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TMI Blog2023 (3) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... Jazzy Creations Pvt. Ltd. [ 2016 (1) TMI 1453 - ITAT MUMBAI] , wherein, the Tribunal while relying upon the decision of the Hon'ble Madras High Court, in the case of Vijay Television Pvt. Ltd. Vs DRP [ 2014 (6) TMI 540 - MADRAS HIGH COURT] has quashed such an invalid assessment order which was framed without passing of draft assessment order and held that the subsequent corrigendum issued by the AO did not have any legal sanctity. Appeal of the assessee stands allowed. - I.T.A. No. 2308/Kol/2019 - - - Dated:- 6-2-2023 - Shri Sanjay Garg , Judicial Member And Shri Girish Agrawal , Accountant Member Shri Ketan K Ved , CA , appeared on behalf of the appellant Shri Amal Kamat, CIT - DR , appeared on behalf of the Respondent ORDER Per Sanjay Garg , Judicial Member : The present appeal has been preferred by the assessee against the order dated 31.07.2019 of the Assessing Officer (in short the 'A.O') passed u/s. 92CA(3) 144C read with section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') in pursuance of the directions of the Dispute Resolution Panel (DRP) dated 14.05.2019. 2. At the outset, the ld. counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty notice u/s. 274 of the Act dated 29.11.2018 are withdrawn. Vide same letter, the AO enclosed the impugned draft assessment order passed on 21.12.2018. 3.5 In terms of the provisions of section 144C(1) of the Act, after reference to the TPO on the transfer pricing issue related to international transaction in terms of s. 92C(3) of the Act, and after receipt of the TPO's order u/s. 92CA(3) of the Act, the Assessing Officer is required to pass draft assessment order incorporating the order of the TPO in terms of s. 92CA(4) of the Act. 3.6 In view of the provisions under the Dispute Resolution Panel Rules 2009 and Chapter XIV and the relevant s. 144C (1) of the Act, it is observed that the Panel has the power to issue Directions u/s. 144C(5) of the Act to the Assessing Officer to enable him to complete the assessment only in regard to the cases of 'eligible assessees' in whose case the variation referred to in s. 144C(1) of the Act arises as a consequence of the order passed u/s. 92CA(3) of the Act, and consequently draft assessment order has been passed by the AO. 3.7 In view of the above provisions it is clear that the Panel has no jurisdiction over such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Assessing Officer after final assessment order was not a valid draft assessment order, therefore, the ld. DRP has also declined to interfere or propose any adjustment to such an invalid draft assessment order. 5. At this stage, we deem it appropriate to discuss the relevant provisions of section 144C also. The relevant part of the provisions of section 144C, for the sake of ready reference, is reproduced as under: 11. Provisions of section 144C read as under : 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (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. 12. Most relevant clauses pertinent for adjudication of the quarrel reads as under: (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; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee . Clearly, therefore, the issuance of a draft assessment order is a sine qua non before the Assessing Officer can pass a regular assessment order under section 143(3). We have carefully perused the assessment order dated 24 November 2010. It is a regular assessment order in form and in substance. Not only that the income is computed, tax payable thereon is computed and demanded, entries are made on the basis of this order in the demand and collection register and even penalty proceedings are initiated. Such an exercise could not have been done if the assessment order was indeed a draft assessment order. Undoubtedly, if a draft assessment order is wrongly titled as an assessment order, Section 292B comes to the rescue of the Assessing Officer as it specifically provides that (n) o return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed on 26.03.2013, the second respondent even raised a demand as also imposed penalty. Such demand has to be raised only after a final order has been passed determining the tax liability. The very fact that the taxable amount has been determined itself would show that it was passed as a final order. In fact, a notice for demand under Section 156 of the Act was issued pursuant to such order dated 26.03.2013 of the second respondent. Both the order dated 26.03.2013 and the notice for demand thereof have been served simultaneously on the petitioner. Therefore, not only the assessment is complete, but also a notice dated 28.03.2013 was issued thereon calling upon the petitioner to pay the tax amount as also penalty under Section 271 of the Act. Thereafter, the petitioner was given an opportunity of hearing on 12.04.2013. Subsequently, the second respondent realised the mistake in passing a final order instead of a draft assessment order which resulted in issuing a corrigendum on 15.04.2013. In the corrigendum it was only stated that the order passed on 26.03.2013 under Section 143C of the Act has to be read and treated as a draft assessment order as per Section 143C read with Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the Assessing Officer, which he otherwise lacked on the expiry of the said period. 