Gigabyte Technology (India) Private Ltd,B v. Commissioner Of Income Taxplot

1 TXA NO.77-78-15 Santosh IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 77 OF 2015 Gigabyte Technology (India) Private Ltd,B-411, BSEL Tech Park, Sector 30A,Vashi, Maharashtra – 400705Presently at :807 & 808, 8[th] Floor, NamanMidtown, B-Wing,Elphinstone Road, MumbaiMaharashtra – 400 013.PAN : . ... Appellant Versus Commissioner of Income TaxPlot No.5, Patto,Aaykar Bhavan, Patto, Panaji, Goa.... RespondentMr. Vishal Kalra, Advocate along with Mr. Nikhil Pai, Advocate forthe Respondent. Ms. Susan Linhares, Advocate for the Appellant. AND TAX APPEAL NO. 78 OF 2015 Gigabyte Technology (India) Private Ltd,B-411, BSEL Tech Park, Sector 30A,Vashi, Maharashtra – 400705Presently at :807 & 808, 8[th] Floor, NamanMidtown, B-Wing, 2 TXA NO.77-78-15Elphinstone Road, MumbaiMaharashtra – 400 013.PAN : . ... Appellant Versus Commissioner of Income TaxCircle – 1, Margao, Goa. ... Respondent Mr. Vishal Kalra, Advocate for the Appellant. Ms. Susan Linhares, Standing Counsel, with Ms. S. Pinto, Advocatefor the Respondent. Coram:- M. S. SONAK & DAMA SESHADRI NAIDU, JJ. Reserved on:- 30th September, 2020Pronounced on:- 19thOctober, 2020 JUDGMENT : (Per M. S. Sonak, J.): Heard the learned Counsel for the parties. 2.The learned Counsel for the parties submit that both theseTax Appeals can be disposed of by a common Judgment and Order,since, the decision in Tax Appeal No.77/2015 will govern the decisionin Tax Appeal No.78/2015. The learned Counsel agree that in case TaxAppeal No.77/2015 is decided in favour of the Assessee, then, TaxAppeal No. 78/2015 will also have to be decided in favour of the 3 TXA NO.77-78-15 Assessee. However, if Tax Appeal No.77/2015 is decided against theAssessee, then, Tax Appeal No.78/2015 will also have to be dismissed. 3.Tax Appeal No.77/2015 was admitted on 11/2/2016, on thefollowing substantial questions of law : 1. Whether on the facts and circumstances of the case andin law, the Tribunal erred in holding that there was noinfirmity in assuming revisionary jurisdiction by the CITunder section 263 of the Act, without appreciating that theassessment order which was sought to be revised by suchrevisionary action was itself bad in law and void ab initio ? 2. Whether on the facts and circumstances of the case and inlaw, the Tribunal erred in upholding the action of the CITunder section 263 of the Act, without appreciating that suchaction of the CIT directing the AO to frame de novoassessment would result in extending the period of limitationas provided in section 153 of the Act, to complete theassessment proceedings, and thus, the action of the CIT wasnon-est, invalid and illegal? 4.In this case, the Appellant-Assessee is engaged in the tradingof computer components and peripherals, including motherboards,AGP cards, and optical disk drives. On 27/11/2006, the Appellantfiled a return of income for the Assessment Year 2006-07. Noticesunder Sections 143(2) and 142(1) of the Income Tax Act, 1961 (saidAct) were issued to the Assessee on 25/10/2007. On 27/3/2008, theAssessee's return of income was processed under Section 143(1) of the 4 TXA NO.77-78-15 said Act, since the Assessee had entered into international transactionsduring the subject assessment year. The matter was referred toTransfer Pricing Officer (TPO) for computing the arm's length price. 5.The TPO made an order dated 29/10/2009 under Section92CA(3) of the said Act proposing an addition of Rs.7,30,40,428/- inrespect of the international transactions for the purchases made fromthe associated enterprises. On 18/12/2009, the Assessing Officer (AO)made the final assessment order under Section 143(3) of the said Act,assessing the total income of the Assessee at Rs.6,38,06,928/-. 4 TXA NO.77-78-15 said Act, since the Assessee had entered into international transactionsduring the subject assessment year. The matter was referred toTransfer Pricing Officer (TPO) for computing the arm's length price. 5.The TPO made an order dated 29/10/2009 under Section92CA(3) of the said Act proposing an addition of Rs.7,30,40,428/- inrespect of the international transactions for the purchases made fromthe associated enterprises. On 18/12/2009, the Assessing Officer (AO)made the final assessment order under Section 143(3) of the said Act,assessing the total income of the Assessee at Rs.6,38,06,928/-. 