The ITO, Ward-1(1)(1), Baroda V. M/s. C-SAM (India) Pvt. Ltd., Vadodara

ITA 932/AHD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0017 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 04-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Principle of natural justice; Period of limitation; Procedural lapse
• Section: 143(3); 145; 148; 144

Judgement Text

I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR , AM AND S S GODARA , JM ] I.T.A. NO. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 INCOME TAX OFFICER , WARD 1(1)(1), BARODA. ..... ...... . ... . . APPELLANT VS. C - SAM (INDIA) PVT. LTD., ............... . RESPONDENT OHM BUILDING PARK, OHM HOUSE, NR. BALAJI HOSPITAL, SUBHANPURA, ELLORA PARK, VADODARA 390 007. [ PAN: A A CCC 5675 J ] APPEARANCES BY: MADHUSUDAN FOR THE A PPELLANT SANJAY R. SHAH FOR THE RE SPONDENT DATE OF CONCLUDING THE HEARING : 0 4 . 10 .2016 DATE OF PRONOUNC ING THE ORDER : 29 . 1 1 .2016 O R D E R PER PRAMOD KUMAR , AM : 1 . BY WAY OF THIS APPEAL, THE ASSESSING OFFICER APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 28 .01.2015, PASSED BY THE LEARNED CIT (A), IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009 - 10, ON THE FOLLOWING GROUNDS : - I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 2 OF 12 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT (APPEALS) ERRED IN LAW IN DELETING ALL THE ADDITIONS MADE BY THE AO, BY QUASHING THE ORDER OF ASSESSING OFFICER, ONLY ON THE GROUND THAT THE ORDER WAS NOT LEGALLY CORRECT AS NO DRAFT ORDER U/S 144C WAS FRAMED BEFORE PASSING THE FINAL ORDER U/S 143(3) , WITHOUT APPRECIATING THE FACT THAT THE QUANTUM OF ADDITION IS VERY HIGH AND THE SAME WAS MADE BY THE TRANSFER PRICING OFFICER BASED ON INDEPENDENT DATA AND INFORMATION AVAILABLE FOR THIS PURPOSE AND THAT TOO AFTER PROVIDING SUFFICIENT TIME AND OPPORTUNIT IES TO THE ASSESSEE IN THIS RESPECT THERE WAS NO DEPRIVAL OF NATURAL JUSTICE TO THE ASSESSEE. 2. THE LD. CIT (APPEALS) OUGHT TO HAVE DEALT WITH ON MERITS THE FACT THAT THE ADJUSTMENTS MADE BY THE TPO ARE APPEALABLE BEFORE THE LD. CIT(A), 3. WITHOUT PRE JUDICE TO THE ABOVE, THE LD . CIT(A) OUGHT TO HAVE DEALT WITH THE ISSUES OF DISALLOWANCE OF LATE PAYMENT OF PF, DISALLOWANCE U/S 40(A)(IA) & INTEREST ON TDS ON MERITS AND OUGHT NOT TO HAVE QUASHED THE ENTIRE ASSESSMENT ORDER ON TECHNICAL GROUND. 2. TO ADJ UDICATE ON THIS APPEAL , ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE IS A N ELIGIBLE ASSESSEE UNDER SECTION 144C OF THE ACT AND THAT ARMS LENGTH PRICE ADJUSTMENT OF RS.2,86,19,511/ - WAS CONTEMPLAT ED BY ORDER DATED 24. 01 .2013 ISSUED BY TRANSFER PRICING OFFICER (TPO) UNDER SECTION 92CA(3 ) OF THE ACT. HOWEVER, INSTEAD , IN THE FIRST INSTANCE , FORWARDING OF DRAFT OF THE PROPOSED ASSESSMENT, AS REQUIRED UNDER SECTION 144C(1), THE ASSESSING OFFICER STRAI GHTAWAY PASSED ORDER UNDER SECTION 143(3) ON 22.02.2013 . B Y WAY OF THE SAID A SSESSMENT O RDER THE ASSESSING OFFICER INTER ALIA MADE AN ADDITION OF ARMS LENGTH PRICE ADJUSTMENT OF RS.2,86,19,511/ - IN TERMS OF TPO S RECOMMENDATION. AGGRIEVED, ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) AND ONE OF THE POINT WHICH THE ASSESSEE TOOK UP BEFORE THE LEARNED CIT(A) WAS THAT SINCE THE ASSESSING O FFICER STRAIGHTAWAY PASSED FINAL ASSESSMENT ORDER UNDER SECTION 143(3) WITHOUT FIRST FORWARDING A DRAF T OF THE PROPOSED ORDER OF ASSESSMENT TO THE ASSESSEE, THE ORDER IS LIABLE TO BE QUASHED FOR THIS REASON ALONE. THE PLEA OF THE ASSESSEE FOUND FAVOUR WITH I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 3 OF 12 THE LEARNED CIT(A) AND ACCORDINGLY, THE IMPUGNED ASSESSMENT ORDER WAS QUASHED. WHILE DOING SO, THE LEARNED