ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(2)(1), BANGALORE V. CSG SYSTEMS INTERNATIONAL (INDIA) PRIVATE LIMITED, BANGALORE

ITA 1317/BANG/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) and a cross objection by the assessee, M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru. The primary legal issue was whether the Assessing Officer (AO) erred in issuing a notice of demand under Section 156 and a penalty notice under Section 271(1)(c) of the Act along with the draft assessment order without following the procedure laid down under Section 144C, rendering the final assessment order bad in law. The Tribunal examined the procedural compliance of the AO in issuing the draft assessment order and related notices, ultimately finding that the AO had not adhered to the mandatory requirements of Section 144C, leading to the quashing of the final assessment order and related notices.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847765 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Bangalore
• Assessment Year: 2013-2014
• Appeal Filed On: 04-06-2025
• Other Referred Cases: CIT Vs. Sahara India, CIT Vs Indian Bank, Gundathur Thimmappa & Sons vs. CIT, Mysore, National Thermal Power Co. Ltd. Vs CIT, Cisco Systems Services B.V. vs. CIT, Vijay Television (P.) Ltd. v. Dispute Resolution Panel, Chennai, SHL (India) Private Limited Vs. Deputy Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N. BALUSAMY
• Assessee Lawyers: ALIASGAR RAMPURAWALA; SUMEET M; A.RS
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Transfer pricing; International transaction; Question of law; Period of limitation; Initiation of penalty proceedings; Right to appeal; Procedural lapse
• Section: 148; 144; 143(3); 142(1); 271(1)(c); 145

Judgement Text

"ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru IN THE INCOME TAX APPELLATE TRIBUNAL “A’’BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI,VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1317/Bang/2025 Assessment Year : 2013-14 DCIT/ACIT Central Circle-2(2)(1) Bengaluru Vs. M/s. CSG Systems International (India) Pvt. Ltd., Embassy Tech Village, 5th Floor, Block 1 & J, Trillium, Devarabisanahalli Outer Ring Road, Bellandur Bengaluru 560 103 PAN NO : AABCI2954B APPELLANT RESPONDENT CO No.24/Bang/2025 (Arising out of ITA No.1317/Bang/2025) Assessment Year: 2013-14 M/s. CSG Systems International (India) Pvt. Ltd., Embassy Tech Village, 5th Floor, Block 1 & J, Trillium, Devarabisanahalli Outer Ring Road, Bellandur Bengaluru 560 103 PAN NO : AABCI2954B Vs. DCIT/ACIT Central Circle-2(2)(1) Bengaluru APPELLANT RESPONDENT Assessee by : Sri Aliasgar Rampurawala & Shri Sumeet M, A.Rs Revenue by : Sri N. Balusamy, D.R. Date of Hearing : 21.01.2026 Date of Pronouncement : 25.03.2026 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals), Bengaluru- Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 2 of 36 12, Bengaluru dated 07.01.2025 vide DIN & Order No. ITBA/APL/S/250/2024-25/1071941288(1) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for the AY 2013-14. The assessee has also filed a cross objection in CO No. 24/BANG/2025 against the said appeal of the Revenue in ITA No.1317/BANG/2025. 2. The Revenue has raised the following Grounds of appeal: - Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 3 of 36 3. At the outset, the ld. DR submitted that there is a delay of 65 days in filing the appeal before this Tribunal by the Revenue. Before us, the ld. D.R. drew our attention to a letter dated 15.12.2025 stating therein the cause for delay, which is reproduced below for ease of reference and convenience:- Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 4 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 5 of 36 4. On going through the above letter, we observed that the main cause cited for delay was solely attributable on account of unintentional and unavoidable reasons and in lieu of assessment proceedings getting time barred on 31.3.2025 and reopening proceedings getting time barred on 30.6.2025, and therefore the appeal could not be filed within the prescribed period by the Revenue. 4.1 Perused the record and having heard both the parties, it is perceived that the explanation offered in the condonation application is plausible and sufficient cause has been shown by the Revenue, which prevented them from filing the appeal within the prescribed period before the ITAT, and accordingly, we are inclined to condone the delay in filing the appeal by the Revenue before this Tribunal & admit the appeal for adjudication. 5. The assessee company has raised the following Grounds in the Cross objection:- Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 6 of 36 6 Per contra, the ld. A.R. of the assessee submitted that there is a delay of 20 days in filing the Cross objection before this Tribunal. Further, the ld. A.R. of the assessee also drew our attention on an affidavit along with a petition for condonation of delay dated 19/08/2025 stating the cause for such delay, which is reproduced below for ease of reference and record:- Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 7 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 8 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 9 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 10 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 11 of 36 7. Perused the record and having heard learned counsel for the respective parties, it is perceived that the explanation offered in the condonation petition is plausible and sufficient cause has been shown by the assessee, which prevented them from filing the appeal within the prescribed period before this Tribunal, and accordingly, we are inclined to condone the short delay of 20 days in filing the appeal before this Tribunal and admit the cross objection filed by the assessee also for adjudication. 