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2018 (8) TMI 575 - HC - Income TaxNon issuance of the draft assessment order u/s 144C - whether after remand, it was necessary to issue a draft assessment order - Held that - The issuance of a draft assessment order is not an empty formality. When a draft assessment order is passed and copy is given to the Assessee, the Assessee can raise objections before the Dispute Resolution Panel on any of the proposed variations. There is a right given to the Assessee to object, and to have the objections considered not by the Assessing Officer, but by the Dispute Resolution Panel. The Tribunal, by order dated 1 October 2012, set aside the entire exercise and the matter was relegated to the Assessing Officer. Once the matter was sent back to be decided afresh it went back to the stage of Section 144C(1) of the Act. Since the Tribunal set aside the proceedings on the ground of violation of principles of natural justice, the first exercise was void and without jurisdiction. Nothing remained on the record, including the draft assessment order. Therefore, issuance of a draft assessment order was necessary. We do not find from the scheme of Section 144C that if the proceedings were to be started a fresh on remand, the draft assessment order is not required to be given. Non issuance of the draft assessment order has thus vitiated the final assessment order. The view taken by the Tribunal in the impugned order that for want of issuance of draft order, the assessment order is without jurisdiction, cannot be faulted with. No substantial question of law
Issues Involved:
1. Non-issuance of draft assessment order. 2. Requirement of draft assessment order upon remand. 3. Jurisdiction of the Assessing Officer under Section 144C(13). Detailed Analysis: 1. Non-issuance of Draft Assessment Order: The Respondent-Assessee argued that the order passed by the Assessing Officer was without forwarding a draft of the proposed order of assessment, contrary to Section 144C of the Income Tax Act. The Tribunal confirmed this factual assertion, stating that the absence of a draft assessment order goes to the root of the assessment, making the assessment order void and unenforceable. The Tribunal relied on the Andhra Pradesh High Court decision in M/s. Zuari Cement Ltd., which held that an assessment order passed contrary to the mandatory provisions of Section 144C is without jurisdiction, null, and void. 2. Requirement of Draft Assessment Order upon Remand: The Revenue contended that upon remand, a draft assessment order is not necessary. However, the Tribunal had set aside the previous proceedings due to the violation of natural justice principles, directing the matter to be considered afresh by the Assessing Officer. The Tribunal's decision implied that the entire exercise, including any previously issued draft assessment order, was void. Consequently, the issuance of a new draft assessment order was necessary. The Tribunal's decision was consistent with the established legal position that failure to issue a draft assessment order renders the final assessment order without jurisdiction. 3. Jurisdiction of the Assessing Officer under Section 144C(13): The Revenue argued that the order passed by the Assessing Officer was under Section 144C(13), where no draft assessment order is required. However, the Tribunal clarified that the remand directed a fresh consideration starting from Section 144C(1), not Section 144C(13). The Tribunal noted that the new Transfer Pricing Officer should have issued a show cause notice and heard the Assessee before making adjustments, as the previous proceedings were set aside for violating natural justice principles. Thus, the subsequent proceedings were not under Section 144C(13), and a draft assessment order was necessary. Conclusion: The Tribunal's decision to annul the assessment order for not issuing a draft assessment order was upheld. The Tribunal's interpretation of Section 144C was found correct, and the requirement for a draft assessment order upon remand was affirmed. The appeal was dismissed as no substantial question of law arose.
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