TMI Blog2022 (1) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... section 144(1) of the Act and is not a curable defect and would vitiate the entire assessment order is upheld. Therefore, we uphold the impugned action of Ld. CIT(A) on the reasons aforestated by us and, therefore, we hold that the order of the AO dated 23.12.2018 is null in the eyes of law and so unenforceable. Therefore, the appeal of the revenue stands dismissed. Assessment u/s. 143(3) of the Act has been held to be void/non est - Since the subject matter of the appeal of the assessee was before the Ld. CIT(A) and the Ld. CIT(A) has held the AO's assessment order to be void vide order dated 09.09.2020 the question of Ld. Pr. CIT later revising the same by order dated 24.03.2021 does not arise. - I.T.A. Nos. 115/Pat/2020 and 31/Pat/2021 - - - Dated:- 5-1-2022 - A.T. Varkey, Member (J) And Rajesh Kumar, Member (A) For the Appellant : Ajay Rastogi, Senior Advocate For the Respondents : Sanjay Mukherjee, CIT, DR ORDER Per Shri A.T. Varkey, JM ITA No. 115/Pat/2020 is against the order of Ld. CIT(A), Patna-1 dated 09.09.2020 for A.Y. 2015-16 and ITA No. 31/Pat/2021 is against the order of Ld. Pr. CIT, Patna-1 dated 24.03.2021 for A.Y. 2015-16. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be adjudicated is what would be the fate of an assessment order (final) made by an AO without complying with the provisions of section 144C(1) of the Act by not framing the draft assessment order and in that process in not providing the assessee's discretion to file objection before the Dispute Resolution Panel (DRP) within the statutory prescribed time provided therein. We note that this issue is no longer res integra as held by the Hon'ble Madras High court in the case of M/s. Vijay Television Vs. DRP (2014) 225 Taxman 35 (Mad) and the Hon'ble High Court of Andhra Pradesh in M/s. Zuari Cements Ltd. Vs. ACIT (Petition CC No. 16694/2013 dated 27.09.2013) and the department's appeal (SLP) in the case of M/s. Zuari Cements Ltd. has been dismissed by the Hon'ble Supreme Court after hearing the counsel for the department. According to the ratio decidendi of the aforesaid judicial precedents it was laid down that the omission on the part of the AO not to comply with the provisions of section 144(1) (2) of the Act and thereby not framing the draft assessment order and consequently not providing the assessee the discretion to file objection before the DRP within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer shall in the first instance forward the draft of the proposed assessment order to the assessee and thereafter, if no objections are received and/or the assessee files his acceptance to the variation to the Assessing Officer, then the Assessing Officer is empowered to complete the assessment within one month from the end of the month thereof. However, in the event the assessee exercises his discretion as per section 144C(2)(b) of the Act and files his objection before the DRP, then the AO cannot pass the final order and has to await for the directions of the DRP; and thereafter the DRP on the objection raised by the assessee gives directions to the AO, then the Assessing Officer on receipt of such directions shall complete the assessment (final) in conformity with such directions of the DRP. Therefore, in view of the aforesaid provisions of the Act, we note that the compliance of the aforesaid exercise as contemplated under section 144C of the Act is mandatory in the event where the TPO proposes variation in the income or loss returned in the case of an eligible assessee to the prejudice of the assessee. Only after complying with the exercise as laid down in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a draft assessment order or it can be rectified by issuing the corrigendum. In fact, pursuant to the order of assessment under section 143(3), 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 the corrigendum issued by the second respondent are vitiated by errors apparent on the face of the record and they are legally not sustainable. 8. Further we note that the Hon'ble High Court of Andhra Pradesh in M/s. Zuari Cements Ltd. Vs. ACIT (Petition CC No. 16694/2013 dated 27.09.2013) on similar issue where after receipt of the order passed by the TPO under section 92CA(3) of the Act, the Assessing Officer had passed the assessment order under section 143(3) of the Act raising a demand of ₹ 27,40,71,913/- without giving an opportunity/discretion to the assessee under section 144C of the Act as to whether it prefers to file objection before the DRP i.e. the AO without passing the draft assessment order as contemplated u/s. 144C(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 144C of the Act and then only ought to have passed the final assessment order. 10. In view of the aforesaid discussion, we hold that the AO's omission to frame draft assessment order breached the Rule of Law and consequently, his non-action to frame draft assessment order before passing the final assessment order was in contravention of mandatory provision of law as stipulated in section 144C of the Act. Consequently his action is arbitrary whimsical and such exercise of power by the AO offends Article 14 21 of the Constitution of India and therefore framing of final assessment order without framing draft assessment order is held to be an action without jurisdiction and ergo the assessment order dated 23.12.2018 is null in the eyes of law and, therefore, the impugned action of Ld. CIT(A) in holding that the AO could not have passed the final assessment order without first passing a draft assessment order is in violation of section 144(1) of the Act and is not a curable defect and would vitiate the entire assessment order is upheld. Therefore, we uphold the impugned action of Ld. CIT(A) dated 09.09.2020 on the reasons aforestated by us and, therefore, we hold that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act, 1961. 6. For the above referred reasons and the facts on record, I deem it fit to cancel and set aside the assessment order u/s. 143(3) of the I.T. Act, 1961 dated 23.12.2018 passed by the AO for A.Y. 2015-16 without making enquiries and verification which should have been made as discussed above. 7. Accordingly, the assessment order passed u/s. 143(3) of the I.T. Act, 1961 dated 23.12.2018 for A.Y. 2015-16 is cancelled and set aside with direction to the AO to frame the assessment de novo by making fresh enquiries, investigation and verification for determination of Arm's Length Price in respect of Specified Domestic Transactions entered by the assessee with Associated Enterprises after making fresh reference to the TPOI in the light of deficiencies and infirmities discovered in the order of the TPO u/s. 92CA(3) of the I.T. Act, 1961 dated 31.10.2018. 13. Thus, it is noted that the Ld. Pr. CIT was pleased to cancel and set aside the AO's assessment order passed u/s. 143(3) dated 23.12.2018 for A.Y. 2015-16 with direction to the AO to frame assessment de novo by making fresh enquiries and verification for determination of Arms Length Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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