TMI Blog2021 (9) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... to above. The circumstances in the said orders are slightly different. For the purpose of appreciating that the order is erroneous insofar as it is prejudicial to the interest of Revenue is sine qua non for taking recourse to the power under Section 263. The appellant had reasons to believe that a few matters required reconsideration by the Assessing Officer, the remedy is not by interdicting a draft assessment order proposed in Annexure-B, but a different mechanism is available as per the scheme of the Act. Tribunal noticed that from the scheme of the Act the draft assessment order is only a proposed assessment order and there is no demand notice attached to the draft assessment order. In cases covered by Section 144C of the Act, the assessment order comes into picture only after an assessment order is passed pursuant to draft assessment order or in compliance with the directions of the DRP. Draft assessment order by itself cannot levy tax on the assessee. There is no question of loss of revenue in the draft assessment order. It is further held that Section 263 has no application for revising the draft assessment order proposed by the AO. Also the scheme of the Act and the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he directions issued by DRP. The Assessing Officer vide order dated 18.02.2015 in Annexure-D made the assessment in terms of directions issued in Annexure- C order dated 26.12.2014. Though it is not germane for adjudicating the controversy arising in the appeal, but it is contextual to refer to the circumstance that the assessee and the Revenue questioned the assessment order dated 18.02.2015 before the Income Tax Appellate Tribunal (for short 'the Tribunal'). On 23.03.2016 the Principal Commissioner of Income Tax/appellant, purporting to exercise his power and jurisdiction under Section 263 of the Act, directed the Assessing Officer as follows: This issue was not properly examined by the Assessing Officer. The Assessing Officer also did not examine the applicability of Section 40(a)(ia) in respect of payment to persons on account of R D expenditure claimed. Hence the order dated 28.03.2014 is erroneous in so far as it is prejudicial to the interests of revenue on the above discussed points. To that extent the order passed under section 144C read with Section 143(3) of the Income-tax Act, 1961, dated 28.03.2014 is set aside and the Assessing Officer is directed to exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emedy even when availed is limited to the issues concerning the draft assessment order, directions of DRP, and assessment made by the Assessing Officer, but not to the items which are not included in the return of the assessee or wrong application of fact or law, resulting in prejudice to the Revenue. These are and were independent of orders in Annexures-B, C, and D. Hence, the invocation of revision power under Section 263 of the Act is correct and valid. He prays for allowing the appeal. 5. Learned Senior Advocate Sri.Joseph Markos argues that the exercise of jurisdiction under Section 263 of the Act, in the admitted circumstances of the case, is completely illegal and unavailable. By explaining the scheme of Section 144C of the Act, it is argued, Annexure-B order dated 28.03.2014 is nothing but a draft assessment proposed by the Assessing Officer. The assessee, upon receipt of notice of draft assessment order, has options either to accept the draft assessment or file objections on the dis-allowances, additions etc made by the Assessing Officer. In the case on hand, the objections were filed by the assessee. This resulted in the draft assessment order in Annexure-B, being forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer when proposes to make any variation in the income or loss returned by the assessee which is prejudicial to the interest of such assessee serves on the assessee a draft of the proposed assessment order (2) The assessee shall within the time permitted in this behalf, could either: (a) file his acceptance of the variation to the Assessing Officer; or (b) file his objections, if any, to variations proposed in the draft assessment order. 7.1 In a case where the assessee either accepts or does not file objection, the Assessing Officer is authorized to make the draft as final assessment. Per contra, in a case where objections are received by the Assessing Officer, the case is made over to DRP for resolution. This mechanism is more in the nature of an alternate dispute resolution mechanism for expeditious finalization of disputed returns falling under Section 144C of the Act. The DRP conducts hearing/enquiry, issues directions to the Assessing Officer on the draft assessment forwarded to DRP for directions. The Assessing Officer complies with the directions and issues the assessment order. Section 144C is not reproduced, for, in the present case, the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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