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TMI Blog2020 (12) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... ut jurisdiction, null and void and unenforceable. This Court is of the opinion that no question of law, let alone a substantial question of law, arises in the present appeal. This Court is of the view that till the Income Tax Department ensures that the Assessing Officers follow the mandate of law, in particular, binding provisions like Section 144C and eschew filing of unnecessary appeals rather than in nearly all matters where the Assessing Officer has taken a view against the Assessee, the assessments will not achieve finality for a number of years like in the present case where the case of assessment year 2007-08 stands remanded and restored to the file of the Assessing Officer. Revenue appeal dismissed with cost. - HON'BLE MR. JUSTICE MANMOHAN AND HON'BLE MR. JUSTICE SANJEEV NARULA Appellant Through: Mr. Deepak Anand, Advocate. Respondent Through: None J U D G M E N T MANMOHAN, J: 1. Elementary My Dear Watson is a popular phrase often attributed to Sherlock Homes, the English detective in the works of Sir Arthur Conan Doyle. However, it seems, like the present case highlights, nothing is elementary to the appellant, even when the statute uses clear and explicit langu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been done in respect of 20 comparables. Therefore, the matter of transfer pricing adjustment is restored to the file of the AO for following proper procedure as mentioned above and decide the matter denovo. (emphasis supplied) 6. Pursuant to the aforesaid remand, the Assessing Officer passed the assessment order dated 31st March, 2014 and the same was challenged by the respondent-assessee before the CIT(A), which partly allowed the appeal. Being aggrieved by the order passed by the CIT(A), respondent-assessee as well as Revenue filed appeals before the ITAT, being ITA No. 5409/DEL/2014 and ITA No. 6117/DEL/2014 respectively. 7. In its appeal, respondent-assessee raised the ground with regard to validity of the remand assessment as the Assessing Officer had not followed the procedure contemplated under Section 144C of the Act, while framing remand assessment. The ITAT vide order dated 30th September, 2015 allowed the appeal of the respondent-assessee on the said ground without going into the merits of the case. The relevant portion of the said order is reproduced hereinbelow:- 10. . it is crystal clear that, a direction was given to the AO for following proper procedure while decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or re-computation or fresh assessment, as the case may be, expires.] 12. After receiving the order from the TPO, the AO is required to pass a draft assessment order u/s 144C(1) of the Act and the same is to be forwarded to the eligible assessee who after receiving the draft assessment order may file his objection, if there is any variation in the income or loss returned, to the Dispute Resolution Penal within 30 days of the receipt of the draft order and the DRP after considering the objections of the assessee shall issue the directions as per the provisions of section 144C(6)of the Act which read as under: 144C . (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following namely: (a) Draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. Admittedly, this had not been done and the Assessing Officer had passed a final assessment order dated December 22, 2011, straightaway. Therefore, the order of assessment was clearly contrary to section 144C and was without jurisdiction, null and void. 14. In view of the aforesaid discussion and the judicial pronouncement, we set aside the impugned order of the ld. CIT(A) on this issue. In the present case, the procedure contemplated u/s 144C of the Act is violated by the AO, therefore, we are of the confirmed view that the assessment vide order dated 31.03.2014 framed by the AO was null and void ab initio. Since we have decided the legal issue in favour of the assessee therefore, no separate findings are being given for the other issues raised by the assessee on merit. 15. In the result appeal of the assessee is partly allowed. 8. In view of the aforesaid order dated 30th September, 2015, ITAT dismissed the Revenue s appeal holding that since the assessment had been annulled in the appeal filed by the respondent-assessee, nothing survived for consideration in the Revenue s appeal. This order has been impugned before this Court. The relevant portion of the impugned order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground without adjudicating and deciding the grounds of appeal raised by the Revenue on merits. 