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TMI Blog2017 (10) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... ohan Khare, Advocates For The REVENUE : Shri H.K. Choudhary, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : The appellant, M/s. Globerian India Pvt. Ltd. (hereinafter referred to as the assessee company ), by filing the present appeal, sought to set aside the impugned order dated 28.03.2014 passed by the DCIT, Circle 12 (1), New Delhi qua the assessment year 2007- 08 on the grounds inter alia that :- 1 . The Learned DCIT erred in fact and in law in passing the order u / s 254 / 143 ( 3 ) rw 144C which is not only bad in law but void ab initio . 2 . The Learned DCIT erred in fact and in law in making as disallowance of Rs . 1,14,36,265 /- on account of depreciation on computers . 3 . The Learned DCIT erred in fact and in law in making an addition of Rs . 4,12,04,919 /- being a difference in Arms length Price . 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : in compliance to the directions issued by ITAT vide letter F.No.DCIT/Cir 12 (1)/2013-14/714 dated 25.11.2013 AO/DCIT written to DRP-1, New Delhi f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was dismissed by Hon ble Supreme Court on 27.09.2013; (ii) M/s. Vijay Television Pvt. Ltd. vs. DRP 47 taxman 100 (Mad); (iii) Capsugel Health Care Ltd. 152 ITD 142 (Delhi ITAT); (iv) ACIT vs. M/s. Getrag Hi Tech Gears Pvt. Ltd. 69 taxmann.com 35 (Chd Tribunal); (v) Turner International India Pt. Ltd. vs. DCIT WP 4260/2015 dated 17.05.2017 (Delhi High Court); (vi) JCB India Ltd. vs. DCIT WP No.3399/2016 dated 07.09.2017 (Delhi High Court). 6. On the other hand, ld. DR to repel the arguments addressed by the ld. AR contended that since in the first round of litigation the draft assessment order was passed, there was no need to again pass the draft assessment order and the case laws relied upon by the assessee are not applicable to the facts and circumstances of this case. 7. To proceed further, we would like to reproduce operative part of the order passed by the Tribunal in the first round of litigation in this case for ready perusal as under :- 9 . So far as regards the issue of difference in arms length price, for the assessment year 2006 - 07, the matter is remitted to the AO, the DRP has approved the draft assessment order con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - section ( 2 ). ( 4 ) The Assessing Officer shall, notwithstanding anything contained in section 153 or section 153B, pass the assessment order under sub - section ( 3 ) within one month from the end of the month in which, - ( a ) the acceptance is received; or ( b ) the period of filing of objections under subsection ( 2 ) expires . 11. The mandate of section 144C is categoric enough for the AO to pass a draft of the proposed assessment order so as to enable the assessee to file his acceptance of variation to the AO; or to file his objection to any of such variation before the Dispute Resolution Panel and the AO and only then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndatory on the part of the AO to pass a draft assessment order since this was a second round before the TPO pursuant to remand by the ITAT . Moreover, it was not as if the ITAT had set aside the entire assessment order of the AO . The setting aside was only in respect of the transfer pricing adjustment and that too with a specific direction to the AO for determining the arms length price after considering fresh comparables . Since the assessment itself was not cancelled by the ITAT or completely set aside, it is the provisions of Section 153 ( 3 ) ( ii ) of the Act which would apply . Mr Jain submitted that the requirement of passing a draft assessment order under Section 144C was only in the first instance and not after the remand by the ITAT . 17 . The Court is unable to agree with the submissions made on behalf of the Revenue by Mr . Jain . Section 144C ( 1 ) of the Act is unambiguous . It requires the AO to pass a draft assessment order after receipt of the report from the TPO . There is nothing in the wording of Section 144C ( 1 ) which would indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is a long series of decisions to which reference would be made presently . 12 . In Zuari Cement Ltd . v . ACIT ( decision dated 21 st February, 2013 in WP ( C ) No . 5557 / 2012 ) , the Division Bench ( DB ) of the Andhra Pradesh High Court categorically held that the failure to pass a draft assessment order under Section 144C ( 1 ) of the Act would result in rendering the final assessment order without jurisdiction, null and void and unenforceable . In that case, the consequent demand notice was also set aside . The decision of the Andhra Pradesh High Court was affirmed by the Supreme Court by the dismissal of the Revenue's SLP ( C ) [ CC No . 16694 / 2013 ] on 27 th September, 2013 . 13 . In Vijay Television ( P ) Ltd . v . Dispute Resolution Panel [ 2014 ] 369 ITR 113 ( Mad .) , a similar question arose . There, the Revenue sought to rectify a mistake by issuing a corrigendum after the final assessment order was passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' . Sub - section ( 5 ) of Section 144C empowers the DRP to issue directions to the Assessing Officer to enable him to complete the assessment . Sub - section ( 10 ) of Section 144C makes, such directions binding on the Assessing Officer . As per Sub - Section 144C, the Assessing Officer is required to pass the order of assessment in terms of such directions without any further hearing being granted to the assessee . 7 . The procedure laid down under Section 144C of the Act is thus of great importance . When an Assessing Officer proposes to make variations to the returned income declared by an eligible assesses he has to first pass a draft order, provide a copy thereof to the assessee and only thereupon the assessee could exercise his valuable right to raise objections before the DRP on any of the proposed variations . In addition to giving such opportunity to an assessee, decision of the DRP is made binding on the Assessing Officer . It is therefore not possible to uphold the Revenue's contention that such requirement is merely a procedural . The requirement is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhere to the mandatory requirement of Section 144C ( 1 ) of the Act and first pass a draft assessment order would result in invalidation of the final assessment order and the consequent demand notices and penalty proceedings . 25 . For all of the aforementioned reasons, the Court finds no difficulty in holding that the impugned final assessment orders dated 30 th March 2016 passed by the AO for AYs 2006 - 07, 2007 - 08 and 2008 - 09 are without jurisdiction on account of the failure, by the AO, to first pass a draft assessment order and thereafter, subject to the objections filed before the DRP and the orders of the DRP, to pass the final assessment order . The Court also sets aside the orders of the TPO dated 30 th March 2016 issued pursuant to the remand by the ITAT . 15. Decisions rendered by Hon ble High Court in case cited as JCB Limited vs . DCIT (supra) is applicable to the facts and circumstances of this case. Even otherwise, passing assessment order straightway without passing the draft assessment order would take away the enforceable right of the assessee company to approach the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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