Cyient Limited Hyd, Hyderabad V. Dy. Commissioner of Income Tax , Circle-2(1), Hyderabad

MA 56/Hyd/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6862 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-07-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 12-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D PRASAD RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER M.A. NOS. 56 & 57/HYD/2018 (IN ITA NOS. 1053 & 1054/HYD/2016 ASSESSMENT YEARS: 2006-07 & 2007-08) CYIENT LIMITED (FORMERLY INFOTECH ENTERPRISES), HYDERABAD. PAN AAACT4446Q VS. DCIT, CIRCLE 2(1) HYDERABAD. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA REVENUE BY : SRI D. PRASAD RAO DATE OF HEARING : 06-07-2018 DATE OF PRONOUNCEMENT : 25-07-2018 ORDER PER P. MADHAVI DEVI, J.M.: BOTH THESE MISCELLANEOUS APPLICATIONS ARE FILED BY THE ASSESSEE SEEKING RECTIFICATION OF THE MISTAKES APPARENT FROM THE RECORD IN CONSOLIDATED ORDER OF THE TRIBUNAL DATED 29.12.2017 IN ITA NOS. 1052 TO 1054/HYD/2016 FOR THE A.Y 2004-05 TO 2007-08. IN THE MAS IT IS STATED AS UNDER: 1. THE AFORESAID APPEAL, ALONG WITH THOSE FOR A.Y 2004-05 AND A.Y. 2007-08, WAS DISPOSED OF BY THE HONBLE TRIBUNAL BY A CONSOLIDATED ORDER DATED 29.12.2017. SINCE THE AFORESAID ORDER, IN SO FAR AS IT RELATES TO A.Y. 2006-07 (ITA NO. 1053/HYD/2016), CONTAINS CERTAIN APPARENT MISTAKES, THIS HUMBLY APPLICATION IS BEING MADE FOR RECTIFICATION THEREOF. A COPY OF THE AFORESAID CONSOLIDATED ORDER OF THE HONBLE TRIBUNAL DATED 29.12.2017 IS ENCLOSED AND MARKED AS ANNEXURE-A. 2 2. THE RELEVANT FACTS CONCERNING THE CAPTIONED APPEAL (SECOND ROUND OF LITIGATION), IN WHICH ARGUMENTS ON MERITS AND LEGAL SIDE WERE RAISED, ARE DISCUSSED IN PARAGRAPH 19 OF ANNEXURE-A. FOR READY REFERENCE, EXCERPTS THEREFROM, WHICH HAVE RELEVANCE TO THIS APPLICATION ARE REPRODUCED BELOW: 19.. FURTHER, IT IS ALSO ARGUED THAT EVEN WHILE PASSING THE CONSEQUENTIAL ORDER, THE AO HAS TO PASS ONLY A DRAFT ASSESSMENT ORDER AGAINST WHICH THE ASSESSEE CAN RAISE ITS OBJECTIONS BEFORE THE DRP OR CHOOSE TO FILE AN APPEAL BEFORE THE CIT (A) AND ONLY AFTER THE ASSESSEE EXERCISES ITS OPTIONS, CAN THE AO PASS THE FINAL ASSESSMENT ORDER AND THEREFORE, THE SAID ORDER IS NOT SUSTAINABLE. IN SUPPORT OF THIS CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF JCB INDIA LTD VS. DCIT REPORTED IN 398 ITR 189 (DEL.). 3. THE AFORESAID PLEADINGS WERE FOUND FAVOUR WITH THE HONBLE TRIBUNAL, AS IS EVIDENT FROM THE FOLLOWING FINDINGS RECORDED IN PARGRAPH 21: 21 WE FIND THAT WHEN THE ISSUES WERE SET ASIDE BY THE TRIBUNAL, IT IS NOT MERELY FOR CORRECTING MATHEMATICAL ERRORS IN THE CALCULATIONS, BUT IT IS FOR RECONSIDERING THE ISSUE IN ACCORDANCE WITH THE DIRECTIONS OF THE ITAT. WHEREVER, THE AO/TPO EXERCISE THEIR DISCRETION AFTER VERIFICATION, AND PASS AN ORDER, IT IS INCUMBENT UPON THEM TO GIVE THE ASSESSEE AN OPPORTUNITY TO PRESENT ITS CASE OR TO APPEAL AGAINST SUCH ORDERS. IT IS FOR THIS REASON THAT THE STATUES PROVIDE THAT THE AO SHALL PASS A DRAFT ASSESSMENT ORDER AGAINST WHICH THE ASSESSEE CAN EITHER CHOOSE TO FILE ITS OBJECTION BEFORE THE DRP OR CHOOSE TO FILE AN APPEAL BEFORE THE CIT (A) AND AFTER THE ASSESSEE EXERCISES ITS OPTION, THE AO CAN PASS THE FINAL ASSESSMENT ORDER IN ACCORDANCE WITH THE DIRECTIONS OF THE DRP OR THE ASSESSEE CAN FILE AN APPEAL BEFORE THE CIT (A). AS PER SECTION 144C OF THE ACT, THE AO FIRST HAS TO PASS THE DRAFT ASSESSMENT ORDER AND THE CHOICE IS WITH THE ASSESSEE EITHER TO APPROACH THE DRP OR THE CIT (A). ONLY IF THE ASSESSEE CHOOSES TO PREFER AN APPEAL BEFORE THE CIT (A), CAN THE AO PASS THE FINAL ASSESSMENT ORDER. SIMILAR FACTS HAD ARISEN IN THE CASE OF JCB INDIA LTD (CITED SUPRA) BEFORE THE HON'BLE DELHI HIGH COURT AND THE HON'BLE HIGH COURT 3 HAS HELD THAT EVEN IN THE CASE OF A REMAND BY THE TRIBUNAL, THE AO HAS TO PASS A DRAFT ASSESSMENT ORDER AND NOT THE FINAL ASSESSMENT ORDER. FOR THE SAKE OF READY REFERENCE AND CLARITY, THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER .. EVEN THOUGH IN THE CONCLUDING PART OF PARAGRAPH 21 ON PAGE 18 OF THE ORDER IT WAS HELD THAT EVEN IN SET ASIDE PROCEEDINGS THE A.O WAS BOUND TO FIRST PASS A DRAFT ASSESSMENT ORDER AND THE FACTS IN THE CASE OF ASSESSEE-APPLICANT WERE FOUND TO BE SIMILAR TO THOSE IN JCB IND LTD., VS. DCIT [398 ITR 189 (DEL)], INSTEAD OF QUASHING THE ASSESSMENT ORDER THE ISSUE WAS REMITTED TO HE A.O/TPO IN THE FOLLOWING WORDS: 22.IN VIEW OF THE SAME, THE CONSEQUENTIAL ORDERS DATED 29.05.2015 FOR BOTH THE A.YS ARE SET ASIDE AND THE A.O / TPO IS DIRECTED TO PASS THE DRAFT ASSESSMENT ORDER IN ACCORDANCE WITH THE DIRECTIONS OF THE TRIBUNAL DATED 16.01.2014. 4. AS IS EVIDENT FROM THE ABOVE, THE HONBLE TRIBUNAL HAS ALREADY FOUND THAT THE FACTS IN THE CASE OF THE ASSESSEE- APPLICANT ARE PARI MATERIA WITH THOSE IN JCB INDIA LTD., VS. DCIT [398 ITR 189 (DEL)]. THEREFORE, THE HONBLE TRIBUNAL OUGHT TO HAVE QUASHED THE ORDER PASSED BY THE A.O AS IT WAS NOT IN ACCORDANCE WITH THE STATUTORY PROVISIONS AND THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN JCB IND LTD. IN THE PREMISES, IN OUR HUMBLE SUBMISSION, THE DIRECTIONS ISSUED TO THE A.O /TPO, WHICH WOULD BE THIRD ROUND OF LITIGATION, AMOUNTS TO A MISTAKE APPARENT FROM RECORD WHICH REQUIRES RECTIFICATION. 5. IN THIS RESPECT, WE MAY GAINFULLY RELY UPON A RECENT ORDER PASSED BY DELHI BENCH OF THE HONBLE TRIBUNAL IN THE CASE OF M/S GLOBERIAN INDIA PVT LTD., VS DCIT IN MA NO. 632/DEL/2017 DATED 22.02.2018. IN THIS CASE ALSO, INITIALLY THE ORDER PASSED BY THE A.O WITHOUT FIRST PASSING A DRAFT ORDER WAS SET ASIDE AND REMITTED TO THE FILE OF THE A.O RELYING UPON JCB INDIA LTD., VS. DCIT [398 ITR 189]. HOWEVER, WHEN THE MISTAKE IN THE SAID ORDER, AKIN TO THE ONE IN THE PRESENT CASE, WAS BROUGHT TO THE NOTICE OF THE HONBLE TRIBUNAL, IT WAS RECTIFIED BY AMENDING THE RELEVANT PARAGRAPHS AS UNDER: 5. IN VIEW OF THE RATIO OF THE JUDGMENT IN JCB LIMITED VS. DCIT (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT ERROR APPARENT ON RECORD HAS CREPT INTO THE ORDER DATED 12.10.2017 PASSED BY THIS BENCH IN ITA NO. 2265/DEL/2014 WHICH IS RECTIFIED AND PARA NO. 15 OF THE ORDER (SUPRA) IS ORDERED TO BE READ AS UNDER: 4 15. THE DECISION RENDERED BY THE HONBLE HIGH COURT IN CASE OF JCB LIMITED VS. DCIT (SUPRA) IS APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IN VIEW OF THE UNDISPUTED FACT THAT THE A.O HAS NOT PASSED DRAFT ORDER AS MANDATED BY SECTION 144C RATHER STRAIGHTAWAY PASSED THE ASSESSMENT ORDER, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT ORDER IN THIS CASE IS INVALID HENCE NOT SUSTAINABLE IN THE EYES OF LAW AS IT HAS TAKEN THE ENFORCEABLE RIGHT OF THE ASSESSEE TO APPROACH THE LD. DRP BY WAY OF FILING OBJECTIONS TO THE DRAFT ASSESSMENT ORDER. CONSEQUENTLY, THE PRESENT APPEAL FILED BY THE ASSESSEE IS ALLOWED. 16. CONSEQUENTLY, THE MISC. APPLICATION IS HEREBY ALLOWED. 6. A COPY OF THE ORDER OF THE HONBLE DELHI TRIBUNAL IN ITA NO. 2265/DEL/2014 DATED 12.10.2017 AND THAT IN MA NO. 632/DEL/2017 DATED 22.02.2018 ARE ENCLOSED AND MARKED AS ANNEXURE-B AND ANNEXURE-C RESPECTIVELY. 7. THE APPLICANT, THEREFORE, HUMBLY PRAYS: (A) THAT THIS HONBLE TRIBUNAL MAY BE PLEASED TO PASS SUITABLE ORDERS U/S 254(2) OF THE ACT AS HAS BEEN DONE BY THE CO-ORDINATE BENCH IN M/S GLOBERIAN INDIA PVT LTD. (SUPRA); OR (B) TO PASS ANY OTHER ORDER OR DIRECTION AS MAY BE DEEMED FIT AND PROPER IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE APPLICANT SUBMITS THAT THE AFORESAID ORDER DATED 29.12.2017 WAS RECEIVED ON 17.01.2018. IN THE PREMISES, THE APPLICATION BEING PREFERRED U/S 254(2) OF THE ACT IS VERY MUCH WITHIN TIME. 2. AFTER HEARING BOTH PARTIES, WE ARE SATISFIED THAT THERE IS A MISTAKE APPARENT FROM RECORD AND AS HELD BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S GLOBERIAN INDIAN PVT LTD., VS. DCIT CITED IN THE SUBMISSIONS OF THE ASSESSEE, THE FINAL ASSESSMENT ORDERS PASSED BY THE A.O, WITHOUT PASSING THE DRAFT ASSESSMENT 5 ORDER, ARE INVALID. THE PARAGRAPH NO. 22 OF THE ORDER OF THE TRIBUNAL ACCORDINGLY STANDS SUBSTITUTED BY THE FOLLOWING: 22. IN VIEW OF THE SAME THE CONSEQUENTIAL ORDERS DATED 29.05.2015 FOR BOTH THE ASSESSMENT YEARS ARE HELD TO BE INVALID 3. IN THE RESULT MAS FILED BY THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2018. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 25 TH JULY, 2018. KRK 1) CYIENT LTD., 4 TH FLOOR, A WING, PLOT NO. 11, SOFTWARE UNITS LAYOUT INFOCITY, MADHAPUR, HYDERABAD -81. 2) DCIT, CIRCLE 2(1), HYDERABAD. 3) CIT(A)-2, HYDERABAD. 4) THE PR.CIT 2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE.