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TMI Blog2016 (1) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... or adjudication on merits. Regular assessment order without issuance of draft assessment order - What is material is that the original assessment order was in form and in substance a regular assessment order, and not a draft assessment order. DR has also submitted that since the assessee has participated in the proceedings before the DRP, it cannot be open to the assessee to raise this question now. It is only elementary that acquiescence does not confer the jurisdiction, and the only issue which can not be raised subsequently, in the light of the specific provisions of Section 292BB, is objections with regard to service, time or manner of service of a notice. That is not the case before us. In the case of Inventors Industrial Corp [ 1991 (4) TMI 70 - BOMBAY HIGH COURT ] as well, the assessee had duly participated in the reassessment proceedings and yet, in the second round of proceedings, the objections were taken to the validity of reassessment itself. In this view of the matter, and in the light of the above discussions, we uphold the grievance of the assessee and quash the impugned assessment order itself. The issuance of a regular assessment order, without issuance of draft as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings under section 271(1)(c) of the Income Tax Act, 1961, are initiated separately for furnishing inaccurate particulars of income and thereby concealment of income . The notice of demand dated 24th November 2010 was duly raised on this basis demanding a sum of ₹ 66,71,271. As evident from the handwritten entries on page 1 of the assessment order, entries in respect of the demand so raised were duly made in the demand and collection register. On 30th December 2010, however, the Assessing Officer issued a letter to the assessee pointing out that the assessment order was passed actually under section 144C(1) r.w.s. 143(3), however, on the first page of the order, the words Section 144C were missed to be mentioned and that the demand notice and notice under section 271(1)(c) were inadvertently served, which should not have been served as the order was only a draft order . The assessee was advised to treat the assessment order as a draft assessment order only and a rectified draft assessment order was also issued on that day. Accordingly, the assessee proceeded to deal with the order as drat assessment order and the matter was carried in appeal in the first round. In the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassess was not raised even in the second round of proceedings before the Income-tax Officer who completed reassessment afresh on March 28, 1970. No such ground was taken originally even in the appeal filed against the second reassessment. The ground in dispute was taken at the time of hearing before the Appellate Assistant Commissioner. In view of the latest decision of the Supreme Court in the case of Jute Corporation of India Ltd. [1991] 187 ITR 688, it cannot be disputed that the assessee could have raised this ground before the Appellate Assistant Commissioner in his appeal against the first order of reassessment. The pertinent question is whether the new ground could be taken in reassessment proceedings after remand. This takes us to another aspect of the question, namely, whether the assessee could have taken such a ground before the Income-tax Officer himself in these proceedings because if he could have done so, the powers of the Appellate Assistant Commissioner being coterminous, it would be open to him to do so before the Appellate Assistant Commissioner as well. The other aspect would be whether being a ground challenging the very jurisdiction to make reassessment, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er which he is not lawfully seized of. This view was taken by the Madras High Court in the case of N. Naganatha Iyer v. CIT [1966] 60 ITR 647 . The said decision was followed by the Gujarat High Court in CIT v. Nanalal Tribhovandas [1975] 100 ITR 734 . We are in respectful agreement with the view taken by the Madras and Gujarat High Courts in this regard. If it is found that the Income-tax Officer had no jurisdiction to make an order of reassessment, it is irrelevant that the jurisdiction of the Income-tax Officer to reassess was not challenged at any of the earlier stages. 8. In this view of the matter, the mere fact that this issue was not taken up in the first round of proceedings does not act to the detriment of the assessee. The issue being raised now is a fundamental legal issue which goes to the root of the matter. If the assessment order itself is a legal nullity, as it is claimed to be, the impugned additions are devoid of any legally sustainable basis. As long as this legal plea can be raised before us otherwise, which it can be in the light of Hon ble Supreme Court s judgment in the case of NTPC Ltd (supra), this issue can also be raised before us in the second round of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n substance and in effect. The subsequent letter dated 30th December 2010, issued by the Assessing Officer, was only a cover up exercise to convert a regular assessment order into a draft assessment order. However, once a regular assessment order is framed and issued- as, in our considered view, was issued on 24th November 2010, there cannot be any occasion to turn the clock back and issue a draft assessment order. As to what is the impact of an assessment order being directly issued, in a situation in which the assessee is an eligible assessee who ought to have been issued a draft assessment order, we find the following guidance from the decision of a coordinate bench in the case of Capsugel Healthcare Limited Vs ACIT and vice versa [(2015) 152 ITD 142 (Del)] :- 7. We find that the issue is covered is now covered in favour in of the assessee by judgment of Hon'ble Madras High Court, in the case of Vijay Television Pvt Ltd Vs