Perfetti Van Melle (India) (P) Ltd. v. ACIT [ITA
No. 9116/Del/2019, dt. 11-8-2020] : 2020 TaxPub(DT) 3127 (Del-Trib)
Questioning legality of assessment process under section
144C
Facts:
A draft assessment order was passed after TPO's additions
for the assessee on 27-12-2018 with the assessing officer also issuing a demand
notice under section 156 along with the draft assessment order. Assessee
participated in the DRP proceedings subsequently and it was before the ITAT
that they questioned the validity of the assessment order that the assessing
officer did not follow the legal process as envisaged under section 144C for
the first time.
Held in favour of the assessee that the issuance of the
demand notice with the draft assessment order was incorrect adoption of the
process as per section 144C thus the assessment process came to an end by the
issuance of the notice of demand under section 156 along with the draft
assessment order. The order of the assessing officer enshrining the TPO
additions all became non est by the action of the assessing officer.
The process post a draft assessment order is for the
assessing officer to wait for the acceptance of the order or seeking an appeal
with DRP within the time limit as per law. It is after this that the draft
order becomes a final order along with which the demand notice under section
156 may be raised. If this is not followed it cannot be cured by resort to
under section 292B. Subsequent participation by the assessee in the DRP
proceedings cannot create an estoppel against the assessee. Not following
process as per section 144C was not mere irregularity to be cured by section
292B but an incurable illegality worthy of being stuck down as void by law.
Demand notice is an integral part of the assessment order
as well. The Supreme Court has in terms stated that assessment is one
integrated process involving not only the assessment of the total income but
also the determination of the tax. It has further observed that the latter is
as crucial as the former. Therefore, unless the total income is determined and
the determination of tax is also done, it cannot be said that the process of
assessment is complete thus held in CIT v. Purshottam Das T Patel (1994) 209
ITR 52 (Guj-HC) : 1994 TaxPub(DT) 0544 (Guj-HC), Kalyan Kumar Ray v. CIT (1991)
191 ITR 634 (SC) : 1991 TaxPub(DT) 1526 (SC).
" 'Assessment' is one integrated process involving not
only the assessment of the total income but also the determination of the tax.
The latter is as crucial as the former. The Income Tax Officer has to
determine, by an order in writing, not only the total income but also the net
sum which will be payable by the assessee for the assessment year in question
and the demand notice has to be issued under section 156 of the Income Tax Act,
1961, in consequence of such an order.
The words "order of assessment" cannot be
construed to mean assessment of total income only. Those words would mean an
order in writing whereby the total income of the assessee is assessed and the
tax payable by him is determined. When an order in writing in respect of both
these things is passed, it can be said that there is a complete order of
assessment. These two steps may be taken simultaneously or separately, but it
cannot be gainsaid that both of them will have to be taken within the time
prescribed by the Act".
Upheld: Dipak
Babaria 3 SCC 502 (SC)
"If the law requires that a particular thing should be
done in a particular manner, it must be done in that way and none other. State
cannot ignore the policy intent and procedure contemplated by the
statute".
Distinguished: Price
Water House Company (2020) 117 Taxmann.com 276 (Kol-Trib) in ITA No.
2298/KOL/2016 (Kolkata-ITAT) : 2020 TaxPub(DT) 2444 (Kol-Trib)
Participation by assessee in subsequent assessment
proceedings do they create an estoppel against the assessee has been answered
by the Apex court in CIT v. Mr. P. Firm, Muar (1965) 56 ITR 67 (SC) :
1965 TaxPub(DT) 0204 (SC) --
"Approbate and Reprobate" is only species of
estoppel. It applies only to conduct of parties as in the case of estoppel, it
cannot operate against the provisions of a statute. If particular income is
taxable under the Income Tax Act, it cannot be taxed on the basis of estoppel
or any other equal document. Equity is out of placed in tax place. A particular
income is either exigible under the Income tax under taxing statute or not. If
it is not, the ITO Has no power to tax the said income."
Affirmed :
Nikon India Pvt. Ltd. [ITA Nos. 8752 &
8753/DEL/2019]
Turner International Pvt. Ltd. (2017) 398 ITR 177 (Del)
: 2017 TaxPub(DT) 1685 (Del-HC)
JCB India Ltd. [W.P. (C) No. 3399/2016] : 2017
TaxPub(DT) 4106 (Del-HC)
Zuari Cement Ltd. v ACIT (decision dated 21-2-2013 in
W.P. (C) No. 5557/2012), SLP dismissed by SC vide [CC
No. 16694/2013 on 27-9-2013]
Vijay Television (P) Ltd. v. Dispute Resolution Panel
(2014) 369 ITR 113 (Mad.) : 2014 TaxPub(DT) 3520 (Mad-HC)
ESPN Star Sports Mauritius S.N.C. ET Compagnie v. Union
of India (2016) 388 ITR 383 (Del.) : 2016 TaxPub(DT) 2166 (Del-HC)
International Air Transport Association v. DCIT (2016)
290 CTR (Bom) 46 : 2016 TaxPub(DT) 1593 (Bom-HC)