12. He lastly stated, without prejudice to other grounds, that this was not a case of an order passed without jurisdiction and at the highest, assuming without admitting, it was a procedural irregularity and not an illegality. COURT S REASONING ONCE THE ITAT DIRECTED THE ASSESSING OFFICER TO DECIDE THE MATTER DE NOVO, IT MEANT THAT A NEW HEARING OF THE MATTER HAD TO BE CONDUCTED, AS IF THE ORIGINAL HEARING HAD NOT TAKEN PLACE. CONSEQUENTLY, THE ASSESSING OFFICER HAD TO DECIDE THE MATTER IN ACCORDANCE WITH THE ELABORATE PROCEDURE MENTIONED IN SECTION 144 C AND NOT DEHORS IT. 13. The ITAT while remanding the matter of transfer pricing adjustment to the Assessing Officer vide order dated 17th July, 2012 had not only restored the matter to the file of the Assessing Officer for following proper procedure but also to decide the matter de novo . 14. This Court is of the view that once the ITAT directed the Assessing Officer to decide the matter de novo, it meant that a new hearing of the matter had to be conducted, as if the original hearing had not taken place (See: meaning of De novo hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. Explanation .-For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. (9) If the members of the Dispute Resolution Panel differ i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Panel s powers are co-terminous with the CIT(A), including the power to confirm, reduce or enhance the variation proposed and to consider the issues not agitated by the Assessee in the objections. In fact, under Section 144C, the Dispute Resolution Panel can issue directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment and the Dispute Resolution Panel can confirm, reduce or enhance the variations proposed in the draft order. It is specifically stipulated in Section 144C that every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. This is akin to the Assessing Officer giving effect to an order passed by the Appellate Authority or the Courts. 18. Consequently, Section 144C envisages a change of forum and it leads to complete cessation of the jurisdiction of the Assessing officer on passing of the draft order. Thereafter the Assessing officer is to give effect to either the direction of the Dispute Resolution Panel or pass an order on acceptance by the Assessee. THE EXPRESSION IN THE FIRST INSTANCE HAS BEEN USED IN SECTION 144C TO SIGNIFY THE FIRST STEP TO BE TAKEN BY THE ASSES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies vs. Union of India, (2016) 388 ITR 383 (Delhi) this Court, after discussing the judgments of the Andhra Pradesh High Court, High Court of Bombay as well as Madras High Court in Vijay Television Pvt. Ltd. vs. TRP and Ors. (2014) 369 ITR 130 has held that failure to pass a draft assessment order under Section 144C(1) of the Act would render the final assessment order without jurisdiction, null and void and unenforceable. The said view was reiterated by this Court in Turner International India Pvt. Ltd. vs. Deputy Commissioner of Income Tax, Cirlce-25(2), New Delhi, WP(C) 42604261/2015 as well Nokia India Pvt. Ltd. vs. Additional Commissioner of Income Tax, WP(C)3629/2017. The relevant portion of the judgment in Turner International India Pvt. Ltd. (supra) is reproduced hereinbelow:- 11. The question whether the final assessment order stands vitiated for failure to adhere to the mandatory requirements of first passing draft assessment order in terms of Section 144C(1) of the Act is no longer res intregra. There is a long series of decisions to which reference would be made presently. 12. In Zuari Cement Ltd. v. ACIT (decision dated 21st February, 2013 in WP(C) No.5557/2012), the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order would result in invalidation of the final assessment order and the consequent demand notices and penalty proceedings. CONCLUSION 24. Consequently, in the present case, in complete contravention of Section 144C, the Assessing Officer wrongfully assumed the jurisdiction and passed the final assessment order without passing a draft assessment order and without giving the respondent/assessee an opportunity to raise objections before the Dispute Resolution Panel. 25. Keeping in view the aforesaid, this Court is of the opinion that no question of law, let alone a substantial question of law, arises in the present appeal. 26. This Court is of the view that till the Income Tax Department ensures that the Assessing Officers follow the mandate of law, in particular, binding provisions like Section 144C and eschew filing of unnecessary appeals rather than in nearly all matters where the Assessing Officer has taken a view against the Assessee, the assessments will not achieve finality for a number of years like in the present case where the case of assessment year 2007-08 stands remanded and restored to the file of the Assessing Officer. 27. Consequently, we dismiss the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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