Itta/29/2023 Of The Prl. Commissioner Of Income Tax - 2 v. M/S. Hyundai Motor India Engineering Pvt. Ltd

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD MONDAY ,THE ELEVENTH DAY OF SEPTEMBERTWO THOUSAND AND TWENW THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY THE HONOURABLE SRI JUSTICE LAXMI NARAYANA ALISHETTYINCOME TAX TRIBUNAL APPEAL NO: 29 OF 2023 (Income Tax Tribunal Appeal Under Section 260-A. of the Income Tax Act, against the orderof the Income Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad in ITA No.[23MYD/2020 for assessment Year 2015-16 dated 29.07.2O22, preferred against the Orderof the Commissioner of Income Tax (Appeals) - 2 Hyderabad, Appeal No.l02l712018-19/CIT(A)-2 dated 05.12.2019, preferred against the Order of the Depury Commissioner ofIncome ta:q Circle2(2), Hyderabad, PAN/GIR No.AABCJH7867C dated 27.07.2022of the Income Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad in ITA No.[23MYD/2020 for assessment Year 2015-16 dated 29.07.2O22, preferred against the Orderof the Commissioner of Income Tax (Appeals) - 2 Hyderabad, Appeal No.l02l712018-19/CIT(A)-2 dated 05.12.2019, preferred against the Order of the Depury Commissioner ofIncome ta:q Circle2(2), Hyderabad, PAN/GIR No.AABCJH7867C dated 27.07.2022 Between: The Prl. Commissioner of lncome Tax - 2, Hyderabad. ,..APPELLANT AND M/s. Hy_undaiJvlotor lndia Engineering Pvt. Lld-, Sy. No.5/2 and 5/3, Opp. HitechCity Railway Station. lzzatnagar, Lingampally Mandat, Hyderabad- 50dd84. PANNo. AABCJH7867C ...RESPONDENT Counsel for the Appellant :Smt K. MAMATA CHOUDARY Counsel for the Respondent :SRl K. RAGHAVENDRA RAOThe Court made the following: THE HON'BLE SRI JUSTICE P.SAM KOSHYAND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY I.T.T.A.No.29 of 2023 JUDGMENT:.er Hon'ble Sri Justice P.SAM KOSHYI The challenge in the instant appeal is to the order dated 29.07.2022 passed by the Income ['i'ax ]AppellateTribunal (for short the Tribunal'), Hyderaba:d Bench 'B'Hyderabad, in I.T.A.No.123/Hyd/2020 for thr: assessmentyear 2O15-16. Vide the said impugned order, the Tribunalhas allowed the appeal preferred t,)' therespondent/ assessee by setting aside the ordt:r passed bythe Commissioner of Income Tax (Appeals) (for short '(CIT(Appeats)') dated 05. 12.2O19 and also the assesism(:nt orderpassed on 11.12.2018. 2. Heard Ms. K. Mamata Choudary, learned counsel forthe appellant and Mr.Raghavendra Rao, learned coltnsel forthe respondent-Department. 3. The issue involved in the present appeal is rr,hetherthc Tribunal was [justified ]in setting aside tl-rc ,rsse ssment order dated [ll ][.12.2018, ][treating ][the ][same ][as ][final]assessment [order' ][Rather ][than, ][treating ][it ][to ][be ][a ][draft]assessment order [under ][Section ][144-C ][of the ][Income ][Tax]Act, 1961 [(for ][short ][the ][Act')'] 4. The brief facts [which led ][to ][the hling ][of ][the ][instant]appeal is ttrat [the ][respondent/ ][assessee ][is ][involved ][in ][the]business of rendering [support ][services ][in ][computer ][aided]engineering [freld. ][For the ][assessment ][year ][20 ] [5- ][16 ][']respondent/ [assessee ][filed ][its ][return ][on ][27 ]['l ][l ]['2Ol5 ][The]assessment of [the ][respondent/ ][assessee ][was ][subsequently]to [scrutiny under ][Section ][t ][3 ][(2) ][of thc Act ][and]subjected referencewasmadetoTransferPricingofficer(TPo)fordetermination of [the ][Arm's ][Length ][Price ][(ALP) ][of ][the]assessee's international [transactions entered ][with ][its]associate enterPrises. 