DRP [(2014) 369 ITR 113 (Mad)] wherein Hon'ble High Court has, inter alia, observed as follows: 20. Under Section 144 (C) of the Act, it is evident that the assessing officer is required to pass only a draft assessment order on the basis of the recomme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 to pass a final order pursuant to the recommendations made by the TPO. In fact, the second respondentassessing officer himself has admitted by virtue of the corrigendum dated 15.04.2013, that the order dated 26.03.2013 is only a final order and it was directed to be treated as a draft assessment order. In this context, it is worthwhile to refer to the decision of the Honourable Supreme Court in the decision Deepak Agro Foods (supra) wherein in Para No.10, the Honourable Supreme Court discussed as to when an order could be construed as a final order:- 10. Shri Rajiv Dutta, learned senior counsel appearing on behalf of the appellant, submitted that in the light of its afore-extracted observations and a clear finding that the assessment order for the assessment year 1995-96 had been anti-dated, the order was null and void. It was urg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 second respondent to pass a draft assessment order is mandatory and it is prescribed by the statute. Therefore, this decision relied on by the learned standing counsel for the respondents cannot be made applicable to this case. 26. The learned senior counsel for the petitioners relied on the decision of the Allahabad High Court in the case of Shital Prasad Kharag Prasad (supra) wherein the Division Bench of the Allahabd High Court held that a notice contemplated under Section 148 of the Income Tax Act is a jurisdictional notice and it is not curable by issuing a notice under Section 292 B of the Act, if it was not served in accordance with the provisions of the Act. 27. Similarly, the Division Bench of this Court in the decision in the case of V. Ramaiah (supra) Madras held that when an order is passed under Section 158BC of the Act instead of Section 158BD, it is not valid since it is not a defect curable under Section 292B of the Act. It was also held that an order passed after the period of limitation laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes that this clause enables the Assessing Officer, after the return is filed, to complete the assessment under Section 143 (2) by following the procedure like issue of notice under Section 143 (2)/142. This does not provide accepting the return as provided under Section 143 (1) (a). The Officer has to complete the assessment order under Section 143 (3) only. If an assessment is to be completed under Section 143 (3) read with Section 158BC, notice under Section 143 (2) should be issued within one year from the date of filing of the block return. Omission on the part of the assessing officer to issue notice under Section 143(2) cannot be a procedural irregularity and is not curable. 30. It is evident from the above decision of the Division Bench of this Court that where there is an omission on the part of the assessing officer to follow the mandatory procedures prescribed in the Act, such an omission cannot be termed as a mere procedural irregularity and it cannot be cured. 31. In identical case as that of the case on hand, the Division Bench of the Andhra Pradesh High Court, in an unreported decision, had an occasion to consider the scope of the validity of the demand notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar contrary intention is not indicated, which were introduced by the said enactment, would apply from 01.04.2009 i.e., from the assessment year 2010-2011. It is not disputed that the memorandum explaining the Finance Bill and the Notes and clauses accompanying the Finance Bill which preceded the Finance (No.2) Act, 2009 clearly indicated that the amendments relating to S.144C would take effect from 01.10.2009. In our view, the circular No.5/2010 issued byt he CBDT stating that S.144C(1) would apply only from the assessment year 2010-2011 and subsequent years and not for the assessment year 2008-09 is contrary to the express language in S.144C(1) and the said view of the Revenue is unacceptable. The circular may represent only the understanding of the Board/Central Government of the statutory provisions, but it will not bind this Court or the Supreme Court. It cannot interfere with the jurisdiction and power of this Court to declare what the legislature says and take a view contrary to that declared in the circular of the CBDT (Ratan Melting and Wire Industries Case (1 Supra), Indra Industries (2 supra). The Revenue has not been able to pursuade us to take a contra view by citing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be allowed to develop their own case. Therefore, following the order passed by the Division Bench of the Andhra Pradesh High Court, which was also affirmed by the Honourable Supreme Court by dismissing the Special Leave Petition filed thereof, on 27.09.2013, the orders, which are impugned in these writ petitions are liable to be set aside. 8. Learned Departmental Representative, on the other hand, submits that this lapse on the part of the Assessing Officer is at best a procedural lapse and the matter should, therefore, be restored to the file of the Assessing Officer for adjudication de novo. 9. We are, however, unable to see any legally sustainable merits in the stand so taken by the learned Departmental Representative. Hon'ble High Court's esteemed views, as extracted above, bind us and we have to respectfully follow the same. Accordingly, in due deference to this binding judicial precedent, and other binding judicial precedents referred to therein, we quash the impugned assessment order. It is a legal nullity. As for the show cause notice issued by the Assessing Officer, before making the ALP adjustment, this cannot be treated as a draft assessment order nor the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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