TMI Blog2022 (1) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us - Decided in favour of assessee. - IT(IT)A No. 961/Bang/2017 - - - Dated:- 19-1-2022 - Shri. Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri Rajan Vora, CA. For the Revenue : Dr. Manjunath Karkaihalli, CIT DR. ORDER PER BEENA PILLAI, JUDICIAL MEMBER This appeal by assessee is directed against the order of the Ld.AO dated 27.02.2017 passed u/s. 143(3) r.w.s. 144C(14) of the Incometax Act, 1961 [the Act] on the following grounds: Based on the facts and circumstances of the case and in law, Cisco Systems Services B.V. - India Branch (hereinafter referred to as the 'Appellant.) respectfully craves leave to prefer an appeal against the order passed by the Deputy Commissioner of Income-tax (International Taxation) - Circle 1(1) ('Assessing Officer' or 'AO') dated February 27, 2017 in pursuance of the directions the revised directions issued by the Dispute Resolution Panel ('DRP'), Bangalore dated December 29, 2016 January 16. 2017 respectively, under section 253 of the Income-tax Act, 1961 ('Act) on the following grounds: That on the facts and in the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable companies identified by the Appellant using the related party transactions more than 25% of the sales as a comparability criterion: 13. The learned TPO/ learned AO have erred, in law and in facts, by not appreciating the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Rules, conducting a fresh economic analysis for the determination of the ALP in connection with the impugned international transaction and holding that the Appellant's international transaction is not at arm's length. 14. The learned TPO/ learned AO have erred, in law and in facts, by applying the filter of companies having different accounting year for rejecting the comparable companies (i.e., companies having accounting year other than March 31 or companies whose financial statements were for a period other than 12 months): 15. The learned TPO/ learned AO have erred, in law and in facts, by determining the arm's length margin/price using only FY 2011-12 data, which was not available to the Appellant at the time of complying with the transfer pricing documentation requirements. 16. The learned TPO/ learned AO have erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yog Limited The Assessee craves. to consider the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal. 3. The assessee has also raised additional ground dated 08.04.2021 as follows: Based on the facts and circumstances of the case and in law, Cisco Systems Services B V - India Branch (hereinafter referred to as the `CSS BV - India BO' or 'Appellant'), respectfully craves leave to file additional ground of appeal, in addition to the grounds of appeal filed previously by the Appellant on April 28, 2017 which is detailed herein below: Validity of draft assessment order 22. The learned AO has erred in issuing the notice of demand under section 156 of the Act and notice initiating penalty proceeding under section 271(1)(c) along with draft assessment order and thereby making the same as final order and thus, not following the provisions of section 144C of the Act and hence, the order passed by the learned AO is bad in law and merits to be quashed. The Appellant craves leave to add, alter, amend, vary, omit or substitute the aforesaid ground of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... August 26, 2020 6. Pune Tribunal in the case of Kohler Power India Private Limited (ITA No, 2467/PUN/2016) dated August 26, 2019 7. Delhi Tribunal in the case of Perfetti Van Melle (India) Pvt. Ltd. (ITA No 9116/De1/2019) dated August 11, 2020 8. Pune Tribunal in the case of M/s. Sandvik Asia Pvt. Ltd. (ITA No. 607/PUN/2014 ITA No. 465/PUN/2014) dated March 26, 2018 9. Pune Tribunal in the case of Skoda Auto India Pvt. Ltd. (ITA No. 2344/PUN/2012) dated June 03, 2019 10. Pune Tribunal in the case of Soktas India Pvt. Ltd. (ITA No. 206/PUN/2015) dated December 09, 2016 11. Supreme Court in the case of Kalyan Kumar Ray v. CIT [191 ITR 634] dated August 06, 1991 12. Madras High Court in case of GE Oil Gas India Pvt Ltd (WP 1575/2020) dated 5 January 2021 6. On the contrary, the Id. DR submitted that the order passed by the AO is valid in law as the assessee ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss accordingly, and determine the sum payable by the assessee on the basis of such assessment; (ii) issued under clause (ii) of sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment: Provided that in the case of a -- (a) research association referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (d) institution referred to in clause (23B) of section 10; (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso to clause (15) of section 2 become applicable in the case of such person in such previous year, whether or not the approval granted to such trust or institution or notification issued in respect of such trust or institution has been withdrawn or rescinded. 144C. Reference to dispute resolution panel.-- (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter 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. