TMI Blog2023 (10) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... uld force one to reach to the conclusion that though it is termed as draft assessment order, in fact, it is the final assessment order and the notice of demand and penalty was accompanying the same. As decided in M/s.Zuari Cement Ltd. as confirmed by SC [ 2013 (9) TMI 1167 - SC ORDER] AO is mandated to first pass a draft assessment order, communicate it to the assessee, hear his objections and then complete assessment. Admittedly this has not been done and the respondent has passed a final assessment order dt.23.12.2011 straight away. Therefore, the impugned order of assessment is clearly contrary to S.144C of the Act and is without jurisdiction, null and void As per legal position as is required under Section 144-C of the Act and also taking note of the contents of the operative part of the so called assessment order, in the considered opinion of this Bench leads to the only conclusion of the order being a final assessment order, more particularly, when the authority concerned has also ordered and directed for initiation of penalty proceedings simultaneously along with the draft assessment order. Hence, this Bench has no hesitation in reaching to the conclusion that the findings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der law which is in dispute in the present appeal. 6. The dispute in the instant case is that when the draft Assessment Order under Section 144-C was sent to the respondent/assessee, it also was accompanied by a notice of demand and penalty under Section 271(1)(c) of the Act. It is said that the respondent/assessee did not respond to the said notice and as a consequence, the final assessment order was passed on 10.01.2019. The respondent/assessee immediately preferred an appeal before the CIT (Appeals) on the very same day i.e. on 10.01.2019, which was rejected by the CIT (Appeals), leading to filing of an appeal before the Tribunal. The Tribunal after considering the contentions put forth by the parties, allowed the appeal, thereby setting aside the order passed by the CIT (Appeals). It is this order under challenge by the respondent- Department by way of the instant appeal. 7. The contention of the learned counsel for the respondent-Department all along was that in fact the authorities concerned had issued a draft Assessment Order on 11.12.2018 calling for the objections from the respondent/assessee on the draft Assessment Order. And it is only when the respondent/assessee failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of at this juncture, is the requirement of law. The reference to dispute resolution panel is what is envisaged under Section 144-C of the Act. The relevant provision of Section 144-C is reproduced hereunder: 144C. (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) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions, complete, notwithstanding anything to the contrary contained in section 153, 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 rules 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. (15) For the purposes of this section, (a) Dispute Resolution Panel means a collegium comprising of three Commissioners of Income-tax constituted by the Board for this purpose; (b) eligible assessee means, (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub- section (3) of section 92CA; and (ii) any foreign company. . A plain reading of sub-Sections 1, 2, 6, 8 and 13 of Section 144-C would clearly spell out the requirement of law. Admittedly in the instant case, in addition to the draft assessment order, there was also a notice of demand and penalty which was enclosed. A plain reading of sub-Section 8 of Section 144-C w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessing officer is required to pass only a draft assessment order on the basis of the recommendations made by the TPO after giving an opportunity to the assessee to file their objections and then the assessing officer shall pass a final order. According to the learned senior counsel for the petitioners, this procedure has not been followed by the second respondent inasmuch as a final order has been straightaway passed without passing a draft assessment order. As rightly pointed out by the learned senior counsel for the petitioners, in the order passed on 26.03.2013, the second respondent even raised a demand as also imposed penalty. Such demand has to be raised only after a final order has been passed determining the tax liability. The very fact that the taxable amount has been determined itself would show that it was passed as a final order. In fact, a notice for demand under Section 156 of the Act was issued pursuant to such order dated 26.03.2013 of the second respondent. Both the order dated 26.03.2013 and the notice for demand thereof have been served simultaneously on the petitioner. Therefore, not only the assessment is complete, but also a notice dated 28.03.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed as pre-assessment order. It is further evident from the materials available on record that when the assessee approached the DRP against the above assessment order u/s 144-C (2), the DRP has categorically refused to entertain the appeal pointing out that no draft assessment order has been placed before it for taking up the matter. In essence, the DRP itself has confirmed that the order passed by the AO is a final order and not a draft assessment order. Therefore, it is very clear that what has been issued is not a Draft Assessment Order, as contemplated u/s 144-C of the Income Tax Act, but a final order, as mandated u/s 143(3) of the Act. However, the contention now raised is that the mistake stood corrected by issuance of the corrigendum dated 15.4.2013 and, therefore, for all purposes the assessment order should be treated as final assessment order. Will the corrigendum, which has been issued on 15.4.2013 cure the defect that has crept into the order and, thereby, rectify the mistake committed by the Revenue and enable treatment of the assessment order as a draft assessment order is the point, which requires the determination of this Court. From the above it is unambi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 156 may be issued after completion of the assessment under section 144C(13) . 17. The Bombay High Court also in somewhat similar circumstances in the case of SHL (India) Private Limited Vs. Deputy Commissioner of Income Tax at paragraph Nos.25 and 26 held as under: In our view, the following principles emerge from the above discussion :- (i) that the procedure prescribed under Section 144C of the IT Act is a mandatory procedure and not directory (ii) failure to follow the procedure under Section 144C(1) would be a jurisdictional error and not merely procedural error or irregularity. (iii) Therefore, Section 292B of the IT Act cannot save an order passed in breach of the provisions of Section 144C(1), the same being an incurable illegality. It is important to note that Section 144C(1) is a non- obstante provision, which requires its compliance irrespective of the other provisions that may be contained in the IT Act. There is no dispute that Petitioner is an eligible assessee and also there is no dispute as to the applicability of Section 144C. It is also not in dispute that the final Assessment Order has been passed without the draft Assessment Order as contemplated under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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