INCOME TAX ACT, 1961

Section 144C

Assessment - Transfer pricing cases - Non-issuance of draft assessment order by AO -

AO made an addition to the returned income as proposed by TPO in his order under section 92CA(3) by passing an order under section 143(3) read with section 144C. Along with the assessment order, a notice of demand was issued under section 156 raising a demand. Separately, penalty proceedings under section 271(1)(c). Assessee carried the matter in appeal on the ground that impugned order under section 143(3)/143C was passed directly without passing draft proposed order in terms of section 144C(1). AOs case was that adequate opportunity had been provided to assessee to submit objections against ALP adjustments by TPO as well as by AO were accordingly, it was not a case where rights of assessee prejudiced in any manner by not passing a draft order.Held: In terms of mandate laid down under section 144C, to pass a draft assessment order was mandatory and issuance of a show-cause notice could not be equated and treated as a draft assessment order as the same would make the provisions of section 144C redundant. Accordingly, final assessment order passed by AO under section 143(3) read with 144C was without jurisdiction.

Followed:Dy. CIT v. Jaipur Rugs Company (P) Ltd., Jaipur (ITA No. 1084/JP/16 & 46/JP/17 dt. 24-4-2018) : 2018 TaxPub(DT)2815 (Jp-Trib)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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