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,-- (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with, -- (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if -- (a) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. (14) The Board may make rules52 for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. The following sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a corrigendum on 15.04.2013. In the corrigendum it was only stated that the order passed on 26.03.2013 under Section 143C of the Act has to be read and treated as a draft assessment order as per Section 143C read with Section 93CA (4) read with Section 143 (3) of the Act. In and by the order dated 15.04.2013, the second respondent granted thirty days time to enable the assessee to file their objections. On receipt of the corrigendum dated 15.04.2013, the petitioner company approached the first respondent, but the first respondent declined to issue any direction to the assessment officer on the ground that the first respondent has got jurisdiction only to entertain such an appeal if the order passed by the second respondent is a pre-assessment order. Therefore, it is evident that the first respondent declined to entertain the objections raised by the petitioner company on the ground that the order passed by the second respondent is not a draft assessment order, rather it is a final order. Thus, the first respondent had treated the order dated 26.03.2013 of the second respondent as a final order and therefore it refused to entertain the objections filed on behalf of the petitioner c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er lacks inherent jurisdiction, such an order will be null and void ab initio, as the defect of jurisdiction goes to the root of the matter and strikes at his very authority to pass any order and such a defect cannot be cured even by consent of the parties. 24. This decision squarely applies to the facts of this case. In this case, the order passed by the second respondent lacks jurisdiction especially when it is beyond the period of limitation prescribed by the statute. When there is a statutory violation in not following the procedures prescribed, such an order cannot be cured by merely issuing a corrigendum. 25. In the decision rendered by the Honourable Supreme Court of India in the case of (L. Hazari Mal Kuthiala (supra), which was relied on by the learned standing counsel for the respondents, it was held that the mistake or defect on the part of the Commissioner to consult the Central Board of Revenue did not render his order invalid since the provision about consultation in terms of Section 5 (3) of Patiala Act was merely directory and not mandatory. In the present case, the procedure that was required to be followed by the second respondent to pass a draft asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections) would not amount to a mistake, a defect or an omission, much less a curable one. When different contingencies are dealt with under different sections of the Act, allowing an illegality to be perpetrated and then taking a plea by the Revenue that such an action adopted on their part would not nullify the proceedings, cannot be appreciated since by virtue of such actions, the Revenue has attempted to nullify the scheme of things of limitations legally propounded under the Act.... 29. In yet another decision of the Division Bench of this Court in the case of Smt. R.V. Sarojini Devi (supra), which was relied on by the learned senior counsel for the petitioners, it was held s follows:-- Under Section 158BC of the Act empowers the assessing officer to determine the undisclosed income of the block period in the manner laid down in Section 158BB and 'the provisions of Section 142, subsections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be apply. This indicates that this clause enables the Assessing Officer, after the return is filed, to complete the assessment under Section 143 (2) by following the procedure like issue of notice unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objections and then complete assessment. Admittedly, this has not been done and the respondent has passed a final assessment order dated 22.12.2011 straight away. Therefore, the impugned order of assessment is clearly contrary to S.144C of the Act and is without jurisdiction, null and void. The contention of the Revenue that the circular No.5/2010 of the CBDT has clarified that the provisions of S.144C shall not apply for the assessment year 2008-09 and would apply only from the assessment year 2010-2011 and later years is not tenable in as much as the language of Sub-section (1) of Section 144C referring to the cut off date of 01.10.2009 indicates an intention of the legislature to make it applicable, if there is a proposal by the Assessing Officer to make a variation in the income or loss returned by the assessee which is prejudicial to the assessee, after 01.10.2009. Therefore, this particular provision introduced by Finance (No.2) Act, 2009, would apply if the above condition is satisfied and other provisions, in which similar contrary intention is not indicated, which were introduced by the said enactment, would apply from 01.04.2009 i.e., from the assessment year 2010-2011. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in and by the order dated 26.03.2013, the second respondent determined the taxable amount and also imposed penalty payable by the petitioner. According to the learned senior counsel for the petitioners, even as on this date, the website of the department indicate the amount determined by the second respondent payable by the company inspite of issuance of the corrigendum on 15.04.2013 as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even withdraw the taxable amount determined by him or updated the status in the website. In any event, such an order dated 26.03.2013 passed by the second respondent can only be construed as a final order passed in violation of the statutory provisions of the Act. The corrigendum dated 15.04.2013 is also beyond the period prescribed for limitation. Such a defect or failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the corrigendum dated 15.04.2013. By issuing the corrigendum, the respondents cannot be allowed to develop their own case. Therefore, following the order passed by the Division Bench of the Andhra Pradesh High Court, which was also aff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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