TMI Blog2022 (12) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (DR) ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER: Captioned appeals have been filed by the same assessee, assailing a consolidated order dated 21.12.2015 passed by learned Commissioner of Income-Tax (Appeals)-1, Noida. Though, in the aforesaid consolidated order, learned Commissioner (Appeals) has disposed of appeals relating to four different assessment years, however, presently, we are concerned with the assessment years 2009- 10 and 2010-11. 2. In addition to the grounds raised in the Memorandum of Appeal, the assessee vide letters dated 9th September 2019 has raised the following common additional ground in both these appeals: 1. That on the facts and circumstances of the case and in law, the assessment order dated March 30,2104 issued by the Assessing Officer ( AO ) is bad in law and void ab initio as the same has been passed in violation of section 144C(1) of the Income-Tax Act, 1961 ( Act ). 3. Since, in the aforesaid additional ground assessee has raised a purely legal and jurisdictional issue going to the root of the matter and which can be decided without making investigation into fresh facts, we admit the additional ground for adjudicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition, learned counsel relied upon the following decisions: i ) Decision of Hon'ble Supreme Court in case of Zuari Cement Ltd. vs. ACIT bearing SLP No. 16694/2013 (SC) affirming the decision of Hon ble Bench of Andhra Pradesh High Court in the case of WP(C) No. 5557/2012(AP); ii ) DCIT vs. Control Risks India Pvt. Ltd.: [2019] 264 Taxman 91 (SC); iii) ACIT vs. Nokia India Pvt. Ltd.: [2018] 259 Taxman 91 (SC); iv ) Turner International India (P) Ltd. vs. DCIT [2017] 398 ITR 177 (SC); v ) PCIT vs. Headstrong Services India Pvt. Ltd.: [2021] 278 Taxman 224 (Del). 7. Shri Mahesh Shah, learned CIT (DR), appearing for the Revenue submitted that the provisions contained under Section 144C of the Act were brought to the Statute by Finance Act (No.2) Act, 2009 with retrospective effect from 01.04.2009. He submitted, the Central Board of Direct Taxes (CBDT) had issued an explanatory Circular, vide Circular No. 5 of 2010 dated 03.06.2010, explaining that, since, the amendment brought to the Statute by Section 144C of the Act has been made applicable with effect from Ist October 2009, the said provision will apply in relation to assessment year 2010-11 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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). (4) The Assessing Officer shall, notwithstanding anything contained in section 153, pass the assessment order under sub-section (3) within one month from the end of the month in which,- (a ) the acceptance is received; or (b ) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:- (a ) draft order; (b ) objections filed by the assessee; (c ) evidence furnished by the assessee; (d ) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e ) records relating to the draft order; (f ) evidence collected by, or caused to be col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpart greater efficiency, transparency and account, ability by a) eliminating the interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible; b) optimising utilization of the resources through economies of scale and functional specialisation; c) introducing a mechanism with dynamic jurisdiction for issuance or directions by dispute resolution panel. (14C) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (14B), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, [2024]. (14D) Every notification issued under sub-section (14B) and sub-section (14C) shall, as soon as may be after the notification is issued , be laid before each House of Parliament.] (15) For the purposes of this section,- (a ) Dispute Resolution Panel means a collegium comprising of three Commissioners of Income-tax constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the Assessing Officer has made the variation to the income returned by assessee after the cut off date of Ist day of October, 2009. Therefore, the provisions of section 144C(1) are clearly applicable to the assessee. However, it is a fact on record that instead of forwarding a draft assessment order in terms with the mandatory provisions of section 144C(1) of the Act, the Assessing Officer has passed a final assessment order under Section 153A of the Act. Pertinently, though, Section 153A of the Act overrides certain provisions of the Act, however, it has no impact on section 144C of the Act. 12. A plain reading of section 144C(1) of the Act makes the provision very much clear and leaves no room for any ambiguity. Irrespective of the assessment year involved, it is incumbent upon the Assessing Officer to propose a draft assessment order, in case, he makes any variation to the income returned by an eligible assessee after the Ist day of October 2009, which is prejudicial to the interest of such assessee. Thereafter, the procedure laid down in the other provisions of section 144C would follow. Thus, in sum and substance, section 144C