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TMI Blog2014 (6) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... st respondent declined to entertain the objections raised by the assessee company on the ground that the order passed is not a draft assessment order, rather it is a final order. Relying upon Deepak Agro Foods v. State of Rajasthan and others [2008 (7) TMI 553 - SUPREME COURT OF INDIA] - if an order is passed beyond the statutory period prescribed, such order is a nullity and has no force of law - the period for assessment proceedings expired and fresh assessment orders have been issued by anti-dating it – the High Court ought not to have remanded the matter back to the assessment officer and by doing so, the statutory period prescribed for completion of assessment has been extended by conferring jurisdiction upon the AO, which he otherwise lacked on the expiry of the period - there is a distinction between an order which is a nullity and an order which is irregular and illegal - Where an authority making order 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. Where there is an om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respondent, instead of passing a provisional order, has passed a final assessment order dated 26.03.2013 as contemplated under Section 143 (3) of the Income Tax Act, 1961 (hereinafter called as "The Act''). This order, according to the learned senior counsel for the petitioners, is per se unsustainable under law as there is a mandatory direction enumerated under the Act that after an order was passed by the TPO, the Assessment Officer has to only pass a draft assessment order as required under Section 144C of the Act. The learned senior counsel for the petitioners would further pointed out that the Assessment Officer, after realising the folly that a final order ought not to have been passed pursuant to the order passed by the TPO, issued a Corrigendum on 15.04.2013 modifying the final order of assessment passed on 26.03.2013 to be read as a draft assessment order purported to have been passed under Section 144C of the Act. On receipt of the corrigendum, the petitioner company filed their objections before the Dispute Resolution Panel, Chennai, the first respondent herein on 26.04.2013 specifically questioning the validity of the corrigendum issued by the second resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a to treat it as a draft assessment order. This course of action adopted by the second respondent is contrary to the mandatory provisions contained in the Act and the corrigendum issued by the second respondent could not cure the defect. The very fact that the assessing officer has signed the order of assessment and also assessed the amount payable by the assessee has become complete and it cannot be simply treated as a draft assessment order or it can be rectified by issuing the corrigendum. In fact, pursuant to the order of assessment under Section 143C, demand was also made for payment of the amount and such demand has not been withdrawn by the second respondent even after issuing the corrigendum. Even as per the website of the department, the demand made to the petitioner company continues till date and therefore, the final order as well as the corrigendum issued by the second respondent are vitiated by errors apparent on the face of the record and they are legally not sustainable. 6. It is further argued by the learned senior counsel for the petitioner that under Section 154 of the Act, no doubt, an order can be amended, varied or modified but that by itself will not cure the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the petitioners further relied on the decision of the Honourable Supreme Court in the case of (Kalyankumar Ray v. Commissioner of Income Tax) reported in Volume 191, ITR SC 634 to contend that once when an order was passed by assessing the total income and also determining the tax payable thereof, such an order can only be called as a final order of assessment and it could not be termed as a draft assessment order. 9. The learned senior counsel also relied on yet another decision of the Honourable Supreme Court in the case of (Patel Narshi Thakershi and others v. Shri. Pradyumansinghji Arjunsinghji) 1971 (3) Supreme Court Cases 844 to submit that the order passed under Section 154 of the Act could not make the already invalid order passed by the second respondent to be a valid by reason of the corrigendum issued on 15.04.2013. For the same proposition, reliance was also placed on the decision of the Madhya Pradesh High Court in the case of (Commissioner of Income tax v. Fatelal) reported in 225 ITR 1061. 10. Apart from the above decisions, the learned senior counsel for the petitioners also cited the decisions reported in the following cases (i) Peeru Lal, Mohan Lal v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly when the petitioner company questioned it before the first respondent and when the appeal was not heard, WP No. 1528 of 2014 was filed seeking for a direction to the first respondent to give them opportunity of hearing. In fact, to this course of action, the respondents are also amenable. 13. According to the learned standing counsel for the respondents, the order passed by the second respondent is not an illegal order, as alleged by the petitioner company. No doubt, the assessment officer has passed an order on the basis of the order passed by the TPO, of course, in the nature of a final order on 26.03.2013. Immediately, to rectify such mistake, the second respondent has issued the corrigendum on 15.04.2013. According to the learned standing counsel for the respondents, there cannot be any period of limitation prescribed for issuing a corrigendum and therefore, the corrigendum, as such, is legally sustainable. The corrigendum was issued only to rectify the mistakes or deficiencies committed by the second respondent and such a course of action cannot be termed as illegal. In this context, the learned standing counsel for the respondents, relying on Section 154 of the Act, cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. By placing reliance on this decision, the learned standing counsel for the respondents would contend that merely because the assessment officer has committed certain mistakes or quoted a wrong provision of law, it cannot be taken to the advantage of the petitioner company or that by itself will not render the order vitiated especially when it was sought to be corrected by issuing the corrigendum at the earliest point of time. 16. The learned standing counsel for the respondents also relied on the Division Bench decision of this Court passed on 10.02.2014 in Tax Case (Appeal) No. 2412 of 2006 for the proposition that whether the assessment order was passed under Section 158BC or 158BD or whether the procedures contemplated under Section 158BC of the Act have not been followed, will not make the assessment order itself vitiated. Similarly, in this case, merely because the order of the assessment officer has been passed purportedly to be in the nature of a final order, it wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the total income or 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 ..... st proviso 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.] [Reference to dispute resolution panel. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 51a[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 (14A) shall be inserted after sub-section (14) of section 144C by the Finance Act, 2013, w.e.f. 1-4-2016 : (14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 company. 22. As mentioned supra, as per Section 144C (1) of the Act, the second respondent-assessing officer has no right t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 v. Income Tax Office, Special Circle, Ambala Cantt. And another) reported in Volume XLI ITR SC Page No.12, 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 seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in (356 ITR 646) is extracted hereunder:- " Certainly passing an order of assessment under Section 158BC instead of Section 158BD (inspite of clear terminology used in both the 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 v. Inspecting Assistant Commissioner of Income Tax and another) reported in (242 ITR 329) Madras, which was relied on by the learned senior counsel for the petitioners, it was held äs 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, subsec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer accepted the variation submitted by the TPO without giving the petitioner any opportunity to object to it and passed the impugned assessment order. As this has occurred after 01.10.2009, the cut off date prescribed in sub-section (1) of S.144C, the Assessing Officer 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 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 assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent refused to entertain it by stating that the order passed by the second respondent is a final order and it had jurisdiction to entertain objections only if it is a draft assessment order. While so, the order dated 26.03.2013 of the second respondent can only be termed as a final order and in such event it is contrary to Section 144C of the Act. As mentioned supra, 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 limitati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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