6.The Assessee aggrieved by Assessment Order dated18/12/2009, appealed to the Commissioner (Appeals) on 27/01/2010.One of the main grounds urged by the Assessee was that in this case,the AO was duty-bound to follow the provisions of Section 144C ofthe said Act and, in terms thereof, to provide the Assessee with a draftassessment order before the assessment order would be made underSection 143(3) of the said Act. 7.The Commissioner (Appeals) called for a remand reportfrom the AO, which was duly submitted by the AO on 2/2/2012. It isthe case of the Assessee that the remand report form, with theprovision of Section 144C of the said Act, was not complied with by 5 TXA NO.77-78-15 the AO in this matter. 8.On 20/03/2012, the Commissioner of Income Tax (CIT)issued a notice under Section 263(1) of the said Act, purporting toexercise his revisional jurisdiction in the matter of the assessment orderdated 18/12/2009 made by the AO. This notice states that the AO, byfailing to provide the draft assessment order in terms of Section144C(1) of the said Act to the Assessee, had violated the principles ofnatural justice and, therefore, the assessment order dated 18/12/2009,was erroneous and deserved to be set aside. 9.The Assessee, on 19/3/2012, filed a detailed response to thenotice dated 23/2/2012 objecting to the very initiation of therevisional proceedings. The Assessee pointed out that the assessmentorder dated 18/12/2009 was not merely illegal, but was void ab initioand, therefore, a nullity. In any case, the Assessee pointed out that theassessment order dated 18/12/2009 was certainly not prejudicial to theinterest of the Revenue and, therefore, there was no question ofexercise of the powers under Section 263 of the said Act. 10.On the very next day i.e. 20/3/2012, the CIT passed anorder under Section 263 of the said Act, setting aside the assessmentorder dated 18/12/2009 and directing the AO to issue the Assessee 6 TXA NO.77-78-15 draft assessment order as contemplated by Section 144C(1) of the saidAct. 11.On 30/3/2012, the Commissioner (Appeals) dismissed theAssessee's appeal against the assessment order dated 18/12/2009 on theground that the appeal was rendered infructuous because the CIT, inthe exercise of powers under Section 263 of the said Act, had alreadyset aside the assessment order dated 18/12/2009. 12.The Assessee appealed to the Income Tax Appellant Tribunal(ITAT), challenging both, the CIT's order dated 23/2/2012purporting to exercise the revisional jurisdiction and the order of theCommissioner (Appeals) dated 30/03/2012, dismissing the Assessee'sappeal. The ITAT, vide order dated 31/10/2014, dismissed both theseappeals. Hence these two appeals under Section 260A of the said Actby the Assessee. The Assessee appealed to the Income Tax Appellant Tribunal 13.Tax Appeal No.77/2015 concerns the order dated 30/3/2012made by the CIT in the purported exercise of its revisional jurisdictionunder section 263 of the said Act. If this order, as well as the order ofthe ITAT dated 31/10/2014 confirming this order, are set aside, then,obviously the assessment order dated 18/12/2009 and the order of theCommissioner (Appeals) dated 30/3/2012, will also have to be set 7 TXA NO.77-78-15 aside The Assessee appealed to the Income Tax Appellant Tribunal 13.Tax Appeal No.77/2015 concerns the order dated 30/3/2012made by the CIT in the purported exercise of its revisional jurisdictionunder section 263 of the said Act. If this order, as well as the order ofthe ITAT dated 31/10/2014 confirming this order, are set aside, then,obviously the assessment order dated 18/12/2009 and the order of theCommissioner (Appeals) dated 30/3/2012, will also have to be set 7 TXA NO.77-78-15 aside 14. Accordingly, it is only appropriate that both these Appeals aredisposed of by a common Judgment and Order by treating Tax AppealNo.77/2015 as the lead matter. 