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TMI Blog2018 (3) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the assessee is against the order of ACIT, Circle-10, Pune, dated 27.01.2014 relating to assessment year 2009-10 passed under section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (in short the Act ). 2. The learned Authorized Representative for the assessee at the outset pointed out that the jurisdictional issue raised in the present appeal is vide ground of appeal No.1, which reads as under:- 1. The learned AO has erred in passing the impugned order which was not in accordance with law, the statutory provisions, and which is void and of no legal effect. 3. Further, during the course of arguments, the assessee furnished additional grounds of appeal elaborating the issue vide grounds of appeal No.1 2 which are as under:- 1. The appellant submits that as the assessment order has been issued without following the procedure laid down in section 144C of the Income-tax Act, 1961 (the Act), the said assessment order issued be declared null and void. 2. The appellant submits that the learned Assessing Officer (Ld. AO), erred in issuing notice of demand under section 156 and notice under section 274 read with section 271(1)(c) of the Act along with the draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other hand, placed reliance on the orders of authorities below. 7. We have heard the rival contentions and perused the record. The additional grounds of appeal raised by the assessee do not require any investigation of facts and hence, the same are admitted. The issue which is raised in the present appeal is whether the draft assessment order passed in the case along with issue of demand notice is correct start of proceedings against the assessee. The requirement of the Act is that in the draft assessment order proposed, additions are to be made and show cause notice is to be issued to the assessee either accepting the same or file objections before the DRP. However, in the facts of the present case, there was no proposal for making addition but the final assessment order was passed though the Assessing Officer calls it a draft assessment order and also observed that the assessee was at liberty to file objections before the DRP or accept the same, but along with the said order, he also issued demand notice and also initiated penalty proceedings. 8. We find similar issue arose before Tribunal in the case of DCIT Vs. M/s. Rehau Polymers Pvt. Ltd. (supra), wherein it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociate enterprises. The TPO vide order dated 28.01.2014 under section 92CA(3) of the Act had proposed the adjustment to arm's length price of international transaction and had passed the said order. The Assessing Officer on receipt of said order passed order under section 143(3) r.w.s. 92C(4) and 144C of the Act. The said order of Assessing Officer was forwarded to the assessee along with letter dated 28.02.2014, wherein the Assessing Officer categorically said that the draft assessment order was being forwarded for necessary action at the end of assessee. It was clearly mentioned in the said letter that on receipt of draft order, the assessee may within 30 days of the receipt of draft order either file acceptance of variation as proposed in the order or file objections to the variation to the DRP or to the undersigned. However, the Assessing Officer also issued demand notice under section 156 of the Act dated 28.02.2014 and also issued notice under section 274 r.w.s. 271 of the Act. The assessee on understanding that it was draft assessment order filed objections before the DRP on 07.04.2014 i.e. within the time allowed under the Statute. However, the said objections of assess ..... 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. Upon receipt of the said directions, the Assessing Officer shall in conformity with the same, complete the assessment without providing any further opportunity of being hearing to the assessee within one month from the end of the month in which such direction is received, notwithstanding anything to the contrary contained in section 153 or 153B of the Act, as per sub-section (13) to section 144C of the Act. In view of the provisions of section 144C of the Act impliedly where the TPO proposes any variation in the income or loss returned by the assessee, which is prejudicial to the interest of assessee, the Assessing Officer shall in the first instance forward the draft of the proposed assessment order to the assessee and thereafter, if no objections are received and / or the assessee files his acceptance to the variation to the Assessing Officer, then the Assessing Officer is empowered to complete the assessment within one month from the end of the month thereof. In case, the assessee files his objection before the DRP and where the said Panel issues directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete 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 the corrigendum issued by the second respondent are vitiated by errors apparent on the face of the record and they are legally not sustainable. 9. The similar issue had arisen before the Pune Bench of Tribunal in Agfa India Pvt. Ltd. Vs. ACIT in ITA Nos.341/PN/2014 and 1072/PN/2014, relating to assessment year 2008-09, order dated 28.10.2015 and reference was made to the decision of the Hon ble High Court of Andhra Pradesh at Hyderabad in M/s. Zuari Cements Ltd. Vs. ACIT in WP No.5557/2012, vide judgment dated 21.02.2013 and the Hon ble Supreme Court in ACIT Vs. M/s. Zuari Cement Ltd. vide Special Leave Petition CC No.16694/2013, judgment dated 27.09.2013 and it was held as under:- 20. The Hon ble High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared as one without jurisdiction, null and void and unenforceable. The Hon ble High Court of Andhra Pradesh held as under:- In this view of the matter we are of the view that the impugned order of assessment dt. 23.12.2011 passed by the respondent is contrary to the mandatory provisions of S.144C of the Act and is passed in violation thereof. Therefore, it is declared as one without jurisdiction, null and void and unenforceable. Consequently, the demand notice dated 23.12.2011 issued by the respondent is set aside. 21. The Hon ble Supreme Court (supra) in ACIT Vs. Zuari Cements Ltd. (supra) had dismissed the Special Leave Petition filed by the Department upon hearing the Counsel. The learned Authorized Representative for the assessee contended that since the said Special Leave Petition was dismissed after hearing the Counsel and the view taken by the Hon ble High Court of Andhra Pradesh at Hyderabad has been approved by the Apex Court and any order contradicting the conditions laid down in section 144C of the Act is null and void and unenforceable in law. 22. Further, the Delhi Bench of Tribunal in the case of Capsugel Healthcare Limited in ITA No.1356/Del/2012, vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceded by a draft assessment order. Hence, the foundational/basic order viz. the assessment order dated 23rd March, 2015 is set aside and quashed as being without jurisdiction. Consequent orders passed on rectification application as well as on penalty are also quashed and set aside being unsustainable. 11. The learned Authorized Representative for the assessee has placed reliance on the ratio laid down by the International Air Transport Association Vs. DCIT (supra) and the Hon ble Madras High Court in the case of Vijay Television Writ Petition Nos.1526 and 1527 of 2014 M.P. Nos.1 and 1 of 2014 vis- -vis. Whereas the learned Departmental Representative for the Revenue strongly opposed and pointed out that the Assessing Officer has sent the draft assessment order wherein the letter clearly says that it is draft assessment order. He pointed out that the DRP had mis-interpreted and the issue may be sent back to the file of DRP. He also pointed out that the facts before the Hon ble Bombay High Court were different and the said proposition is not applicable. We find no merit in the plea of learned Departmental Representative for the Revenue. The Assessing Officer passed the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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