5. In terms of [the ][procedure prescribed ][bclore ][an]assessment [is ][frnalized, ][the statute ][requires ][the ][Assessing]to [first ][forward ][a ][draft ][assessment ][order ][to ][the]Authority assessee, [calling ][upon his ][objections ][if ][any ][The ][objections]are to be submitted [within thirty ][(3O) ][days ][from the ][date ][of] its receipt. And it is only thereafter that the AssessingAuthority shall pass the final assessment order. It is thisrequirement under law which is in dispute in the presentappeal 5. In terms of [the ][procedure prescribed ][bclore ][an]assessment [is ][frnalized, ][the statute ][requires ][the ][Assessing]to [first ][forward ][a ][draft ][assessment ][order ][to ][the]Authority assessee, [calling ][upon his ][objections ][if ][any ][The ][objections]are to be submitted [within thirty ][(3O) ][days ][from the ][date ][of] its receipt. And it is only thereafter that the AssessingAuthority shall pass the final assessment order. It is thisrequirement under law which is in dispute in the presentappeal 6. The dispute in the instant case is that when the draftAssessment Order under Section 144-C was sent to therespondent/ assessee, it also was accompanie(l b1, a noticeof demand and penalty under Section 271(1)(c) of the Act. Itis said that thc respondent/ assessee did not respond to thesaid notice and as a consequence, the final assessmentorder r.vas passed on 10.0I.2019. The responde:nt/ assesseeimmediatel."- preferred an appeal before the CIT (Appeals) onthe ven' same day i.e. on 10.01.2019, which rr'as rejectedby the CIT (Appeals), leading to frling of an appeal beforethe Tribunal. The Tribunal aJter consi<lering theconlentions put forth by the parties, allowed the appeal,thereby setting aside the order passed by the CI'f (Appeals)It is this order under challenge by the respondent-Depart.mcnt bt' u,a1, of the instant appeal The contenLion contenLion [[of the ]][[tearned ][counsel ][for ]][[counsel ][for ]][[for ]][[the]] 7, The contenLion contenLion [[of the ]][[tearned ][counsel ][for ]][[counsel ][for ]][[for ]][[the]]respondent-Department [all ][along ][was ][that ][in ][fact ][the]authorities [concerned ][had ][issued ][a ][draft ][Assessment ][Order]on I I .12.20L8 [calling ][for the ][objections ][from ][the]respondent/ [assessee ][on ][the ][draJt Assessment ][Order' ][And ][it]is only when the [respondent/ ][assessee ][failed ][to ][submit ][any]the [dra-ft ][Assessment ][Order' ][nor ][aly ][objections]response to before the authorities [concerned, ][the final ][assessment]order was [passed ][on ][10.01'2019'] to [[the ][learned counsel ][for ][the ][appellant']][[learned counsel ][for ][the ][appellant']][[for ][the ][appellant']][[the ][appellant']][[appellant']]According 8. According to [[the ][learned counsel ][for ][the ][appellant']][[learned counsel ][for ][the ][appellant']][[for ][the ][appellant']][[the ][appellant']][[appellant']]the statutory [requirement as such has ][been ][duly ][complied]u,ith.However,itwasonlybecauseofaninadvertencethatthe draft assessment [order ][got ][accompanied ][rvith the ][notice]of demand and [penalty. ][But ][the ][siune ][was ][inconsequential]for the reason [that ][since ][the ][respondent/ ][assessee ][did ][not]respond to this [draft ][assessment ][order, they ][were ][left ][\r'ith]no other option, [but ][to ][pass ][the Iinal ][assessment order']which theY did Pass [on ][10'O1'2019'] According [to ][the ][learned counsel ][for the ][appellant] g. because [there ][was ][a ][notice ][of ][demand ][and][ penaltS']only which inadvertently got enclosed along with the draftassessment order b_y itself will not vitial.e the entireassessment order b_y itself will not vitial.e the entireproceedings. As the respondent/ assessee had the occasionof submitting his objections to the draft assessment order,the authorities concerned would have still considered thesame and thereafter, passed the final assessmr:nt order.of submitting his objections to the draft assessment order,the authorities concerned would have still considered thesame and thereafter, passed the final assessmr:nt order. 