15. Mr. Vishal Kalra, the learned Counsel for the Appellant- Assessee, at the outset, submitted that the AO was duty-bound tofollow the provisions of Section 144C of the said Act and since,admittedly, these provisions were not followed, the assessment orderdated 18/12/2009 was void ab initio and a nullity. He submits that asagainst the order which was void ab initio, or a nullity, the revisionaljurisdiction under Section 263 of the said Act could never have beeninvoked. He submits that Section 263 of the said Act presupposes theexistence of an order which may be erroneous, but not an order whichis void ab initio or a nullity. In support of this proposition, Mr. Kalrarelies upon the following decisions : (i) Keshab Narayan Banerjee vs. Commissioner of Income-tax[1]' (ii) P. Abdulkadar Hamza vs. Commissioner of Income-tax[2]; (iii) Commissioner of Income-tax[3]; (iv) Westlife Development Ltd. vs. Principal Commissioner of Income 1[1998] 101 Taxman 512 (Cal)2[2001] 116 Taxman 455 (Ker)3[1990] 48 Taxman 297 (Delhi) 8 TXA NO.77-78-15 Tax-5, Mumbai[4]; (v) Inder Kumar Bachani (HUF) vs. Income Tax Officer[5]; and (vi) Paul John, Delicious Cashew Co. vs. The Income Tax Officer[6] 16. Mr. Kalra also referred to some of the decisions which take the view that assessment orders made without following the provisionsof Section 144C of the said Act (wherever applicable) are a nullity andconsequently unsustainable. These decisions are : (a) M/s. Zuari Cement Ltd. vs. The Assistant Commissioner ofIncome Tax; Tirupathi[7]; (b) Control Risk India (P.) Ltd. vs. Deputy Commissioner of Income Tax[8]; (c) International Air Transport Association vs. Deputy Commissionerof Income-tax[9]; (d) Principal Commissioner of Income-tax-15 vs. LionbridgeTechnologies (P.) Ltd.[10]; and .(e) Vijay Television (P.) Ltd. vs. Dispute Resolution Panel, Chennai[11] 17.Mr. Kalra submits that in this case, even it were to be assumed that the assessment order dated 18/12/2009 was merely 4[2016] 49 ITR (T) 406 (Mumbai)5MANU/LU/0488/20055MANU/LU/0488/2005 6MANU/IN/0421/2004 7WP No.5557 of 2012 dated 21/2/2013 by AP High Court. 8[2019] 107 taxmann.com 82 (Delhi) 9[2016] 68 taxmann.com 246 (Bombay.) 10 [2019] 260 Taxman 273 (Bombay.) 11 [2014] 46 taxmann.com 100 (Madras) 9 TXA NO.77-78-15 erroneous and not a nullity, the revisional jurisdiction could not havebeen exercised, because, the assessment order dated 18/12/2009 was,in no manner, prejudicial to the interest of the Revenue. He submitsthat unless and until the twin conditions i.e. the order being erroneousand the order being prejudicial to the interest of the Revenue, areestablished, there is no jurisdiction to exercise the revisional powersunder Section 263 of the said Act. 4[2016] 49 ITR (T) 406 (Mumbai)5MANU/LU/0488/20055MANU/LU/0488/2005 6MANU/IN/0421/2004 7WP No.5557 of 2012 dated 21/2/2013 by AP High Court. 8[2019] 107 taxmann.com 82 (Delhi) 9[2016] 68 taxmann.com 246 (Bombay.) 10 [2019] 260 Taxman 273 (Bombay.) 11 [2014] 46 taxmann.com 100 (Madras) 9 TXA NO.77-78-15 erroneous and not a nullity, the revisional jurisdiction could not havebeen exercised, because, the assessment order dated 18/12/2009 was,in no manner, prejudicial to the interest of the Revenue. He submitsthat unless and until the twin conditions i.e. the order being erroneousand the order being prejudicial to the interest of the Revenue, areestablished, there is no jurisdiction to exercise the revisional powersunder Section 263 of the said Act. 18.Mr. Kalra submits that in any case, by incorrectly exercisingthe revisional jurisdiction of Section 263 of the said Act, the CIT haspurported to extend the period of limitation for making the assessmentorder, which is impermissible. He relies upon the decision of the FullBench of the ITAT (Chennai Bench) in case of V. Narayanan vs.ACIT[12]. He submits that the decision of the Full Bench in V.Narayanan (supra) was binding upon the ITAT in the present case, inview of the law laid down by the Hon'ble Supreme Court in Union ofIndia & others vs. Kamlakshi Finance Corporation Limited[13]; thedecision of the Bombay High Court in CIT vs. Goodlas NerolacPaints Limited[14] and CIT vs. L.G. Ramamurthi[15]. 19.For all the aforesaid reasons, Mr. Kalra submits that the 12 [2010] 2 ITD 446 (Chennai) 13 SLP (C) No.7717 of 1990 (SC) 14 [1991] 188 ITR 1 (Bom). 15 [1977] 110 ITR 453 (Mad) 10 TXA NO.77-78-15 substantial questions of law, as framed in these matters, are required tobe answered in favour of the Assessee and against the Revenue. 20.Ms. Linhares, the learned Standing Counsel for the Revenue,defends the order made by the ITAT based on the reasoning reflectedtherein. She submits that the assessment order dated 18/12/2009 wasnot a nullity, but it was merely an erroneous order made in breach ofthe procedure prescribed under Section 144C of the said Act. Shepoints out that the assessment order dated 18/12/2009 was prejudicialto the interest of the Revenue because the said assessment order couldhave been easily set aside by the appellate authorities on the ground ofbreach of procedure. She submits that accordingly the twopreconditions for the exercise of the revisional jurisdiction underSection 263 of the said Act were fulfilled and there was nothing wrongin the exercise of the revisional jurisdiction by the CIT in thesematters. On this basis, Ms. Linhares submits that the substantialquestions of law are required to be answered against the Assessee and infavour of the Revenue. 21.The rival contentions now fall for our determination. 22.In this case, there is no dispute that the provisions of Section144C of the said Act were applicable and, further, such provisions were 11 TXA NO.77-78-15 not complied with by the AO before passing the assessment orderdated 18/12/2009. 23.Section 144C(1) of the said Act provides that the AssessingOfficer shall, notwithstanding anything to the contrary contained inthe said Act, in the first instance, forward a draft of the proposed orderof assessment (hereinafter in this section referred to as the draft order)to the eligible Assessee if he proposes to make, on or after the 1st dayof October, 2009, any variation in the income or loss returned which isprejudicial to the interest of such Assessee. 24.Section 144C(2) then provides that on receipt of the draftorder, the eligible Assessee shall, within thirty days of the receipt byhim of the draft order, - file his acceptance of the variations to the AO;or - file his objections, if any, to such variation with,— (i) the DisputeResolution Panel; and (ii) the Assessing Officer. 23.Section 144C(1) of the said Act provides that the AssessingOfficer shall, notwithstanding anything to the contrary contained inthe said Act, in the first instance, forward a draft of the proposed orderof assessment (hereinafter in this section referred to as the draft order)to the eligible Assessee if he proposes to make, on or after the 1st dayof October, 2009, any variation in the income or loss returned which isprejudicial to the interest of such Assessee. 24.Section 144C(2) then provides that on receipt of the draftorder, the eligible Assessee shall, within thirty days of the receipt byhim of the draft order, - file his acceptance of the variations to the AO;or - file his objections, if any, to such variation with,— (i) the DisputeResolution Panel; and (ii) the Assessing Officer. 25.Section 144C(3) then provides that the AO shall completethe assessment based on the draft order, if the assessee intimates to theAO the acceptance of the variation; or no objections are receivedwithin the period specified in sub-section (2). 26.Section 144C(4) provides that the AO shall, notwithstandinganything contained in Section 153, pass the assessment order under 12 TXA NO.77-78-15 sub-section (3) within one month from the end of the month inwhich, the acceptance is received, or the period of filing of objectionsunder sub-section (2) expires. 27.Section 144C(5) provides that the DRP shall, in a casewhere any objection is received under sub-section (2), issue suchdirections, as it thinks fit, for the guidance of the AO to enable him tocomplete the assessment. 28.Section 144C(6) provides that the DRP shall issue thedirections referred to in sub-section (5), after considering thefollowing: (a) draft order; (b) objections filed by the assessee; (c) the evidence furnished by the assessee; (d) the report, if any, of the Assessing Officer, Valuation Officer orTransfer Pricing Officer or any other authority;Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any inquiry made by or caused to be made by, it. 29.Section 144C(7) provides that the DRP may, before issuingany directions referred to in sub-section (5), make such furtherinquiry, as it thinks fit; or cause any further inquiry to be made by anyincome-tax authority and report the result of the same to it. 13 TXA NO.77-78-15 30.Section 144C(8) provides that the DRP may confirm, reduceor enhance the variations proposed in the draft order so, however, thatit shall not set aside any proposed variation or issue any directionunder sub-section (5) for further enquiry and passing of the assessmentorder. 