CIT(A) , INTER ALIA , OBSERVED AS FOLLOWS : - 5.3 AS CAN BE SEEN FROM THE ABOVE THAT THE PRESENT A O IN HIS REPORT DATED 1 9/01/2015 HAS ADMITTED THAT NO DRAFT ORDER WAS FRAMED AND PROVIDED BY THE ERSTWHILE AO TO THE ASSESSEE IN RESPECT OF THE VARIATIO NS DECIDED BY THE TPO BEFORE PASSING FINAL ORDER U/S 143(3). THUS, THE UNDISPUTED AND ADMITTED FACT IS THAT THE NO DRAFT ORDER WAS FRAMED AND PROVIDED BY THE ERSTWHILE AO TO THE APPELLANT IN RESPECT OF VARIATION DECIDED BY THE TPO BEFORE PASSING FINAL ORDE R U/S 143(3) OF THE ACT, THE AO AFTER RECEIVING THE TPO'S OBSERVATION AND FINDINGS HAD DIRECTLY INCORPORATED THE ARM'S LENGTH PRICE DETERMINED BY HIM IN THE ASSESSMENT ORDER WITHOUT PROVIDING ANY OPPORTUNITY BEING HEARD, WHICH IS GROSS VIOLATION OF PRINCIP LE OF NATURAL JUSTICE AND ALSO THE PROVISIONS OF THE ACT. THE APPELLANT HAS REFERRED TO SECTION 92C(4) R.W. SUB SECTION (4) OF SECTION 92CA OF THE ACT. THE APPELLANT HAS FURTHER REFERRED TO INSTRUCTION NO.3 DATED MAY 20, 2003. THE APPELLANT ALSO RELIED UPO N DECISIONS OF HON'BLE COURTS AND HAS PLEADED THAT A HEARING HAS TO BE AFFORDED BY THE AO BEFORE ADOPTING THE ADJUSTMENTS PROPOSED BY T HE AO WHICH HAS NOT BEEN DONE IN THE CASE OF ASSESSEE. THUS, AS PER THE APPELLANT TO THIS EXTENT THE ORDER OF THE AO IS W ITHOUT JURISDICTION, VOID AND LIABLE TO BE STRUCK DOWN. AS PER THE APPELLANT THE ASSESSMENT ORDER IS PASSED WITHOUT ANY DRAFT ORDER U/S 144C OF THE ACT AND WITHOUT PROVIDING THE CHANCE TO THE ASSESSEE TO REBUT THE DETERMINATION OF ARM'S LENGTH PRICE BY THE TPO. AS PER THE APPELLANT IN THE LIGHT OF PROVISIONS U/S 144C SUB SECTION(2) TO SUB SECTION( 5 ) AND C LARIFICATION ISSUED BY CBDT ON J ANUARY 20, 2010 THE ASSESSEE HAS OPTION TO FILE VARIATION IN THE DRAFT ASSESSMENT ORDER BEFORE T NE DISPUTE RESOLUTION PANE L (DRP) WITHIN ONE MONTH OF RECEIPT OF DRAFT ASSESSMENT ORDER OR TO OPT FOR NORMAL APPELLATE ROUTE. AS PER THE APPELLANT, THE AO BY PASSING THE IMPUGNED ORDER HAS BLOCKED AN OPTION AVAILABLE TO THE APPELLANT. THIS ENTIRE SUBMISSION OF THE APPELLANT IS FOUN D TO BE ACCEPTABLE. IT IS MENTIONED THAT THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF M/S, ZUARI CEMENT LTD. VS ACIT (WRIT PETITION NO.5557 OF 2012) HAS HELD AS UNDER: 'IN THE CASE OF PETITIONER, ADMITTEDLY THE TPO SUGGESTED AND 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 - SECT/ON (3) THEREOF. THE ASSESSING OFFICER ACCEPTED THE VARIATIONS SUBMITTED BY THE TPO WITHOUT GIVING THE PETITIONER ANY OPPORTUNITY T O OBJECT TO IT AND PASS THE IMPUGNED ASSESSMENT ORDER. AS THIS HAS OCCURRED AFTER 01/ 10/2009 , THE CUT OFF DATE PRESCRIBED IN SUB - SECTION (1) OF SECTION 144C, THE ASSESSING OFFICER IS MANDATE TO FIRST PASS THE DRAFT ASSESSMENT ORDER, COMMUNICATED 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 23/12/2011 STRAIGHT AWAY. THEREFORE, THE IMPUGNED ORDER IS CL EARLY CONTRARY TO SECTION 144C OF THE AC T AND IS WITHOUT JURISDICTION, NULL AND VOID.' I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 4 OF 12 5. 4 . IT IS ALSO MENTIONED THAT THE HON'BLE SUPREME COURT HAS D ISMISSED THE SLP FILED BY DEPARTMENT ON 21/09/2013 IN APPEAL (CIVIL) CC16694/2013. AGAIN, THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF VIJAY TE LEVISION (P) LTD. VS DISPUTE RESOLUTION PANEL, CHENNAI (IN WRIT PETITION NO.1526 AND 1527 OF 2014 M.P. NOS. 1 & 1 OF 2014 DATED 29/04/2014) HAS HELD THAT IF THE FINAL ORDER IS PASSED BY THE AO U/S 143(3) INSTEAD OF PASSING A DRAFT ASSESSMENT ORDER U/S 144C, THERE BEING VIOLATION OF PROCEDURE PRESCRIBED UNDER ACT, IMPUGNED ORDER WAS TO BE SET ASIDE AND IN SUCH A CASE E V EN CORRIGENDUM ISSUED BY AO MODIFYING FINAL ORDER OF ASSESSMENT TO BE R EAD AS A DRAFT ASSESSMENT ORDER COULD NOT CURE THE DEF ECT EXISTING IN ORIGINAL ORDER . 