is a complete code by itself and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue the directions referred to in sub-section (5), after considering the following, namely:- ( a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. A reading of the above section shows that if the Assessing Officer proposes to make, on or after 01.10.2009, any va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Bill and the Notice and clauses accompanying the Finance Bill which preceded the Finance (No.2) Act, 2009 clearly indicated that the amendments relating to S. 144C would take effect from 01.10.2009. In our view, the circular No. 5/2010 issued by the CBDT stating that S. 144C(1) would apply only from the assessment year 2010- 11 and subsequent years and not for the assessment year 2008-09 is contrary to the express language in S. 144C(1) and the said view of the Revenue is unacceptable. The circular may represent only the understanding of the Board/Central Government of the statutory provisions, but it will not bind this court or the Supreme Court. It cannot interfere with the jurisdiction and power of this court to declare what the legislature says and take a view contrary to that declared in the circular of the CBDT (rattan Melting and Wire Industries Case (1 supra), Indra Industries (2 supra). The Revenue has not been able to persuade us to take a contra view by citing any authority. In this view of the matter, we are of the view that the impugned order of assessment dt. 23.12.2011 passed by the respondent is contrary to the mandatory provisions of S. 144C of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 reads as under: 45.5 Applicability: These amendments have been made applicable with effect from 1st October, 2009 and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958 (E) dated 20th November, 2009. In the above extracted Para 45.5 there has been an inadvertent error in stating the applicability of the provisions of section 144C inserted vide Finance (No.2) Act, 2009 that amendments will apply in relation to the assessment year 2010- 11 and subsequent assessment years. Accordingly, para 45.5 is replaced with the following: 45.5. Applicability: Section 144C has been inserted with effect from 1st April, 2009. Accordingly, the Assessing Officer is required to forward a draft assessment 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. In other words section 144C is applicable to any order which proposes to make variation in income or loss returned by an eligible assessee, on or after 1st October, 2009 irrespe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The procedure laid down under Section 144C of the Act is thus of great importance. When an Assessing Officer proposes to make variations to the returned income declared by an eligible assessee he has to first pass a draft order, provide a copy thereof to the assessee and only thereupon the assessee could exercise his valuable right to raise objections before the DRP on any of the proposed variations. In addition to giving such opportunity to an assessee, decision of the DRP is made binding on the Assessing Officer. It is therefore not possible to uphold the Revenue's contention that such requirement is merely procedural. The requirement is mandatory and gives substantive rights to the assessee to object to any additions before they are made and such objections have to be considered not by the Assessing Officer but by the DRP. Interestingly, once the DRP gives directions under sub-section (5) of Section 144C, the Assessing Officer is expected to pass the order of assessment in terms of such directions without giving any further hearing to the assessee. Thus, at the level of the Assessing Officer, the directions of the DRP under sub-section (5) of Section 144C would bind even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear statutory provision as contained under Section 144C(1) of the Act. It is noteworthy, in case of DCIT vs. Control Risk India (P) Ltd. (supra), the Hon'ble Supreme Court has upheld the decision of Hon'ble jurisdictional High Court, laying down the ratio that consequent upon an order of the TPO under Section 92CA(3) of the Act, it would be incumbent upon the Assessing Officer to pass a draft assessment order under Section 144C(1) of the Act. The other decisions cited by learned counsel for the assessee express identical view. 19. We are conscious of the fact that in case of M/s. Vedanta Ltd. Vs. ACIT (supra), the Hon'ble Madras High Court has held that provisions of section 144C would be applicable from assessment year 2010-11 and subsequent assessment years. However, with due respect, we are unable to persuade ourselves to apply the ratio laid down in case of M/s. Vedanta Ltd. Vs. ACIT (supra) due to the following reasons. Firstly, the decision of the Hon'ble Andhra Pradesh High Court in case of Zuari Cement Ltd. (supra) was not considered in case of M/s. Vedanta Ltd. (supra). Secondly, the decision in case of Zuari Cement Ltd. (supra) was rendered by the Divis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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