8. The assessee has raised the following additional grounds of cross objection by filing a petition for admission of additional grounds, which are reproduced below: Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 12 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 13 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 14 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 15 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 16 of 36 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 17 of 36 5. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 18 of 36 9. We have heard the rival submissions on admission of additional grounds. The Lucknow bench of the Hon’ble Allahabad High Court in the case of CIT Vs. Sahara India (2012) 347 ITR 331 held that a legal issue can be raised at any stage but there shall be good reason for admitting the additional ground. In our considered opinion all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of the adjudication of above ground. Further we are also of the opinion that the additional ground raised in the present case are purely legal in nature & goes to the root of the matter & therefore these are critical for a fair adjudication. The Hon’ble Madras High Court in the case of CIT Vs Indian Bank (2015) 230 Taxman 635 (Madras) held that Rule 11 of the I.T. Rules makes it clear that the assessee has the right to raise additional ground and if the same is beneficial to the assessee, the same should be considered by the Tribunal. 9.1 Further, the Hon’ble Karnataka High Court in the case of Gundathur Thimmappa & Sons vs. CIT, Mysore, reported in (1968) 70 ITR 70 held that when the point raised by the assessee is a point which went to the root of the matter and affected not merely his liability to pay tax but also jurisdiction of the Tribunals and Authorities themselves to subject the amount concerned to tax, the Appellate Tribunal had the discretion to permit point of law to be raised for the first time in appeal because the question went to the root of the case. The Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383 held that undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, we fail to see why such a question should not be allowed to be raised when it is necessary to Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 19 of 36 consider that question in order to correctly assess the tax liability of an assessee. Accordingly, we inclined to admit the additional legal grounds as raised by the assessee for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and these are critical for a fair adjudication of the matter. 10. Since we have admitted the additional ground of cross objection filed by the assessee which is purely legal in nature & also goes to the root of the matter, we deem it fit & proper to first consider this legal ground raised by the assessee & if the necessity so desires we will then move to grounds of appeal as raised by the Revenue. 11. Thus, the only legal issue to be decided is with regard to whether the AO erred in issuing a notice of demand u/s 156 of the Act as well as penalty notice u/s 274 r.w.s. 271(1)(c) of the Act along with the draft assessment order without abiding the procedure laid down u/s 144C of the Act rendering the final assessment order bad in law and liable to be quashed? 12. Before us, the ld. AR of the assessee vehemently submitted that the draft assessment order dated 10.11.2016 was passed u/s 143(3) r.w.s. 144C of the Act which was accompanied with a notice of demand u/s 156 of the Act and a notice initiating penalty proceedings u/s 271(1)(c) of the Act both dated 10.11.2016 which entails that the said draft assessment order is indeed a final assessment order. The ld. A.R. of the assessee vehemently submitted that since the provisions of section 144C of the Act have not been followed by the AO, the final assessment order passed on 14.12.2016 is liable to be quashed. The ld. A.R. of the assessee also relied upon the following judgements in support of its claim- Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 20 of 36 13. On the contrary, the ld. D.R. submitted that the order passed by the AO is valid in law as the assessee was very well aware the intent of the AO while passing the draft assessment order on which the assessee filed a letter on 6.12.2016 and intimated that it did not intend to file its objection before the DRP and had requested that final assessment order be passed for the AY 2013-14. It was further submitted that the assessee had categorically mentioned that the assessee reserves its right to file an appeal before the CIT(A) against the final assessment order only and therefore, the AO proceeded to pass final assessment order in accordance with section 144C(3) of the Act. Further, the ld. D.R. submitted that even if the AO had issued notice of demand u/s 156 of the Act and also initiated penalty proceeding u/s 271(1)(c) of the Act while passing the draft assessment order, however the same was clearly mentioned on the top as “DRAFT” and hence it is a curable defect as per provisions contained in section 292B of the Act. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 21 of 36 14. We have heard both the parties on this legal issue raised by the assessee. The assessee company is engaged in the business of providing software development services, marketing support services to its AEs. The assessee company filed its return of income for the AY 2013-14 on 29/11/2013 declaring a total income of Rs. 9,77,69,437/- under the normal provisions of the Act. Thereafter, the case of the assessee company was selected for scrutiny and accordingly notices u/s 143(2) as well as 142(1) of the Act were issued calling for details. The accounts of the assessee company and other information furnished by the assessee through the authorized representative were verified by the AO. 14.1 During the course of the assessment proceedings, the AO observed that during the FY 2012-13 relevant for the AY 2013-14, the assessee company had international transactions with its associated enterprises and therefore, with the prior approval of the Pr. CIT, Bengaluru-1 a reference was made to the TPO to determine the Arms’ length price as per provisions of section 92CA of the Act. The ld. DCIT, Transfer Pricing-1(1)(2), Bengaluru vide order passed u/s 92CA of the Act dated 19/10/2016 computed Rs. 4,99,47,693/- as transfer pricing adjustment in respect of software development segment. Subsequently, incorporating the above adjustments, a draft assessment order was passed on 10/11/2016 allegedly passed u/s 143(3) r.w.s. 144C(1) of the Act. Undisputedly, while passing the draft assessment order, the AO had computed the taxable income and determined the total tax payable by the assessee. Further, the AO while issuing the draft assessment order had also issued notice of demand u/s 156 of the Act stating therein a sum of Rs.2,34,11,024/- payable by the assessee. Further, we also notice that in the said so called draft assessment order, the AO had also initiated penalty proceedings u/s 271(1)(c) of the Act. We are of the Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 22 of 36 considered opinion that the AO had completed the assessment and computed the taxable income along with the tax payable thereon at the stage of passing the draft assessment order and issued the demand notice which is contrary to law. We are also of the opinion that such notice of demand u/s 156 of the Act as well as the initiation of penalty proceedings could only be done only after passing the final assessment order determining the tax liability. The very fact that the taxable amount has been determined itself would show that it was passed as a final assessment order. Therefore, not only the final assessment was completed on 10.11.2016 but also notice of demand of even date was issued thereon, calling upon the assessee company to pay the tax amount and also penalty u/s 271(1)(c) of the Act and by no stretch of imagination it can be construed as pre assessment order. We are of the considered opinion that the assessing officer is duty bound to adhere to the mandatory requirement mandated u/s 144C of the Act by first passing a draft assessment order, the failure of which would invalidate the final assessment order and the consequent demand notices and penalty proceedings. We are also of the considered opinion that as the procedure prescribed u/s 144C of the Act is a mandatory procedure and not directory, the failure to follow the procedure u/s 144C(1) of the Act would be a jurisdictional error and not merely procedural error or irregularity. Therefore, section 292B of the Act cannot save an order passed in breach of the provisions of section 144C(1) of the Act, the same being an incurable illegality. By holding so, we relied on the judgement of the jurisdictional High Court of Karnataka in the case of CIT Vs. Cisco Systems Services B.V. reported in (2023) 456 ITR 50. The relevant portion is reproduced below for ease of reference: “12. We have carefully considered the rival contentions and perused the records. 13. Undisputed facts of the case are, in the draft assessment order, the ACIT has ordered issuance of demand notice and to initiate penalty proceeding under Section 271(1)(c) of the Act. Both the draft assessment order and the demand notice are dated December 28, 2018. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 23 of 36 14. Argument canvassed by the Revenue is, though demand notice has been issued, assessee had understood the order dated December 28, 2018 as a draft assessment order and filed its objections before the DRP. The defect if any is a curable one. On the other hand, Shri. Nageshwar Rao’s argument is that the ACIT had completed the assessment at the stage of passing the draft assessment order and issued the demand notice. Thus, the re-assessment proceeding was complete. This procedure followed by ACIT is contrary to law laid down in Vijay Television Case and other authorities. 15. section 144C lays down a detailed procedure. Under section 144C(1), the AO [Assessing Officer] is required to forward a draft of the proposed order of assessment to the assessee. Assessee may file its acceptance or objection before the DRP and the AO. If assessee intimates its acceptance or no objections are received within 30 days, the AO shall complete the assessment. Where the DRP receives any objection from the assessee, it shall issue necessary directions to the AO to enable him to complete the assessment after considering the documents/material mentioned in section 144C (6)(a) to (g) which includes the draft order. Before issuing the directions, the DRP may also make such further enquiry by any Income Tax Authority. 