TMI Blog2023 (12) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... e Draft or Proposed Assessment Order and shall forward the same to the eligible assessee to enable the assessee to file the objections, if any, before the Dispute Resolution Panel. However, in the instant case, the Ld. AO has not passed the Draft Assessment Order, as mandated u/s. 144C(1) of the Act, before making the assessment and passed the Final Assessment Order. Therefore, AO has not followed the procedure laid down u/s. 144C(1) of the Act and passed the final assessment order. It was incumbent on the part of the Ld. AO to have passed a Draft Assessment Order to adhere to the mandatory requirement of section 144C(1) of the Act otherwise it would result in invalidation of the final assessment order and the consequent demand and penalty also. Failure on the part of the Ld. AO to pass a draft assessment order u/s. 144C(1) of the Act would vitiate the final assessment order as one without jurisdiction. Assessment order passed by the Ld. AO in the case of the assessee is without jurisdiction and in violation of the mandatory provisions of section 144C(1) of the Act and therefore the assessment order passed u/s. 153C of the Act is null and void and unsustainable in law. Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed its reply on 30/03/2022. Considering the replies and the statements recorded u/s. 132 of the Act, the Ld. AO, rejecting the explanation and submissions of the assessee, considered Rs. 34,02,29,806/- as income in the hands of M/s. Polisetty Somasundaram Global Limited on protective basis. Aggrieved by the addition of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A), after examining the submissions made by the Assessee s Representative, dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal and raised 17 grounds on various issues. 3. Additionally, the assessee has also filed a petition for admission of legal ground as follows: On the facts and circumstances of the case whether the final assessment order passed by the Assessing Officer in the case of the appellant which is a foreign company without issuing a draft assessment order as mandated under section 144C of the Act is null and void and unsustainable in law? 4. The petition for admission of legal ground is admitted . Before we proceed to adjudicate the original grounds of appeal raised by the assessee, we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, it was categorically held that failure to adhere to the mandatory requirement of section 144C(1) of the Act and failure to pass a draft assessment order, would result in invalidation of the final assessment order and the consequent demand notice and penalty proceedings. The Ld. AR also relied on the following case laws viz., (i) Judgment of the Hon ble Delhi High Court in the case of Control Risks India Pvt Ltd vs. DCIT , dated 27/07/2017 (ii) Judgment of the Hon ble Delhi High Court in the case of JCB India Ltd vs. DCIT, dated 7/9/2017; (iii) Judgment of the Hon ble Gujarat High Court in the case of CIT Vs. C-Sam (India) Pvt Ltd [2017] 398 ITR 182 (Guj.), dated 31/07/2017 in support of his arguments. The Ld. AR therefore pleaded that since the Draft Assessment Order was not passed by the Ld. AO in the case of the assessee violating the provisions of section 144C(1) of the Act, the Final Assessment Order passed by the Ld. AO is non-est in law and deserves to be quashed. Per contra, the Ld. Departmental Representative [DR] fully supported the orders of the Ld. Revenue Authorities. Further, the Ld. DR heavily relied on the judgment of the Hon ble High Court of Madras(Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) to (g) (7) to (14C) .. (15) . (a) (b) eligible assessee means, (i) any person in whose case the variation referred to in subsection (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company. 7. Section 144C(15)(b) of the Act defines the term eligible assessee . The term eligible assessee includes any nonresident not being a company, or any foreign company which was substituted by the Finance Act, 2020 w.e.f. 1/4/2020. Even prior to its substitution, the term eligible assessee includes foreign company . It is a fact that the assessee is a foreign company. Therefore, as per section 144C(1) of the Act, the Ld. AO is duty bound to pass the Draft or Prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in the case of International Air Transport Association v. Deputy Commissioner of Income-tax 3 of this Court and in the case of Zuari Cement Ltd v ACIT 4 of the Division Bench of the Hon'ble Andra Pradesh High Court has held that 'the failure to pass a draft assessment order under Section 144C(1) of the Act would result in rendering the final assessment as one without jurisdiction. Paragraphs 9,14,17 and 20 of Andrew Telecommunications (Supra) read as under: 9. The matter was sent back to the Transfer Pricing Officer who gave hearing to the Assessee and passed a fresh order on 30th January 2014. Thereafter, the Assessing Officer, without issuing any draft assessment order, proceeded to pass an order on 2nd February 2015. The Assessee challenged the said order before the Commissioner of Income Tax (Appeals) and the appeal was partly allowed by the commissioner of Income Tax (Appeals) by order dated 13th March 2015. As against this order, the Revenue filed the Income Tax Appeal No. 271/2015 before the Income Tax Appellate Tribunal and the Assessee filed a Cross Objection No. 62/2015. xxxxxxxxxxxx 14. Mr. Pardiwala contended that a draft assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order and the consequent demand and penalty proceedings . From the above judgments of the Hon ble High Court of Bombay (supra) and Hon ble High Court of Delhi (supra), it is clear and settled law that the failure on the part of the Ld. AO to pass a draft assessment order u/s. 144C(1) of the Act would vitiate the final assessment order as one without jurisdiction. Therefore, in our considered view, the assessment order passed by the Ld. AO is without jurisdiction and in violation of the mandatory provisions of section 144C(1) of the Act and therefore null and void and cannot be enforceable. 8. The case law relied on by the Ld. DR in the case of M/s. Volex Interconnect (India) Private Limited (supra) is a Single Judge decision . We are not inclined to grant the request of the Ld. DR to remand the matter for fresh consideration and to pass a draft assessment order because in the case of Ms.Volex Interconnect (Supra), the Hon ble Madras High Court has rendered the decision on the facts and circumstances of that case which are different from that of the assessee s case and failure on the part of the Ld. AO to pass draft assessment order Section 144C(1) of the Act has r ..... 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