TMI Blog2021 (5) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 25-5-2021 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER Assessee by : Sh. Ajay Vohra, Sr. Adv. Revenue by : Sh. Prabha Kant, CIT DR ORDER PER N.K. BILLAIYA, A.M. 1.With this appeal the assessee has challenged the validity of the assessment order dated 19.08.2011 framed u/s 144C(13)/143(3)/254 of the Act. 2.The assessee has raised the following grounds of appeal: 1.Based on the facts and circumstances of the case and in law, the order passed by the Ld. Assistant Director of Income-tax (hereinafter referred to as the Ld. Assessing Officer ) in pursuance to the directions of the Hon ble Dispute Resolution Panel 1 (hereinafter referred to as the Ld. DRP ) under section 143(3) read with section 144C of the Income Tax Act, 1961 ( Act ), is bad in law and void ab- initio. 2.Based on the facts and circumstances of the case and in law, the Hon ble DRP has erred in confirming the additions proposed by the Ld. Assessing Officer, determining the taxable income of the appellant for the subject assessment year at ₹ 197,829,055 as against loss of ₹ 5,030,030 returned in the return of income. 3.B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication dated 12.01.2021 the assessee has requested the Bench for the admission of additional ground of appeal under Rule 11 of the ITAT Rules, 1963. The additional ground raised reads as under: That on the facts and circumstances of the case and in law, the assessment completed under section 144C(13)/143(3) of the Income Tax Act, 1961 is bad in law, void ab initio and barred by limitation. 4.We have carefully perused the aforementioned additional ground of appeal. By way of this additional ground the assessee seeks to challenge the validity and legality of the impugned assessment on the ground that the provisions of section 144C of the Act introduced by the Finance (No. 2) Act, 2009 w.e.f. 01.04.2009 has no application for the impugned assessment year. 5.We are of the considered view that the admission of the aforementioned additional ground does not require verification of any new fact. The section, date of the assessment order are very much there in the face of the assessment order itself, therefore, the additional ground raised by the assessee is admitted for adjudication. 6.Since the additional ground goes to the root of the matter, we proceed to decide it fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment (hereinafter 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. The aforesaid section 144C of the Act can only apply prospectively i.e. from AY 2011-12 and is not applicable to the captioned assessment years. The Hon ble High Court of Madras in the case of M/s Vedanta Limited vs. ACIT Writ Petition No. 1729 of 2011 has categorically held that the provisions of section 144C of the Act can be held to be applicable prospectively, from AY 2011-12 only. The relevant findings read as under: 26. Thus, where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has ensured to the parties by virtue of the introduction of section 144C, that, bearing in mind the settled position that the law applicable on the first day of assessment year be reckoned as the applicable law for assessment for that year, leads one to the inescapable conclusion that the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of order 24/12/2020) has categorically held that any order involving international transaction and eligible assessee passed after 1/10/2009 which has not been passed as per section 144C of the IT Act, irrespective of assessment year involved, is bad in law and is void ab-initio. The Hon ble HC has imposed cost of ₹ 10,000/- on AO for not following provisions of section 144C in an order for AY 2007-08 when the order was passed 31/03/2014. In this case also original Draft assessment order was passed on 31/10/2010, DRP confirmed the draft assessment order. AO passed final order. The assessee challenged final assessment order in ITAT Delhi. ITAT Delhi set aside the final assessment order and restored the matter to AO to pass fresh assessment order. In the second innings, the AO did not follow the provisions of section 144C, he passed the final order dated 31/03/2014 without passing the draft assessment order. The assessee filed appeal with CIT(A). The CIT(A) partially allowed the appeal. Against the CIT(A) order the assessee again filed appeal in ITAT, Delhi. ITAT Delhi vide it s order dated 30/09/2015 quashed the assessment order dated 31/03/2014 holding it to be in violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, 2020 issued by the Board clarifying that the substantive procedure of assessment enshrined in section 144C of the Act would apply from AY 2011-12 onwards and the ratio laid down by the Hon ble Supreme Court in the case of Karimtharuvi Tea Estate Ltd. vs. State of Kerala (60 ITR 262) to the effect that assessment has to be made as per the law in force on the first date of the assessment year. The decisions relied upon by the Revenue, including the decision from the Division Bench of the Madras High Court, do not specifically deal with the aforesaid controversy since the same having not been canvassed before the Hon ble Court, the Hon ble Court did not have any occasion to deal with the same. 14.In our considered view the decision of the Court is an authority for what it decides having regard to the facts and controversy projected before the Court as is evident from the following extract from the decision of the Hon ble Supreme Court in the case of Sun Engineering Works (P) Ltd. 198 ITR 297 at page 320: . . It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner or Chief Commissioner or Principal Commission or Commissioner or, as the case may be, the order u/s 263 or section 264 or section 264 is passed by the Pr. Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 17.In the light of the judicial discussion mentioned elsewhere on the facts of the case discussed hereinabove, we have no hesitation in holding that the assessment order dated 19.08.2011 is barred by limitation. 18.Before parting, the DR has placed strong reliance on the decision of the Hon ble Delhi High Court in the case of Headstrong Service India P. Ltd. in ITA No. 77/2019 order dated 24.12.2020. This decision is not applicable to the dispute under consideration because in that case, the Revenue had contended that the procedure in section 144C of the Act would not apply in the remand proceedings considering that sub section (1) of the said section uses the expression in the first instance . Repelling the aforesaid argument on the side of the Revenue, the Hon ble High Court observed that since the original assessment in that case had been completed by following the procedure prescribed u/s 144C of the Act, in the remand proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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