31.In this case, there is no dispute that the provisions of Section144C, read with Section 92CA of the said Act were applicable. Thereis no dispute that in the present case, the AO before making theassessment order dated 18/12/2009 gave a complete go-by to thedetailed provisions contained in Section 144C of the said Act.Therefore, the first question that arises for determination is, whetherthe assessment order dated 18/12/2009 made by the AO in clearbreach of the mandatory provisions of Section 144C of the said Act,was merely erroneous, as contended by Ms. Linhares, or, whether thesame was null and void as contended by Mr. Kalra, the learnedCounsel for the Assessee. 32.In Zuari Cement Ltd. (supra), the Division Bench of theAndhra Pradesh High Court, in almost identical circumstances, heldthat the assessment order is contrary to the mandatory provisions ofSection 144C of the said Act and is 'one without jurisdiction, null and 14 TXA NO.77-78-15 32.In Zuari Cement Ltd. (supra), the Division Bench of theAndhra Pradesh High Court, in almost identical circumstances, heldthat the assessment order is contrary to the mandatory provisions ofSection 144C of the said Act and is 'one without jurisdiction, null and 14 TXA NO.77-78-15 void and unenforceable'. In answer to the objection that no writpetition be entertained because the Assessee had a statutory appellateremedy, the Court held that since the impugned order was withoutjurisdiction, the objection about alternate remedy will not come in theway of the writ Court to grant relief. By order dated 21/2/2012, theHon'ble Supreme Court dismissed the Special Leave to Appeal againstthe decision of the Division Bench of Andhra Pradesh High Court inM/s. Zuari Cement Ltd. (supra). 33.In Control Risk India (P.) Ltd. (supra), the Division Benchof Delhi High Court, held that consequent upon order of TPO underSection 92 CA(3) of the said Act, it is incumbent upon the AO topass a draft assessment order under Section 144C of the said Act andthis is a settled position as explained by the Court in its decision inTurner International India (P.) Ltd. vs. CIT [2017] 82 taxmann.com125. In the said case the AO overlooked the above legal position andproceeded to pass the final order, thereby depriving the Assessee of anopportunity of questioning the draft assessment order under Section144C of the said Act before the DRP, the Court had no hesitation insetting aside the impugned assessment order and consequently thenotice of demand. Again the Special Leave to Appeal against thisdecision was dismissed by the Hon'ble Supreme Court on 16/3/2018. 15 TXA NO.77-78-15 34.In International Air Transport Association (supra), theDivision Bench of this Court has also taken a view that special rightsare made available to an eligible Assessee under Section 144C of thesaid Act. These special rights contemplate the making of a draftassessment order under Section 144C by the AO before he makes afinal assessment order under Section 143(3) of the said Act. Such adraft assessment order bestows certain rights upon an eligible Assessee,such as to approach the DRP with its objections to such a draftassessment order. This is for the reason that an eligible Assessee'sgrievance can be addressed before a final assessment order is passed andappellate proceedings invoked by it. However, these special rights weremade available to eligible Assessee under Section 144C of the said Actare rendered futile, if directly a final order under Section 143(3) of thesaid Act is passed, without being preceded by a draft assessment order.In such a situation, the assessment order made by the AO 'iscompletely without jurisdiction'. The Division Bench of this Courtfollowed the decision of Andhra Pradesh High Court in M/s. ZuariCement Ltd. (supra) and based on the same, not only set aside theassessment order but also consequential order on rectificationapplication, as well as the penalty. 35.Again in Lionbridge Technologies (P.) Ltd. (supra), anotherDivision Bench of this Court, following the decision in International 16 TXA NO.77-78-15 35.Again in Lionbridge Technologies (P.) Ltd. (supra), anotherDivision Bench of this Court, following the decision in International 16 TXA NO.77-78-15 Air Transport Association (supra) held that a draft assessment order isnecessary in terms of Section 144C(1) of the said Act before the AOcan proceed to pass a final assessment order. In the absence thereof,the order is without jurisdiction. Non-issue of draft assessment ordercould not be corrected by issuing a corrigendum to a final assessmentorder. The Division Bench even rejected the contention that theAssessee was estopped from challenging the corrigendum, as it wasexpected by it that such a contention overlooked the fact that there canbe no estoppel on the issue of law about jurisdiction. This Court heldthat if the corrigendum dated 16/4/2004 and the order dated12/3/2014 of the AO were without jurisdiction, then, such an issueof jurisdiction can be raised at any time and the principles of estoppelwill not apply. Mere consent of the parties does not bestowjurisdiction if the order is beyond jurisdiction. 36.To a similar effect is the law laid down by Madras HighCourt in Vijay Television (P.) Ltd. (supra). The Court held that theorder passed by the AO lacked jurisdiction and when there is astatutory violation in not following the procedure prescribed and suchan order cannot be cured by merely issuing a corrigendum. Thisdecision has been approved by the Division Bench of this Court inLionbridge Technologies (P.) Ltd. (supra). 36. Thus, from the conspectus of the aforesaid decisions, the legal 17 TXA NO.77-78-15 position which emerges is that where a final assessment order is madeby the AO without compliance with the mandate of section 144C ofthe said Act, the same is not merely an erroneous order as contendedby Ms. Linhares, but such an order is without jurisdiction, as held bythis Court or, null and void, as held by Andhra Pradesh High Court.The assessment order dated 18/12/2009 was therefore not merely anerroneous order but the same was an order without jurisdiction, nulland void. 37.Even the CIT, in his order dated 20/3/2012 made in thepurported exercise of revisional jurisdiction, held that the AO couldnot have passed the final assessment order dated 18/12/2009, withoutproviding a draft assessment order in terms of Section 144C(1) of thesaid Act to the Assessee in the present case. However, the CIT chose tostyle this final assessment order dated 18/12/2009 as merely'erroneous'. Further, at least, in the notice dated 23/2/2012, by whichthe Commissioner purported to invoke the provisions of Section 263of the said Act, there is no reference to the assessment order dated18/12/2009 being prejudicial to the interest of the Revenue. 38.The Notice dated 23/2/2012, issued by the Commissionerinvoking the revisional powers under Section 263 of the said Act, readsas follows : 18 TXA NO.77-78-15 “OFFICE OF THE COMMISSIONER OF INCOME-TAX “AAYAKAR BHAVAN”, PLOT NO.5, EDC COMPLEX, PATTO PLAZE, PANAJI-403 001, GOA PHONE N0.0832-2438461 FAX 0832-2438460F .NO. 263/CIT-PNJ/2011-12 DATED 23-02.2012 To, M/s: Gigabyte Technology (India) Ltd.Plot No. L-5, Verna Electronic City,Verna Plateu, Verna, Goa - 403 722 Sir, Sub: Notice u/s 263 of I.T. Act 1961, for A.Y. 2006-07 forA.Y. 2006-07 reg. PAN- Please refer to the above. 2. In your case, assessment order u/s 143(3) forassessment year 2006-07 has been passed by AssistantCommissioner of Income-tax, Circle-l, Margao, on18.12.2009 and income was assessed at Rs.6,38,06,926/-. 3. While going through the assessment records for theabove mentioned year, it is noticed that the aforesaid order iserroneous for the following reasons. The details are as under: To, M/s: Gigabyte Technology (India) Ltd.Plot No. L-5, Verna Electronic City,Verna Plateu, Verna, Goa - 403 722 Sir, Sub: Notice u/s 263 of I.T. Act 1961, for A.Y. 2006-07 forA.Y. 2006-07 reg. PAN- Please refer to the above. 2. In your case, assessment order u/s 143(3) forassessment year 2006-07 has been passed by AssistantCommissioner of Income-tax, Circle-l, Margao, on18.12.2009 and income was assessed at Rs.6,38,06,926/-. 3. While going through the assessment records for theabove mentioned year, it is noticed that the aforesaid order iserroneous for the following reasons. The details are as under: 4. In the said assessment order, additions towards TPOadjustments u/s 92CA of Rs.7,30,40,428/- was made inpursuant to the order passed u/s 92CA of the I.T. Act, dated29.10.2009 by the Joint Director of income Tax (TP)-l, 19 TXA NO.77-78-15 Bangalore. The said TPO’s order was received in this officeon 30.11.2009. 