10. The learned counsel for the appelant rr:ferred to anearlier decision rendered by the Tribunal in this regard andwhich was rclied upon by the CIT (Appeals) i.e. in the caseof M/s. BS Hgderabad us. ACIT 2(3) in ITANo.2186/ Hyd I 2OI7 . Therefore, the order of the CIT(Appeals) u'as se lf-contradictory in itself. 10. The learned counsel for the appelant rr:ferred to anearlier decision rendered by the Tribunal in this regard andwhich was rclied upon by the CIT (Appeals) i.e. in the caseof M/s. BS Hgderabad us. ACIT 2(3) in ITANo.2186/ Hyd I 2OI7 . Therefore, the order of the CIT(Appeals) u'as se lf-contradictory in itself. 11. According to the learned counsel for the appellant theTribunal erred in not considering the fact- that therespondent / assessee w,aited till the final assessment orderwas passed on 10.01.2019 and thereafter challenged thesame by u,a,y of an appeal before the CIT (Appeals). 12. According to the learned counsel for the appellantthere is no dispr-rte to the fact that he did not receive thedraft Assessment Order, yet, he chose not to srrbmit any It I I And [it ][is ][only ][when ][the ][final ][assessment order]objections. was passed on [10.01.2019 ][that ][the ][respondent/assessee]filed an appeal [before ][the ] [(Appeals)' ][It is ][further]contended that [the ][reliance ][by the ][Tribunal ][to ][the]judgement of the Hon'ble [Supreme ][Court also was ][not]proper, as the said [judgement ][was ][rendered ][under ][an]entirely different [contextual background and ][the ][same ][was]distinguishable [on facts itself.] 13. Having heard [the contentions ][put forth ][on either ][side] and on perusal [of ][records, ][what ][is ][necessary ][to ][be ][taken]note of at this [juncture, ][is ][the ][requirement ][of ][lau'']The reference to [dispute resolution ][panel ][is ][rvhat ][is]under [Sectio ][n ][144-C ][of ][the Act' ][The ][relevant]envisaged provision of Section [144-C ][is reproduced hereunder:] " 144C. (1) Tle Assessing Officer shall, [notuithstanding]anAthing to tle [contrary ][contained ][in ][this ][Act, ][jn ][the ][first]in{tan Z, fonuard a [drafi ][of ][the ][proposed ][order ][of]o."r".-.rrt [(hereafier ][in tlis ][section ][refered to ][os ][the]drafi order) to the [eligible ][ossessee ][if ][he ][proposes ][to make']on'or aTei tlLe [1st ][dag of ][October, 20O9, ang ]-uanation [in]tLe inime or [loss ][ritumed ][tahich ][is ][preiudtcioL ][to ][the]interest of such [dssessee.]anAthing to tle [contrary ][contained ][in ][this ][Act, ][jn ][the ][first]in{tan Z, fonuard a [drafi ][of ][the ][proposed ][order ][of]o."r".-.rrt [(hereafier ][in tlis ][section ][refered to ][os ][the]drafi order) to the [eligible ][ossessee ][if ][he ][proposes ][to make']on'or aTei tlLe [1st ][dag of ][October, 20O9, ang ]-uanation [in]tLe inime or [loss ][ritumed ][tahich ][is ][preiudtcioL ][to ][the]interest of such [dssessee.] '*litnin (2) On receipt tnirtA digs of tlLe of d.rafi the receipt bg him order, [the ][eligible asses"ee ]of the draft order'-[sholl'](a) fite his acceptance of [the ][uaiations ][to ][the]Assessing Olficer; [or] (b) fle his oblections, i"f ang, to such uaiation u-tith,- (i) the Dispute Resolution Panel; and /iil [the ][Assessing ][Offcer.] (3/ ?he Assessing Officer shall complete the as:;essment onthe basis of the drafi. order, if-(a) the assessee intimates to the