INCOME TAX ACT, 1961

Section 144C

Assessment - Transfer pricing - Issuance of proposed notice of demand and penalty notice along with draft assessment order -

Assessee challenged validity of draft assessment Order under section 144C, dated 27-12-2018 on the ground that assessment proceedings concluded on 27-12-2018 when AO quantified taxable income and determined tax payable issuing and serving demand notice under section 156. AO's case was that on 27-12-2018, AO only framed a draft assessment order and final assessment order was framed after receiving order of the Dispute Resolution Panel (DRP) and notice of demand mentioned proposed/draft notice of demand and no entry had been made in Demand and Collection Register and order was not uploaded on ITD and thus, issuance of proposed notice of demand and penalty notice alongwith order did not convert the same into final assessment order. Held: There is no provision in the Act which provides for proposed/draft notice of demand and secondly, whether demand has been entered in Demand and Collection Register or the order uploaded in ITD is an internal matter/proceure of revenue and cannot be taken into consideration to decide whether demand notice issued along with Order, dated 27-12-2018 completed the proceedings. By issuing demand notice on 27-12-2018 itself, AO by passed all the mandatory sub-sections of section 144C and proceedings culminated on 27-12-2018 when demand notice was issued and served upon the assessee along with penalty notice under section 274 and, therefore, all the subsequent proceedings and orders become non est and section 292B would not protect such an order as it was not mere irregularity but an incurable illegality.

Relied:Turner International (P) ltd. (2017) 398 ITR 177 (Del) : 2017 TaxPub(DT) 1685 (Del-HC) and JCB India Ltd. WPC 3399/2016 : 2017 TaxPub(DT0 4106 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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