5. On receipt of the TPO’s order, an opportunity ofhearing was given to the assessee by this office, vide letterdated 10.12.2009 and the assessee has filed its submissions,dated 17.12.2009. On receipt of the assessees submissions,an order u/s 143(3) of the I.T. Act was passed on18.12.2009. However, it is seen from the records that nodraft assessment order was sent to the assessee before passingan order u/s. 143(3) of the I.T. Act as required u/s 144C ofthe I.T.Act. 6. As per the provisions of section u/s 144C of the l.T. Actas enacted and inserted by the Finance Act 2009, with effectfnom 01.04.2009 a dratt assessment order should have beenprovided to the assessee before passing order u/s 143(3) ofthe I.T. Act in order to raise its objections before DisputeResolution Panel (DRP). Therefore, the order passed u/s143(3) is not in accordance with the provisions of section144C of the I.T.Act. 7. In view of the above facts, it is quite clear that theassessment order is erroneous, since the AO has failed toprovide draft assessment order before passing order u/s143(3) of I.T. Act on the issues discussed above. The AO hasviolated the principle of natural justice and therefore theorder passed is erroneous. I therefore prepose to passappropriate order u/s 263 of the I.T. Act in your case for theA.Y. 2006-07 to set aside the assessment. You are herebyprovided an opportunity of being heard in the matter withinthe meaning of sec. 263(1). The date fixed for hearing is29.02.2012 at 11.30 am. If you do not avail thisopportunity. It will be presumed that you have nothing to 20 TXA NO.77-78-15 say in the matter and the issue will be decided on the basisof the facts available on record and on legal merits of thecase. Yours faithfully, (M.L.KARMAKAR) Commissioner of Income-tax Panaji-Goa” 39.Now, the legal position in so far as the invocation of therevisional powers under Section 263 of the said Act is quite clear.Before such invocation, the Commissioner is required to be satisfiedthat the order which is proposed to be revised is erroneous, as well asprejudicial to the interest of the Revenue. Unless and until theseconditions are satisfied, there is no question of invocation of powersunder Section 263 of the said Act. There are several decisions, whichhave taken this view, the leading decision being Malabar Industrial Co.Ltd. vs. Commissioner of Income Tax[16]. 40.In this case, the notice dated 23/2/2012, by which theCommissioner has purported to invoke his revisional powers, onlypoints out that the assessment order dated 18/12/2009 which heproposed to revise, was erroneous because, the AO, in this case, failedto comply with the provisions under Section 144C of the said Act,though such provisions were clearly attracted in the facts and16 243 ITR 83 (SC) 21 TXA NO.77-78-15 40.In this case, the notice dated 23/2/2012, by which theCommissioner has purported to invoke his revisional powers, onlypoints out that the assessment order dated 18/12/2009 which heproposed to revise, was erroneous because, the AO, in this case, failedto comply with the provisions under Section 144C of the said Act,though such provisions were clearly attracted in the facts and16 243 ITR 83 (SC) 21 TXA NO.77-78-15 circumstances of the present case. However, there was absolutely nosatisfaction recorded on the aspect of the assessment order dated18/12/2009 being prejudicial to the interest of the Revenue. Inabsence of a record of any such satisfaction, there was no question ofinvoking the revisional powers under Section 263 of the said Act. 41.Some of the decisions relied upon by Mr. Kalra also supportthe view that revisional jurisdiction under Section 263 of the said Actcannot be invoked in respect of an assessment order which is withoutjurisdiction or a nullity or void ab initio. However, according to us, itis not necessary to go into this issue, primarily because, the record, inthis case, indicates that before the Commissioner invoked therevisional jurisdiction by the issuance of Notice dated 23/2/2012, theCommissioner nowhere recorded his satisfaction that the assessmentorder dated 18/12/2009 was prejudicial to the interest of the Revenue. 