute that in the present case, the AO before making the assessment order dated 18/12/2009 gave a complete go-by to the detailed provisions contained in Section 144C of the said Act. Therefore, the first question that arises for determination is, whether the assessment order dated 18/12/2009 made by the AO in clear breach of the mandatory provisions of Section 144C of the said Act, was merely erroneous, as contended by Ms. Linhares, or, whether the same was null and void as contended by Mr. Kalra, the learned Counsel for the Assessee. 32. In Zuari Cement Ltd. (supra), the Division Bench of the Andhra Pradesh High Court, in almost identical circumstances, held that the assessment order is contrary to the mandatory provisions of Section 144C of the said Act and is 'one without jurisdiction, null and void and unenforceable'. In answer to the objection that no writ petition be entertained because the Assessee had a statutory appellate remedy, the Court held that since the impugned order was withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd based on the same, not only set aside the assessment order but also consequential order on rectification application, as well as the penalty. 35. Again in Lionbridge Technologies (P.) Ltd. (supra), another Division Bench of this Court, following the decision in International Air Transport Association (supra) held that a draft assessment order is necessary in terms of Section 144C(1) of the said Act before the AO can proceed to pass a final assessment order. In the absence thereof, the order is without jurisdiction. Non-issue of draft assessment order could not be corrected by issuing a corrigendum to a final assessment order. The Division Bench even rejected the contention that the Assessee was estopped from challenging the corrigendum, as it was expected by it that such a contention overlooked the fact that there can be no estoppel on the issue of law about jurisdiction. This Court held that if the corrigendum dated 16/4/2004 and the order dated 12/3/2014 of the AO were without jurisdiction, then, such an issue of jurisdiction can be raised at any time and the principles of estoppel will not apply. Mere consent of the parties does not bestow jurisdiction if the order is beyo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) for assessment year 2006-07 has been passed by Assistant Commissioner of Income-tax, Circle-l, Margao, on 18.12.2009 and income was assessed at ₹ 6,38,06,926/-. 3. While going through the assessment records for the above mentioned year, it is noticed that the aforesaid order is erroneous for the following reasons. The details are as under: 4. In the said assessment order, additions towards TPO adjustments u/s 92CA of ₹ 7,30,40,428/- was made in pursuant to the order passed u/s 92CA of the I.T. Act, dated 29.10.2009 by the Joint Director of income Tax (TP)-l, Bangalore. The said TPO s order was received in this office on 30.11.2009. 5. On receipt of the TPO s order, an opportunity of hearing was given to the assessee by this office, vide letter dated 10.12.2009 and the assessee has filed its submissions, dated 17.12.2009. On receipt of the assessees submissions, an order u/s 143(3) of the I.T. Act was passed on 18.12.2009. However, it is seen from the records that no draft assessment order was sent to the assessee before passing an order u/s. 143(3) of the I.T. Act as required u/s 144C of the I.T. Act. 6. As per the provisions of section u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction recorded on the aspect of the assessment order dated 18/12/2009 being prejudicial to the interest of the Revenue. In absence of a record of any such satisfaction, there was no question of invoking the revisional powers under Section 263 of the said Act. 41. Some of the decisions relied upon by Mr. Kalra also support the view that revisional jurisdiction under Section 263 of the said Act cannot be invoked in respect of an assessment order which is without jurisdiction or a nullity or void ab initio. However, according to us, it is not necessary to go into this issue, primarily because, the record, in this case, indicates that before the Commissioner invoked the revisional jurisdiction by the issuance of Notice dated 23/2/2012, the Commissioner nowhere recorded his satisfaction that the assessment order dated 18/12/2009 was prejudicial to the interest of the Revenue. 42. The ITAT, in this case, has not gone into the issue as to whether the Commissioner at all recorded any satisfaction that the assessment order dated 18/12/2009 was prejudicial to the interest of the Revenue. Instead, the ITAT has reasoned that since the assessment order dated 18/12/2009 was in breach of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l challenging the same, can make no difference to the legal position which is otherwise quite clear. This was not a case where the assessee was merely throwing some collateral challenge to the assessment order dated 18/12/2009. The assessee had frontally challenged this order by instituting an appeal against the same. Therefore, all these decisions could not have been ignored by the ITAT by merely observing that these were the decisions in Writ Petitions instituted by the Assessees. 46. For all the aforesaid reasons, the two substantial questions of law will have to be answered in favour of the assessee and against the revenue. Further, the order dated 23/2/2012 made by the CIT in the purported exercise of jurisdiction under Section 263 of the said Act, is liable to be set aside. Since this order has merged into the order of the ITAT dated 31/10/2014, even this impugned order made by the ITAT is required to be set aside. 47. As a consequence, even the two substantial questions of law, as framed in Tax Appeal No.78/2015, will have to be answered in favour of the Assessee and against the Revenue. Further, the impugned orders in the said appeal will also have to be set aside. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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