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TMI Blog2021 (4) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... as High Court in VIJAY TELEVISION (P.) LTD. VERSUS DISPUTE RESOLUTION PANEL, CHENNAI [ 2014 (6) TMI 540 - MADRAS HIGH COURT] has expressed the view that such orders passed by the Ld.AO without following due process of law are liable to be set aside. We place reliance on the decision of Kaneel Oils Export Inds. Ltd. Vs. JCIT [ 2009 (8) TMI 806 - ITAT AHMEDABAD-C] which is a Third Member decision. As the assessment order passed dated 25/2/2015 has been quashed and set aside. X X X X Extracts X X X X X X X X Extracts X X X X ..... e thus submitted that, the alleged draft assessment order dated 25/02/2015, and the subsequent orders dated 31/12/2015 together with demand notice and penalty notice deserves to be treated as null and void in the eyes of law. He placed reliance on the following decision in support of his contentions: Decision of Hon'ble Supreme Court in case of ACIT vs the Pvt.Ltd., reported in (2018) 259 taxman 91/Decision of Hon'ble Bombay High Court in case of CIT vs Lionbridge Technologies Pvt.Ltd., reported in (2019) 260 Taxmann 273/Decision of Hon'ble Bombay High Court in case of International Air Transport Association vs DCIT reported in (2016) 290 CTR 46/Decision of Hon'ble Delhi High Court in case of JCB India Ltd. vs DCIT reported in (2017) 398 ITR 189/Decision of Hon'ble Delhi High Court in case of Turner International India Pvt.Ltd., vs DCIT reported in (2017) 398 ITR 177/Decision of Hon'ble Madras High Court in case of Vijay Television (2014) 369 ITR 113. 10. On the contrary, the Ld.CIT.DR submitted that, order passed by assessing officer is valid as per section 144C of the Act. She placed reliance on following decisions in support of her submissions: Decision of Hon'ble Hydrabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke 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 sub-clause (via) of clause (23C) of section 10, which is required to furnish the return of income under sub-section (4C) of section 139, no order making an assessment of the total income or loss of such research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, shall be made by the Assessing Officer, without giving effect to the provisions of section 10, unless - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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 sub-section (2) expires. (5) The Dispute Resolution Panel sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 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 : (14A) The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the Commissioner as provided in sub-section (12) of section 144BA. (15) For the purposes of this section, - (a) "Dispute Resolution Panel" means a collegium comprising of three Commissioners of Income-tax constituted by the Board54 for this purpose; (b) "eligible assessee" means,- (i) any person in whose case the variation ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to pass a final order pursuant to the recommendations made by the TPO. In fact, the second respondent-assessing 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. In the decision rendered by the Honourable Supreme Court of India in the case of (L. Hazari Mal Kuthiala (supra), 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, subsections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be apply. This indicates 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee which is prejudicial to the assessee, after 01.10.2009. Therefore, this particular provision introduced by Finance (No.2) Act, 2009, would apply if the above condition is satisfied and other provisions, in which similar 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/Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 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 limitation. Such a defect or failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the corrigendum dated 15.04.2013. By issuing the corrigendum, the respondents cannot 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." 12. In the present facts of the case we note that the Ld.AO passed order under section 143(3) read with section 144C(1) of the Act dated 25/02/2015 and along with demand notice issued under section 156 and penalty notice under section 274 read with section 271 of the Act. Ratio of Hon'ble Madras High Court has expressed the view that such orders passed by the Ld.AO without following due process of law are liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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