5.5 IN VIEW OF THE FACTS AS MENTIONED ABOVE AND ALSO IN THE LIGHT OF DECISIONS OF HON'BLE HIGH COURT OF ANDHRA PRADESH AND HON'BLE HIGH COURT OF MADRAS IT IS HELD THAT THE ORDER U/S 143(3) DATED 22/02/2013 AS PASSED BY THE AO FOR THE YEAR UNDER CONSIDERATION IS LEGALLY INCORRECT AND THEREFORE THE SAME IS QUASHED. THUS, THE GROUND OF APPEAL NO. 1 OF THE APPELLANT IS ALLOWED. SINCE THE ASSESSMENT ORDER U/S . 143(3) HAS BEEN QUASHED ON TECHNICAL GROUND AND THEREFORE OTHER GROUNDS OF APPEAL OF THE APPELLANT ON MERIT ARE NOT DEALT WITH. 3. ASSESSING O FFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT THE APPLICABILITY OF THE SECTION 1 44C IS NOT IN DOUBT IN THE PRESENT CASE. THE ASSESSING OFFICER WAS THERE FORE REQUIRED, IN TERM OF SECTION 144C(1) TO IN THE FIRST INSTANCE FORWARD A DRAFT OF THE PROPOSED ORDER OF AS SESSMENT TO THE ELIGIBLE ASSESSEE IF HE PROPOSES TO MAKE ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSEE . CLEARLY , T HEREFORE . THE ASSESSING O FFICER ACTED CONTRARY TO THE SCHEME OF SECTION 144C OF THE ACT . AS TO WHAT IS THE IMPACT OF SUCH A SSESSMENT O RDER UNDER SECTION 143(3) BEING DIRECTLY ISSUED, IN A SITUATION IN WHICH THE ASSESSEE IS AN ELIGIBLE ASSESSEE WHO OUGHT TO HAVE BEEN ISSUED A DRAFT ASSESSMENT ORDER, WE FIND THE FOLLOWING GUIDELINES FROM THE DECISION OF A CO - I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 5 OF 12 ORDINATE BENCH IN THE CASE OF CAPSUGEL HEALTHCARE LIMITED VS. ACIT (2015) 152 ITD 142 DELHI : - 7. WE FIND THAT THE ISSUE IS COVERED IS NOW COVERED IN FAVOUR IN OF THE ASSESSEE BY JUDGMENT OF HON BLE MADRAS HIGH COURT, IN THE CASE OF VIJA Y TELEVISION PVT LTD VS DRP [(2014) 46 TAXMANN.100 (MAD)], WHEREIN HON BLE HIGH COURT HAS, INTER ALIA, OBSERVED AS FOLLOWS: 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, TH E 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 P ASSED 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 A N 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 RESPON DENT 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 ASSESSMEN T 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 OBJ ECTIONS RAISED BY THE PETITIONER COMPANY ON THE I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 6 OF 12 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 OF FICER, 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 LA W. 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 REMANDE D 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. I N 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 VOI D 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. I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 7 OF 12 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 B E 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 MI STAKE 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 B E 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 NOTI CE 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 BEN CH 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 CANNO T 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 RSPONDENT 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 SO UGHT 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 RE LIED ON, COULD NOT BE I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 8 OF 12 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 O F 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, CAN NOT 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. SAR OJINI DEVI (SUPRA), WHICH WAS RELIED ON BY THE LEARNED SENIOR COUNSEL FOR THE PETITIONERS, IT WAS HELD S FOLLOWS: 