|The Tax Publishers2021 TaxPub(DT) 0694 (Mad-HC) : (2021) 436 ITR 0168
INCOME TAX ACT, 1961
Section 144C sets forth a mandatory scheme of assessment and it is incumbent upon the AO to pass an order of draft assessment at the first instance before proceeding to finalise the assessment in line with the procedure set out under section 144C.
Assessment - Transfer pricing - Validity of Transfer Pricing Order -
Assessee-company challenged an assessment order by filing a writ petition. It was contended that the assessment involved issues of Transfer Pricing and, thus the AO ought to have passed an order of draft assessment in terms of section 144C and not an order of regular assessment quantifying the final demand and imposing penalty. Held: Section 144C sets forth a mandatory scheme of assessment and it is incumbent upon the AO to pass an order of draft assessment at the first instance before proceeding to finalise the assessment in line with the procedure set out under section 144C. Thus, it was clear that the scheme of assessment in terms of section 144C statutorily requires the officer to pass a draft assessment order at the first instance and put the same to the assessee for its acceptance or for filing of objections before the DRP. In instant case, the assessment order had been passed 'inadvertently' by choosing of the wrong field in the Income Tax Department software would not just be an over-simplification, but a wrong statement since a perusal of the order of assessment revealed that the assessment had been styled consciously, as an order of regular assessment only. Further, a draft order of assessment would normally indicate, in conclusion, that the assessee would have the option of either acquiescing with the proposed assessment or proceeding to file objections to the same within 30 days, however, the said statement was conspicuously absent in the assessment order under dispute. Hence, the said assessment order was quashed.
REFERRED : Asstt. CIT v. Vijay Television Private Ltd., The Dispute Resolution Panel (2018) 407 ITR 642 (Mad-HC) : 2018 TaxPub(DT) 4576 (Mad-HC) and Vijay Television (P.) Ltd. v. Dispute Resolution Panel (2014) 369 ITR 113 (Mad) : 2014 TaxPub(DT) 3520 (Mad-HC).
FAVOUR : In assessee's favour.
A.Y. : 2016-17
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