42.The ITAT, in this case, has not gone into the issue as towhether the Commissioner at all recorded any satisfaction that theassessment order dated 18/12/2009 was prejudicial to the interest ofthe Revenue. Instead, the ITAT has reasoned that since the assessmentorder dated 18/12/2009 was in breach of the provisions of Section144C of the said Act, the assessment order would not have withstoodthe challenge in appeal, and in that sense the assessment order dated 22 TXA NO.77-78-15 18/12/2009 was prejudicial to the interest of the Revenue. Based onsuch reasoning, the ITAT virtually permitted the CIT to not onlyassume the revisional jurisdiction, in absence of satisfaction of one ofthe twin conditions, it further permitted the CIT to even extend theperiod for completion of the assessment in terms of Sections 143 and144C of the said Act. 43.The Full Bench of the ITAT in the case of V. Narayanan(supra), has held that revisional jurisdiction under Section 263 of thesaid Act cannot be invoked to give a fresh lease of life for making anassessment order where the period prescribed for making such anassessment order has already expired. This decision of the Full Benchwas binding upon the ITAT in absence of any contrary decision of theHon'ble Supreme Court or the jurisdictional High Court. 44.The ITAT has sought to distinguish the decisions in M/s.Zuari Cement Ltd. (supra), Control Risk India (P.) Ltd. (supra);International Air Transport Association; Lionbridge Technologies (P.)Ltd. (supra) and Vijay Television (P.) Ltd. (supra) on the basis that allthese were decisions rendered in Writ Petitions where the High Courtsheld that the assessment orders without following the provisions underSection 144C of the said Act, is in excess of jurisdiction or null andvoid. The ITAT has reasoned that since in this case the Assessee had 23 TXA NO.77-78-15 not instituted a Writ Petition and got the assessment order dated18/12/2009 void ab initio or a nullity, such assessment order dated18/12/2009 could always have been revised by the revisional authority. 44.The ITAT has sought to distinguish the decisions in M/s.Zuari Cement Ltd. (supra), Control Risk India (P.) Ltd. (supra);International Air Transport Association; Lionbridge Technologies (P.)Ltd. (supra) and Vijay Television (P.) Ltd. (supra) on the basis that allthese were decisions rendered in Writ Petitions where the High Courtsheld that the assessment orders without following the provisions underSection 144C of the said Act, is in excess of jurisdiction or null andvoid. The ITAT has reasoned that since in this case the Assessee had 23 TXA NO.77-78-15 not instituted a Writ Petition and got the assessment order dated18/12/2009 void ab initio or a nullity, such assessment order dated18/12/2009 could always have been revised by the revisional authority. 45.According to us, the issue is whether the assessment orderdated 18/12/2009 in this case, is void ab initio or not. Going by thedecisions in M/s. Zuari Cement Ltd. (supra), Control Risk India (P.)Ltd. (supra); International Air Transport Association; LionbridgeTechnologies (P.) Ltd. (supra) and Vijay Television (P.) Ltd. (supra), wehave to hold that the assessment order dated 18/12/2009, in thepresent case, was clearly without jurisdiction and, therefore, null andvoid or void ab initio. The fact that the Assessee, in this case, may havenot instituted a Writ Petition to challenge the same, but has institutedonly an appeal challenging the same, can make no difference to thelegal position which is otherwise quite clear. This was not a case wherethe assessee was merely throwing some collateral challenge to theassessment order dated 18/12/2009. The assessee had frontallychallenged this order by instituting an appeal against the same.Therefore, all these decisions could not have been ignored by the ITATby merely observing that these were the decisions in Writ Petitionsinstituted by the Assessees. 24 TXA NO.77-78-15 law will have to be answered in favour of the assessee and against therevenue. Further, the order dated 23/2/2012 made by the CIT in thepurported exercise of jurisdiction under Section 263 of the said Act, isliable to be set aside. Since this order has merged into the order of theITAT dated 31/10/2014, even this impugned order made by the ITATis required to be set aside. 47. As a consequence, even the two substantial questions of law, as framed in Tax Appeal No.78/2015, will have to be answered infavour of the Assessee and against the Revenue. Further, the impugnedorders in the said appeal will also have to be set aside. 48.There shall be no order as to costs. Both the Appeals are disposed of in the aforesaid terms. DAMA SESHADRI NAIDU, J. M. S. SONAK, J.