'UNDER SECTION 158BC OF THE ACT EMPOWERS THE ASSESSING OFFICER TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DO WN 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 SECTIO N 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 I SSUE 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 MAND ATORY 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 DE CISION, 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: I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 9 OF 12 '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 T HE 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 G UIDANCE 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 RESPOND ENT 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.5/2 010 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 ASS ESSEE, 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 S AID 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 CLE ARLY INDICATED THAT THE AMENDMENTS RELATING TO S.144C WOULD TAKE EFFECT FROM 01.10.2009. IN OUR VIEW, THE CIRCULAR NO.5/2010 ISSUED BY T 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 I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 10 OF 12 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 T HIS COURT OR THE SUPREME COURT. IT CANNOT INTERFERE WITH THE JURISDICTION AND POWER OF THIS COURT TO DECLARE WHAT THE LEGISLATURE SAYS 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 PERSUADE 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 CONTR ARY 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 SE T 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 DISMISS ED 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 OBJECT IONS 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 OR DER. 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 T HE 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 CO MPANY 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 A N 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 I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 11 OF 12 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. 8. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITS THAT THIS LAPSE ON THE PART OF THE ASSESSING OFFICER IS AT BEST A PROCEDURAL LAPSE AND THE MATTER SHOULD, THEREFORE, BE RESTORED TO THE FILE OF THE AS SESSING OFFICER FOR ADJUDICATION DE NOVO. 9. WE ARE, HOWEVER, UNABLE TO SEE ANY LEGALLY SUSTAINABLE MERITS IN THE STAND SO TAKEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. HON BLE HIGH COURT S ESTEEMED VIEWS, AS EXTRACTED ABOVE, BIND US AND WE HAVE TO RE SPECTFULLY FOLLOW THE SAME. ACCORDINGLY, IN DUE DEFERENCE TO THIS BINDING JUDICIAL PRECEDENT, AND OTHER BINDING JUDICIAL PRECEDENTS REFERRED TO THEREIN, WE QUASH THE IMPUGNED ASSESSMENT ORDER. IT IS A LEGAL NULLITY......... 6. W E SEE NO REASONS TO TAKE A NY OTHER VIEW OF THE MATTER THA N THE VIEW SO TAKEN BY THE CO - ORDINATE BENCH. RESPECTFULLY F OLLOWING THE ESTEEMED VIEW S OF THE HON BLE H IGH C OURTS IN THE CASE OF VIJAY TELEVISION PVT. LTD. (SUPRA) AND ZUARI CEMENTS LIMITED ( SUPRA ) AND BY THE CO - ORDINATE BE NCH , WE HOLD THAT THE LEARNED CIT(A) WAS PERFECTLY JUSTIFIED IN QUASHING THE ASSESSMENT O RDER ISSUED UNDER SECTION 143(3) WITHOUT COMPLYING THE REQUIREMENT OF SECTION 144C(1). WE ACCORDINGLY UPHOLD THE ORDER OF LEARNED CIT(A) AND DECLINE TO INTERFERE IN TH E MATTER. 7. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON 29 TH DAY OF NOVEMBER , 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 29 TH DA Y OF NOVEMBER , 2016. I.T.A. N O. 932 /AHD/201 5 ASSESSMENT YEAR: 200 9 - 10 PAGE 12 OF 12 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD