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TMI Blog2021 (6) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. Once the procedure has been followed and the Appellate Tribunal remitted the matter back to decide the particular issue with a specific finding, then it is sufficient if the remitted issue was decided by the AO / TPO and a final assessment order is passed. Repetition of the same procedures would become an empty formality, which is not intended under the provision and therefore, this Court is of the considered opinion that when the matter was remitted with reference to a particular issue to be clarified or decided by the competent authority, it is sufficient if such an issue is decided and thereafter, a final assessment order is passed. Even in such circumstances, the assessee is having a right of appeal under the provisions of the Act and therefore, in the event of any grievance with reference to an assessment order subsequent passed after remitting the matter by the ITAT, the petitioner is at liberty to file an appeal and thus, the grounds raised once again to pass the draft assessment order would not arise at all. The procedures as contemplated u/s 144C must be meaningfully followed and constructive interpretation is to be adopted. Repeatedly passing draft assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal transactions undertaken by the petitioner company. Thereafter, a Draft Assessment order was issued on 31.03.2016 under Section 144(3) read with Section 144C(1) of the Act. Aggrieved over the said order, the petitioner company filed its objections before the Disputes Resolution Panel, Bangalore. The Disputes Resolution Panel vide its order dated 21.10.2016, in addition to the adjustments proposed by the Transfer Pricing Officer, directed the authority to make adjustments on the transactions with Non-Associated Enterprises. Consequently, the Assessing Officer issued the final assessment order under Section 143(3) read with Section 144(C)(13) incorporating the said adjustment. The petitioner company preferred an appeal before the Income Tax Appellate Tribunal[hereinafter referred to as 'ITAT'], Chennai in ITA.No.2018/Mds/2018. The Tribunal vide its order dated 03.04.2017, remitted back the matter to the Transfer Pricing Officer to examine the selection of most appropriate method for determining the Arm's Length Price and also to see whether the Associated Enterprises has derived any benefit or mark up on the price charged by the vendor for supply of raw materials to pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionary). 15. Consequently, the Assessing Officer had to decide the matter in accordance with the elaborate procedure mentioned in Section 144C and not de hors it. 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. 17. In the opinion of this Court, Section 144C is a self contained provision which carves out a separate class of assesses i.e. 'eligible assessee' i.e. any person in whose case the variation arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of Section 92CA. For this class of assesses, it prescribes a collegium of three commissioners, once objections are preferred. Dispute 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 di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment and it is incumbent upon the Assessing Officer to pass an order of draft assessment at the first instance before proceeding to finalise the assessment in line with the procedure set out under Section 144C. 7. In Principal Commissioner of Income Tax V. Headstrong Services India Private Limited (I.T.A.No.77 of 2019 dated 24.12.2020), the challenge was to an assessment made on remand from an appellate authority and the issue that arose was whether the assessing authority would have to pass a draft order of assessment or a final order of assessment. The phrase in the first instance in Section 144C was interpreted by the Division Bench to the effect that, be an original order of assessment or an assessment made on remand, the mandate of Section 144C must be followed. 8. Relying on the above judgments, the learned counsel for the petitioner reiterated that issuance of draft order is mandatory and contemplated under Section 144(C) of the Income Tax Act. Thus, the respondents have not only violated the provisions of the Act, but violated the legal principles settled by various Courts across the country. 9. The learned Standing counsel appearing on behalf of the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (2). 14. Careful perusal of the above provision, as rightly pointed out by the petitioner, the draft order is mandatory under Section 144(C) of the Income Tax Act. An Assessing officer, at the first instance, forward a draft proposed order of assessment, enabling the assessee to accept the variations to the Assessing Officer or file his objections, if any, with the Disputes Resolution Panel and the Assessing Officer. Thus, the procedure of passing of draft assessment order provides a right to an assessee to file his objections before the Disputes Resolution Panel and the Assessing Officer for vindicating his grievances and redress the same. It is needless to state that the provisions of the Act must be complied with by the executives in its letter and spirit. When the procedure of passing the draft assessment order is contemplated under the Act, the same is to be scrupulously followed by the authorities competent. 15. Let us now consider whether the draft ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials to assessee's AE, which it has sold to assessee. With this observation, we remit the present issue for selection of appropriate method to the AO for fresh consideration. Since we have remitted the issue regarding selection of most appropriate method by the AO/TPO, at this state it is too premature to decide any other issues raised by the assessee. Further, we make it clear that the assessee is at liberty to raise any other grounds in support of the claim of assessee in this case. 7. In the result, the appeal of assessee is partly allowed for statistical purposes. 18. Perusal of the above order clarifies that the Income Tax Appellate Tribunal remitted the issue regarding application of the method whether the CUP method or TNMM as a most appropriate method to the file of Assessing Officer to see whether the AE derived any benefit or mark up on the price charged by the vendor for supply of raw materials to assessee's AE, which it has sold to assessee. With these observations, the Income Tax Appellate Tribunal remitted the issue for selection of appropriate method to Assessing Officer for fresh consideration. 19. Thus, it is not the case, where the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al assessment order is passed. Even in such circumstances, the assessee is having a right of appeal under the provisions of the Act and therefore, in the event of any grievance with reference to an assessment order subsequent passed after remitting the matter by the ITAT, the petitioner is at liberty to file an appeal and thus, the grounds raised once again to pass the draft assessment order would not arise at all. 21. The procedures as contemplated under Section 144C of the Act must be meaningfully followed and constructive interpretation is to be adopted. Repeatedly passing draft assessment order is not the spirit of the provision. The legislative intention is to provide an opportunity to an assessee before passing the final assessment order. Thus, such an opportunity is already provided and the assessee also availed of the opportunity by submitting an objection before the Disputes Resolution Panel and the Assessing Officer and thereafter, a final assessment order is passed and after remitting the matter by ITAT to decide a particular issue, the same procedure in entirety contemplated under Section 144 C of the Act need not be followed and such a repetition is not only unneces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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