16. Upon receipt of the directions from DRP under Sub- Section 5, the AO shall, in conformity with the directions, complete the assessment within one month from the end of the month in which such direction is received. A notice of demand under Section 156 may be issued after completion of the assessment under section 144C(13). 17. In Vijay Television Case, it is held as follows: “21. As rightly pointed out by the learned senior counsel for the petitioners, in the order passed 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.” (Emphasis Supplied) 18. In the case on hand, though it is claimed by the Revenue that order dated December 28, 2018 was a draft assessment order, we may record that the ACIT has directed issuance of demand notice and also initiated penalty proceedings. As in Vijay Television Case, the said order along with demand notice was served on the assessee. 19. In Vijay Television Case, instead of passing the draft assessment order, the final assessment order was passed. Subsequently, Revenue sought to correct the mistake by issuing corrigendum. Following the Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 24 of 36 decision of Andhra Pradesh High Court in Zuari Cement Ltd Vs. Asstt. CIT W.P. No. 5557 of 2012, dated 21.02.2013, the Madras High Court set aside the order in Vijay Television Case. 20. In Kalyan Kumar Ray Vs. CIT (1991) 191 ITR 634 SC, relied upon by Shri. Nageshwar Rao, it is held that assessment is one integrated process involving not only the assessment of total income but also determination of the tax. In this case at the stage of passing the draft order, the ACIT had assessed the tax, passed a final order and also issued a demand notice. 21. Mr. Aravind also contended that the demand notice was not enforced. It is settled that demand notice stems out of an order of assessment and it is enforceable. It meets the assessee with civil consequences. The argument on behalf of the Revenue that the demand notice was not enforced is fallacious and noted only to be rejected. 22. We have carefully considered Section 292B of the Act. The mistake which the ACIT has done in passing the final order at the stage of draft order is not curable under Section 292B of the Act. 23. We have considered the appeals both on delay and merits. In the light of discussion made hereinabove, these appeals are devoid of merit and they are accordingly, dismissed. The questions of law are answered in favour of the Assessee and against the Revenue.” 14.2 We also relied on the judgement of Hon’ble High Court of Madras in the case of Vijay Television (P.) Ltd. v. Dispute Resolution Panel, Chennai, reported in [2014] 369 ITR 113. The relevant portion is reproduced below for ease of reference: “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 recommendations made by the TPO after giving an opportunity to the assessee to file their objections and then the assessing officer shall pass a final order. According to the learned senior counsel for the petitioners, this procedure has not been followed by the second respondent inasmuch as a final order has been straightaway passed without passing a draft assessment order. 21. As rightly pointed out by the learned senior counsel for the petitioners, in the order passed 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 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 25 of 36 271 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 Section 93CA (4) read with Section 143 (3) of the Act. In and by the order dated 15.04.2013, the second respondent granted thirty days time to enable the assessee to file their objections. On receipt of the corrigendum dated 15.04.2013, the petitioner company approached the first respondent, but the first respondent declined to issue any direction to the assessment officer on the ground that the first 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 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 urged that assessment proceedings after the expiry of the period of limitation being a nullity in law, the High Court should have annulled the assessment and there was no question of a fresh assessment. Thus, the nub of the grievance of the appellant is that in remanding the matter back to the Assessing Officer, the High Court has not only extended the statutory period prescribed for completion of assessment, it has also conferred jurisdiction upon 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 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 26 of 36 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 be cured even by consent of the parties. 24. This decision squarely applies to the facts of this case. In this case, the order passed by the second respondent lacks jurisdiction especially when it is beyond the period of limitation prescribed by the statute. When there is a statutory violation in not following the procedures prescribed, such an order cannot be cured by merely issuing a corrigendum. 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 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 in Section 158BC is not a valid order. It was further held that when there is a prescribed procedure contemplated under the Act or in a particular section and it is violated, then it cannot be cured. In the present case, certain procedure has been contemplated under Section 144C of the Act and they have been violated by the second respondent by passing final order of assessment and therefore such order passed by the second respondent has got no jurisdiction or it can be cured by virtue of issuing a corrigendum. