TMI Blog2024 (4) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... stage itself. 2. Rule. Rule made returnable forthwith. 3. Petitioner has challenged an order along with demand notice dated 30th January 2023 passed by Respondent No. 1 Deputy Commissioner of Income Tax 6(1)(1), Mumbai who is also an Assessing Officer (A.O.) of petitioner giving effect to the order of the Income Tax Appellate Tribunal (ITAT) for the Assessment Year (A.Y.) 2009-10. It is petitioner s case that the impugned order is non-est, time barred and results in the abatement of the assessment to assessee. Consequently, petitioner is entitled to refund all taxes paid for A.Y. 2009-10 in excess of what was payable as per the return of income along with applicable interest arising on such refund. 4. Petitioner filed its return of income for A.Y. 2009-10 on 25th September 2009 declaring an income of Rs. 44,59,83,972/-. Petitioner s case was selected for scrutiny assessment and the A.O. referred petitioner s case to the Transfer Pricing Officer (TPO) for determination of Arm s Length Price (ALP) of the international transactions. The TPO passed an order under Section 92CA(3) of the Income Tax Act, 1961 (the Act) on 23rd November 2012 recommending an enhancement of Rs. 2,38,79,893/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer pricing addition of Rs. 1,73,51,834/- in relation to provision of back office support services. 7. The A.O., i.e., Respondent No. 1 passed an order dated 30th January 2023 giving effect to the ITAT s order by making a transfer pricing addition of Rs. 1,73,51,834/- and determining a demand of Rs. 2,21,12,400/-. Against this order petitioner has filed this petition on various grounds. According to petitioner, the impugned order dated 30th January 2023 is barred by limitation. 8. Petitioner further states that the Tribunal by its order dated 27th July 2020 had remanded the transfer pricing issue for determining arm s length price of provision of back-office support services back to the file of the A.O./TPO. Therefore, in this case, there is no dispute that the provisions of Section 144C of the Act, read with Section 92CA of the Act were applicable. Section 144C (1) of the Act mandates that a draft assessment order is necessary before the A.O. can proceed to pass a final assessment order. Even in partial remand proceedings from the Tribunal, the A.O. is obliged to pass a draft assessment order under Section 144C (1) of the Act. Absent draft assessment, the order is without jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi High Court in JCB (India) Ltd. (supra) held that, even in partial remand proceedings from the Tribunal, the Assessing Officer is obliged to pass a draft assessment order under Section 144C (1) of the Act. According to us, the Assessing Officer, is obliged to, in terms of Section 144C of the Act to pass a Draft Assessment Order in all cases where he proposes to assess the Foreign Company under the Act by making a variation in the returned income. In this case, the impugned order dated 31st January, 2018 has been passed in terms of Section 143(3) read with Section 144C read with Section 254 of the Act and it certainly makes a variation to the returned income filed by the petitioner. This even if, one proceeds on the basis that the returned income stands varied by the order of the Tribunal in the first round, to the extent the petitioner accepts it. Therefore, the Assessing Officer correctly invokes Section 144C of the Act in the impugned order. Once having invoked Section 144C of the Act, the Assessing Officer is obliged to comply with it in full and not partly. This impugned order was passed consequent to the order of the Tribunal dated 5th May, 2017 restoring some of the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the failure on the part of the Assessing Officer to follow the procedure under Section 144C (1) is not a merely procedural or inadvertent error, but a breach of a mandatory provision. We are also not impressed with the arguments of the Revenue that the Assessing Officer was under pressure of two charges, as there were timelines to adhere to, since the said timelines from time to time have been extended, the most recent one being to 30 th September, 2021. The Revenue ought to have appreciated that the requirement under Section 144C (1) to first pass a draft Assessment Order and to provide a copy thereof to the assessee is a mandatory requirement which gave substantive right to the assessee to object to any variation, that is prejudicial to it. In this case, the order under Section 92CA (3) of the IT Act, proposed to make an adjustment of Rs. 107,454,337/- to the arm s length price considered as Nil by Petitioner and to that extent the said adjustment was evidently prejudicial to the interest of Petitioner. Depriving Petitioner of this valuable right to raise objection before DRP would be denial of substantive rights to the assessee, for which, in our view, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure under Section 144C (1) is merely a procedural or inadvertent error cannot be accepted. The requirement under Section 144C (1) of the Act to first pass the draft assessment order and to provide a copy thereof to the assessee is mandatory requirement that gave substantive right to the assessee to object to any variation, that is prejudicial to the assessee. Depriving petitioner of this valuable right to raise objection before DRP would be denial of substantive right to the assessee. As held in SHL (India) Private Limited (supra), failure to follow the procedure under Section 144C (1) of the Act would be a jurisdictional error and not merely procedural error or a mere irregularity. Therefore, the Assessing Officer has assumed jurisdiction to straight away pass the final order without following the mandatory procedure prescribed under Section 144C of the Act. It is held in SHL (India) Private Limited (supra) that this is not a mere irregularity but an incurable irregularity. (emphasis supplied) 13. Therefore, in our view this is a clear case of jurisdictional error. The assessment order passed by the A.O., i.e., impugned in this petition is vitiated on account of lack of jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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