Assessing OfficertLLe acceptance ofthe uariation; or(a) the assessee intimates to the Assessing OfficertLLe acceptance ofthe uariation; or (b) no objectlons o.re receiued uithin the peiodspecified in sub section (2).specified in sub section (2). (4) The Assessing Officer shall, notu.titLtstandir,g anythingcontained in section 1.53, pass fhe assessment order undersub-sectlon (3) within one month from the end o"r the monthin which,- (a) Lhe accepLance is receiued; or (b) the peiod of liling of objections tnder sub-section (2) expires.section (2) expires. (5) The Dispute Resolution Panel sholl, in a case where angobjection is receiued under sub-section (2), issue :;uch direc-tions, as it thinks Jit, for the guidance of the Ass€ssing Offi-objection is receiued under sub-section (2), issue :;uch direc-tions, as it thinks Jit, for the guidance of the Ass€ssing Offi-cer to enab[e hint to conlplete the assessment. (b) no objectlons o.re receiued uithin the peiodspecified in sub section (2).specified in sub section (2). (4) The Assessing Officer shall, notu.titLtstandir,g anythingcontained in section 1.53, pass fhe assessment order undersub-sectlon (3) within one month from the end o"r the monthin which,- (a) Lhe accepLance is receiued; or (b) the peiod of liling of objections tnder sub-section (2) expires.section (2) expires. (5) The Dispute Resolution Panel sholl, in a case where angobjection is receiued under sub-section (2), issue :;uch direc-tions, as it thinks Jit, for the guidance of the Ass€ssing Offi-objection is receiued under sub-section (2), issue :;uch direc-tions, as it thinks Jit, for the guidance of the Ass€ssing Offi-cer to enab[e hint to conlplete the assessment. (6) The Dispute Resolulion Panel shall i"ssue the directionsrekffed ro in sub-.section (5), afier consideing *Lefottouing, [narnelq:-]rekffed ro in sub-.section (5), afier consideing *Lefottouing, [narnelq:-] (u) draJi orrler; (b) objections Jited bLt the a-ssessee; (c) euiclcnce firntished bg lhe asses.see; (d) reporl, lj ctny, of the Assessing Officer, Valuation Olficer or T'ransfer Pictng OfJicer or any other autL'-oity; (e ) recorcls relating to the draft order; (f ) evidence collecLed by, or caused to be collected.by, it; ondby, it; ond (g ) result of ang enquiry made by, or cau:;ed to bemade bg, it.made bg, it. (7) The Dispute Resolutiort Panel nag, before issutng angdirectlons refened to tt sub-section (5|- (a) rnake such fulher enquiry, as it thidcs fit: or (b) ceLtse onq furlher etlquiry Lo be mad<: bg angincome tctr autllontll atld reporl the result ol the sarne to it. (8) The Dispute Resolution Panel may [confirm" reduce or]enhonce the uariations [proposed ][in ][the ][drafi ][order ][so,]horueuer, tLnt it shalt not set aside [anA ][proposed ][uaiation]or issue ang direction under sub-section [(5) ]for furtherenquiry and passing of the assessnent order. (9) If the members of the Dispute Resolution Panel differ inopinion on ang point, the point shall be decided accordingto the opinion of the majoitA of the members.opinion on ang point, the point shall be decided accordingto the opinion of the majoitA of the members. (1O) Euery direction issued bg the Di.spute Resolution Panelshall be binding on the Assessing Offtcer.shall be binding on the Assessing Offtcer. (11) No direction under sub-section (5) sLnll be issuedunless an opportunitg of being heard is [giuen ]to theassessee and the Assessing Offier on such directionsuthich are preludicial to the interest of the assessee or thelnterest of the reuentle, respectiuelg. (12) No direction under sub-section (5) shn)l be issued afiernlne months from the end of the month in uhich the drofiorder