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 27 of 36 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 (inspite 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 then taking a plea by the Revenue that such an action adopted on their part would not nullify the proceedings, cannot be appreciated since by virtue of such actions, the Revenue has attempted to nullify the scheme of things of limitations legally propounded under the Act....\" 29. In yet another decision of the Division Bench of this Court in the case of Smt. R.V. Sarojini Devi (supra), which was relied on 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 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 by the assessing officer in the case of Zuari Cement Ltd. (supra), wherein it was held as under:— Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 28 of 36 \"A reading of the above section shows that if the assessing officer proposes to make, on or after 01.10.2009, any variation in the income or loss returned by an assessee, then, notwithstanding anything to the contrary contained in the Act, he shall first pass a draft assessment 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 subsection (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 clearly contrary to S.144C of the Act and is without jurisdiction, null and void. The contention of the Revenue that the circular No.5/2010 of the CBDT has clarified that the provisions of S.144C shall not apply for the assessment year 2008-09 and would apply only from the assessment year 2010-2011 and later years is not tenable in as much as the language of Sub-section (1) of Section 144C referring to the 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/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 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 29 of 36 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 any authority. In this view of the matter, we are of the view that the impugned order of assessment dated 23.12.2011 passed by the respondent is contrary to the mandatory provisions of S.144C of the Act and is passed in violation thereof. Therefore, it is declared as one without jurisdiction, null and void and unenforceable. Consequently, the demand 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 for the petitioners, even as on this date, the website of the department indicate the amount determined by the second respondent payable by the company inspite of issuance of the corrigendum on 15.04.2013 as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even withdraw the taxable amount determined by him or updated the status in the website. In any event, such an order dated 26.03.2013 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. 34. Accordingly, the orders, which are impugned in these writ petitions are set aside and both the writ petitions are allowed. No costs. Consequently, connected miscellaneous petitions are closed.” Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 30 of 36 14.3 Lastly, we also relied upon the judgement of Hon’ble High Court of Telangana in the case of PCIT Vs. Hyundai Motor India Engineering (P) Ltd. reported in (2024) 462 ITR 75 which held as follows: “13. Having heard the contentions put forth on either side and on perusal of records, what is necessary to be taken note of at this juncture, is the requirement of law. The reference to dispute resolution panel is what is envisaged under Section 144-C of the Act. The relevant provision of Section 144-C is reproduced hereunder: \"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. (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, 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 shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Offi- cer to enable him to complete the assessment. (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; and (g) result of any enquiry made by, or caused to be made by, it. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 31 of 36 (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. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, 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 rules 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. (15) For the purposes of this section,— (a) \"Dispute Resolution Panel\" means a collegium comprising of three Commissioners of Income-tax constituted by the Board for this purpose; (b) \"eligible assessee\" means,— (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub- section (3) of section 92CA; and (ii) any foreign company.’. A plain reading of sub-Sections 1, 2, 6, 8 and 13 of Section 144-C would clearly spell out the requirement of law. Admittedly in the instant case, in addition to the draft assessment order, there was also a notice of demand and penalty which was enclosed. A plain reading of sub- Section 8 of Section 144-C would further make it amply clear that the demand has to be raised only after the final assessment order is passed, more particularly, for the reason that the dispute resolution panel has got the power to confirm, reduce or enhance the variations proposed in the draft. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 32 of 36 14. In the given context, if the draft assessment order is accompanied by a notice of demand and penalty that itself would force one to reach to the conclusion that though it is termed as draft assessment order, in fact, it is the final assessment order and the notice of demand and penalty was accompanying the same. To further weaken the case of the appellant, the operative part of the draft assessment order reads as under: “The assessment is completed under section 143(3) r.w.s. 92CA of the Income-tax Act, 1961. Credit for prepaid taxes is given. Penalty proceedings u/s 271AA & 271BA are being initiated separately. A copy of the assessment order along with demand notice is issued to the assessee”. A perusal of the aforesaid operative part of the so called draft assessment order would further establish that it was not a draft assessment order, but was a final assessment order after the assessment was concluded. The operative part also clearly mentioned about the raising notice of demand under Section 271-AA and Section 271- BA of the Act. 15. The High Court of Judicature at Andhra Pradesh in the case of M/s.Zuari Cement Ltd. vs. The Assistant Commissioner of Income Tax has held as under: “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 dt.23.12.2011 straight away. Therefore, the impugned order of assessment is clearly contrary to S.144C of the Act and is without jurisdiction, null and void”. The said judgement has also been affirmed by the Hon’ble Supreme Court of India vide its order dated 27.09.2013 in Special Leave to Appeal (Civil) C.C.No.16694 of 2013. Similarly, the Single Bench of the Madras High Court in the case of Vijay Television (P.) Ltd. v. Dispute Resolution Panel, Chennai [2014] 46 taxmann.com 100 (Madras) at paragraph Nos.20 and 21 held as under: “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 recommendations made by the TPO after giving an opportunity to the assessee to file their objections and then the assessing officer shall pass a final order. According to the learned senior counsel for the petitioners, this procedure has not been followed by the second respondent inasmuch as a final order has been straightaway passed without passing a draft assessment order. “As rightly pointed out by the learned senior counsel for the petitioners, in the order passed 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 Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 33 of 36 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 Section 93CA (4) read with Section 143 (3) of the Act. In an by the order dated 15.04.2013, the second respondent granted thirty days time to enable the assessee to file their objections. On receipt of the corrigendum dated 15.04.2013, the petitioner company approached the first respondent, but the first respondent declined to issue any direction to the assessment officer on the ground that the first 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 refused to entertain the objections filed on behalf of the petitioner company”. The said decision has been further affirmed by the Division Bench of the Madras High Court in the case of the Assistant Commissioner of Income-tax, Media Circle-11, Chennai v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101 (Madras) wherein, the Division Bench at paragraph Nos.31 to 34 and 39 held as under: “A perusal of the materials available in the typed set of documents reveal that the order dated 26.3.13 not only has finalised the assessment, but goes one step ahead by making a demand for tax, thereby implying that the assessment is final and not provisions. Adding insult to injury, penalty has also been imposed in the very same order. A notice of demand has also been made under Section 156 of the Act. Therefore, it is a conclusive order completing the assessment and making a consequential demand and by no stretch of imagination it can be construed as pre-assessment order. It is further evident from the materials available on record that when the assessee approached the DRP against the above assessment order u/s 144-C (2), the DRP has categorically refused to entertain the appeal pointing out that no draft assessment order has been placed before it for taking up the matter. In essence, the DRP itself has confirmed that the order passed by the AO is a final order and not a draft assessment order. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 34 of 36 Therefore, it is very clear that what has been issued is not a Draft Assessment Order, as contemplated u/s 144-C of the Income Tax Act, but a final order, as mandated u/s 143(3) of the Act. However, the contention now raised is that the mistake stood corrected by issuance of the corrigendum dated 15.4.2013 and, therefore, for all purposes the assessment order should be treated as final assessment order. Will the corrigendum, which has been issued on 15.4.2013 cure the defect that has crept into the order and, thereby, rectify the mistake committed by the Revenue and enable treatment of the assessment order as a draft assessment order is the point, which requires the determination of this Court. From the above it is unambiguously clear that the Assessing Officer is duty bound to adhere to the mandatory requirement mandated under Section 144-C of the Act by first passing a drat assessment order, the failure of which would invalidate the final assessment order and the consequent demand notices and penalty proceedings”. 