23. It is evident from the above decision of the Honourable Supreme Court that if an order is passed beyond the statutory period prescribed, such order is a nullity and has no force of law. In that case before the Honourable Supreme Court, the period for assessment proceedings expired and thereafter, fresh assessment orders have been issued by anti-dating it. In those circumstances, it was held that the High Court ought not to have remanded the matter back to the assessment officer and by doing so, the statutory period prescribed for completion of assessment has been extended by conferring jurisdiction upon the Assessing Officer, which he otherwise lacked on the expiry of the said period. In that case, the Honourable Supreme Court also held that there is a distinction between an order which is a nullity and an order which is irregular and illegal. Where an authority making order lacks inherent jurisdiction, such an order will be null and void ab initio, as the defect of jurisdiction goes to the root of the matter and strikes at his very authority to pass any order and such a defect cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second respondent has got no jurisdiction or it can be cured by virtue of issuing a corrigendum. 28. By referring to the decision of the Division Bench of this Court dated 10.02.2014 passed in Tax Case (Appeal) No. 2412 of 2006, the learned standing counsel for the respondents sought to make a distinction with the decision of the Division Bench of this Court mentioned in the preceding paragraph. That is a case where the facts relating to the order covered in the decision of the Honourable Supreme Court, which the Division Bench relied on, could not be made applicable to the facts of that case and therefore it was not discussed by the Division Bench in the order dated 10.02.2014. For more clarity, the relevant portion of the decision of the Division Bench of this Court in the case of V. Ramaiah (supra) is extracted hereunder:- Certainly passing an order of assessment under Section 158BC instead of Section 158BD (in spite of clear terminology used in both the sections) would not amount to a mistake, a defect or an omission, much less a curable one. When different contingencies are dealt with under different sections of the Act, allowing an illegality to be perpetrated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, forward it to the assessee and after the assessee files his objections, if any, the assessing officer shall complete assessment within one month. The assessee is also given an option to file objections before the Dispute Resolution Panel in which event the latter can issue directions for the guidance of the Assessing Officer to enable him to complete the assessment. In the case of the petitioner, admittedly the TPO suggested an adjustment of Rs. 52.14 crores u/s. 92CA of the Act on 20.09.2011 and forwarded it to the Assessing Officer and to the assessee under sub-section (3) thereof. The assessing officer accepted the variation submitted by the TPO without giving the petitioner any opportunity to object to it and passed the impugned assessment order. As this has occurred after 01.10.2009, the cut off date prescribed in sub-section (1) of S. 144C, the Assessing Officer is mandated to first pass a draft assessment order, communicate it to the assessee, hear his objections and then complete assessment. Admittedly, this has not been done and the respondent has passed a final assessment order dated 22.12.2011 straight away. Therefore, the impugned order of assessment is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notice dated 23.12.2011 issued by the respondent is set aside. 32. As against this order of the Division Bench of the Andhra Pradesh High Court, the Revenue went on appeal before the Honourable Supreme Court. The record of proceedings of the Supreme Court indicate that the Special Leave Petition was dismissed on 27.09.2013. 33. The decision of the Division Bench of the Andhra Pradesh High Court deals with an identical issue as that of the present case. In this case, against the order passed by the second respondent on 26.03.2013, the petitioner filed objections before the DRP, the first respondent herein and the first respondent refused to entertain it by stating that the order passed by the second respondent is a final order and it had jurisdiction to entertain objections only if it is a draft assessment order. While so, the order dated 26.03.2013 of the second respondent can only be termed as a final order and in such event it is contrary to Section 144C of the Act. As mentioned supra, in and by the order dated 26.03.2013, the second respondent determined the taxable amount and also imposed penalty payable by the petitioner. According to the learned senior counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, to which assessee is entitled under section 144C (15), the assessment order passed by the AO is to be held is illegal and liable to be quashed on this ground alone. We do so. 10. As we have seen in the reproductions above, the issuance of corrigendum by the Assessing Officer was not allowed to be given effect by the Hon'ble Court as well. 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. Learned Departmental Representative 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 cannot 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 any event, in the case of Inventors Industrial Corp (supra) as well, the assessee had duly participated in the reassessment proceedings and yet, in the second round of proceedings, the objections were t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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