16. Similar view has also been taken by the Division Bench of the High Court of Karnataka in the case of Commissioner of Income-tax (International Taxation) v. Cisco Systems Services B.V. [2023] 149 taxmann.com 486 (Karnataka) wherein at paragraph Nos.13 to 16 it was held as under: “Undisputed facts of the case are, in the draft assessment order, the ACIT has ordered issuance of demand notice and to initiate penalty proceeding under Section 271(1)(c) of the Act. Both the draft assessment order and the demand notice are dated December 28, 2018. Argument canvassed by the Revenue is, though demand notice has been issued, assessee had understood the order dated December 28, 2018 as a draft assessment order and filed its objections before the DRP. The defect if any is a curable one. On the other hand, Shri. Nageshwar Rao’s argument is that the ACIT had completed the assessment at the stage of passing the draft assessment order and issued the demand notice. Thus, the re-assessment proceeding was complete. This procedure followed by ACIT is contrary to law laid down in Vijay Television (P.) Ltd. case (supra) and other authorities. Section 144C lays down a detailed procedure. Under Section 144C(1), the AO is required to forward a draft of the proposed order of assessment to the assessee. Assessee may filed its acceptance or objection before the DRP and the AO. If assessee intimates its acceptance or no objections are received within 30 days, the AO shall complete the assessment. Where the DRP receives any objection from the assessee, it shall issue necessary directions to the AO to enable him to complete the assessment after considering the documents/material mentioned in Section 144C (6)(a) to (g) which includes the draft order. Before issuing the directions, the DRP may also make such further enquiry by any Income-tax Authority. Upon receipt of the directions from DRP under sub- section 5, the AO shall, in conformity with the directions, complete the assessment within one month from the end of the month in which such direction is received. Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 35 of 36 A notice of demand under section 156 may be issued after completion of the assessment under section 144C(13)”. 17. The Bombay High Court also in somewhat similar circumstances in the case of SHL (India) Private Limited Vs. Deputy Commissioner of Income Tax at paragraph Nos.25 and 26 held as under: “In our view, the following principles emerge from the above discussion :- (i) that the procedure prescribed under Section 144C of the IT Act is a mandatory procedure and not directory (ii) failure to follow the procedure under Section 144C(1) would be a jurisdictional error and not merely procedural error or irregularity. (iii) Therefore, Section 292B of the IT Act cannot save an order passed in breach of the provisions of Section 144C(1), the same being an incurable illegality. It is important to note that Section 144C(1) is a non- obstante provision, which requires its compliance irrespective of the other provisions that may be contained in the IT Act. There is no dispute that Petitioner is an eligible assessee and also there is no dispute as to the applicability of Section 144C. It is also not in dispute that the final Assessment Order has been passed without the draft Assessment Order as contemplated under Section 144C(1) of the IT Act. The Assessing Officer ought to have in the first instance forwarded a draft of the proposed order of assessment to Petitioner, as there was a proposed variation prejudicial to the interest of the assessee. This important step has been completely omitted by the Respondent taking away a very necessary right of Petitioner to file objections to the proposed variation with the DRP and the Assessing Officer, which in our view, strikes to the root of the procedure contemplated by Section 144C”. 18. Given the aforesaid legal position as it stands, as is required under Section 144-C of the Act and also taking note of the contents of the operative part of the so called assessment order, in the considered opinion of this Bench leads to the only conclusion of the order being a final assessment order, more particularly, when the authority concerned has also ordered and directed for initiation of penalty proceedings simultaneously along with the draft assessment order. Hence, this Bench has no hesitation in reaching to the conclusion that the findings arrived at by the Tribunal while allowing the appeal of the respondent/assessee was proper, legal and justified. That the present appeal thus being devoid of merits, deserves to be and is accordingly, rejected. There shall be no order as to costs.” 14.4 Respectfully following the above judgement of the Hon’ble jurisdictional High Court of Karnataka as well as other Hon’ble High Courts, we are of the firm opinion that section 144C(1) of the Act is a non-obstante provision, which requires its compliance irrespective of other provisions that may be contained in the Act. There is no Printed from counselvise.com ITANo.1317/Bang/2025 & CO 24/Bang/2025 M/s. CSG Systems International (India) Pvt. Ltd., Bengaluru Page 36 of 36 dispute as to applicability of section 144C of the Act. It is also not in dispute that AO has computed the taxable income and tax payable thereon and issued notice of demand u/s 156 of the Act and also initiated penalty proceeding at the stage of passing the draft assessment order itself, which in our view strikes to the root of the procedure contemplated by section 144C of the Act. Thus, in the light of the discussion as aforesaid, we have no hesitation in quashing the impugned final assessment order and consequential demand as well as penalty notice. Since the CO filed by the assessee is allowed and hence the appeal filed by the revenue is dismissed. 15. In the result, appeal filed by the revenue is dismissed and the CO filed by the assessee is allowed. Order pronounced in the open court on 25th March, 2026 Sd/- (Prashant Maharishi) Vice President Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 25th March, 2026. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. Printed from counselvise.com "