is foru.tarded to the eligible assessee. (I 3) Upon receipt of the directions issued. und.er sub-section(5), the Assessing Officer shall, in anformity uith thedirectlons, complete, nottuith,stand.ing anAthing to thecontrary contoined in section 153, the ossessment uithoutprouiding any further opportunitg of being heard to theassessee, ulithin one month from the end of the month inwhich such direction is receiued. ( 1 4 ) The Board mag moke rules for tle purposes of theeffcient functioning of the Dispute Resolution Panel and.expeditious disposal of the objections ftled und.er sub-section (2) by the eligible assessee.expeditious disposal of the objections ftled und.er sub-section (2) by the eligible assessee. ( I5) For the purposes of this section,- (a) ['Dispute ]Resolution Panel" means a collegiumcomprising of three Commissioners of Iname-taxconstiluted bg the Board for this purpose; (b) "eligible assessee " ftteans,- (i) any person in uhose case the uariationrefened to in sub-section (l) arbes as a consequence of theorder of the Transfer Pricing Offier po-ssed under sub-section [(3) ]of section 92CA; andrefened to in sub-section (l) arbes as a consequence of theorder of the Transfer Pricing Offier po-ssed under sub-section [(3) ]of section 92CA; and (ii) ang foreign compang.'. ( I5) For the purposes of this section,- (a) ['Dispute ]Resolution Panel" means a collegiumcomprising of three Commissioners of Iname-taxconstiluted bg the Board for this purpose; (b) "eligible assessee " ftteans,- (i) any person in uhose case the uariationrefened to in sub-section (l) arbes as a consequence of theorder of the Transfer Pricing Offier po-ssed under sub-section [(3) ]of section 92CA; andrefened to in sub-section (l) arbes as a consequence of theorder of the Transfer Pricing Offier po-ssed under sub-section [(3) ]of section 92CA; and (ii) ang foreign compang.'. A plain reading of sub-sections 1, 2, 6, 8 anc 13 of Section144-C would clearly spell out the requirement of law.Admittedly in the instant case, in addition to the draftassessment order, there was also a notice of demand andpenalty which was enclosed. A plain reading of sub-section8 of Section 144-C would further make it amply clear thatthe demand has to be raised only aJter the final assessmentorder is passed, more particularly, for the reason that thedispute resolution panel has got the power to confirm,reduce or enhance the variations proposed in tfe draft. 14. In the given context. rI thc draft assessment order isaccompanied by a notice o[ dcmand arld penaltv that itselfwould force one to reach to the collclusion that though it istermed as draft assessment order, in fact, it.s the hnalassessment order and the notice ol demand and penaltywas accompanying the same. To further weaken the case ofthe appellant, the operative parr of the draft assessmentorder reads as under: "?he assessment is completed under section 143(31 r.ut.s.92CA of the Incomc tax Act, I 961 . Crerltt for prepaid t<txes isgiuen. Penalty proceeditgs u/s 27 IAA & 27lBA are beitginitiated separotelA. A copy of [hr: n-sscssnrent order alotLgtpith demand nottce is issuecl to the as.se.s-see,'.tpith demand nottce is issuecl to the as.se.s-see,'. ,'t A perusal of [the ][aJoresaid ][operative ][part ][of ][the ][so ][called]draft assessment [order ][would ][further ][establish ][that ][it ][was]not a draft [assessment ][order, ][but ][was ][a final ][assessment]order after [the ]assessment [was ]concluded'The operative [part ][also ][clearly mentioned about the raising]notice of demand [under ][Section ][27 ][1-AA ][ald ][Section ][271-]BA of the Act. 15. The High [Court ][of ][Judicature ][at ][Andhra ][Pradesh ][in]the case of [M/s.Zuari ][Cement ][Ltd' ][as' The ][Assistant]Commissioner [o;f ][Income ][Tax ][has ][held ][as ][under:] "As thi-s has occurred' [after ] [10'2009, ][the ][cut off ][date]in sub'section [(1) ][oJ ][S'laaC, the ][Assessing]prescnbed 'Off u, it mantlated to f.rst pass a draft assessm'e-nt order'ctmmunicate it [lo ][the ][as.sessee, ][hear ][his ][objections ],andlhen complele [a.sses-smenl ][AdmittedlA ][this ][h,as ][not ][been]don orri [the respondent ][has ][passed ][a ][finat ][o-ssessment]order dt.23.12.r011 [straight ][auag ][Therefore' ][the]impugned [order ][of ][assessment ][is ][clearly ][contrary ][to]"i.iiii it the Act and is tuithout jurisdiction' null anduoid". The said [judgement ][has ][also been ][affirmed ][by ][the ][Hon'ble]Court [of ][India ][vide ][its ][order ][dated ][27 ]['O9'2013 in]Supreme Leave [to ][Appeal (Civil) ][C'C'NoJ6694 ][of ][2Ol3']Special Similarly, [the ][Single ][Bench ][of ][the ][Madras ][High Court ][in ][the]case of Viiag [Teleaision ][(P') ][Ltd' a' ][Dispute Resolution] Panel, Chennai) at paragraph Nos.2O and 21 held as under: "Under Section 144 [(C) ]oJ the Act, it is eui(lenl that theassessing oJficer is reEtired to pass only a draJi assessmentord.er on the basis of the recommendations mad':: by the TPOafier giuing an opportunitA lo [he asses-s ee to Jile theirobjections and then the assessing oflicer shall pass a f.nalorder- According to the leamed senior courtsel for thepetitioners, thi-s procedure has not been follorued L'q the secondrespondent inasmuch as a final order has been :;traightanuaypassed uitlaut passing o drafi assessment order. Panel, Chennai) at paragraph Nos.2O and 21 held as under: "Under Section 144 [(C) ]oJ the Act, it is eui(lenl that theassessing oJficer is reEtired to pass only a draJi assessmentord.er on the basis of the recommendations mad':: by the TPOafier giuing an opportunitA lo [he asses-s ee to Jile theirobjections and then the assessing oflicer shall pass a f.nalorder- According to the leamed senior courtsel for thepetitioners, thi-s procedure has not been follorued L'q the secondrespondent inasmuch as a final order has been :;traightanuaypassed uitlaut passing o drafi assessment order. "As ightly [pointed ]out bg the leamed senior [counsel ]for [the]petitioners, in the order passed on 26.03.2013, the secondrespond.ent euen roised a demand as also imposed penaltg.Such demand hzs to be raised. on[y alter a Jirutt order hosbeen po.ssed determining the tax liabilittl. The u:ry fact thatthe taxable omount has been determined itself uould shotuthat it LUos passed os a ftnal order. ln facl, t notice Jordemand under Section 156 of the Act uas [ssued pursuont tosuch order dated 26.03.2013 of the secon<l respcndert. Bothth.e order dated 26.03.2O13 and the not[ce For den and thereofhave been serued. simultaneously on lhe petiLtotrcr ['fherefore,]not only the assessment is complele, but [(.lso ]tt rtolict' d.ated28.O3.2O13 uas issued thereon calling upon ttrc petltioner topaA the tox amount as also penaLlg unde,r Sccttor, 271 of theAct. l'hereafier, the petitioner u)as guen an opltortunitg ofheaing on 12.O4-2013. Subsequently, the secorLd respondentrealised the mistake in passing a final ortler insteacl oJ a draftossessmen, order u.thich resulted in issuing tt corngendum on15.04.2013. In the corrtgend.um it LUas only state.d tfLat theorder passed. on 26.03.2013 under Section I a3C of the Act hasto be read and treated as o draft ossessnent orcler as perSection 143C read uith Section 93CA (1) rearl tuith Section 143(3) of the Act. In an by the order dated 15.04.20 13, r.he secondrespondent granted thirty dags lime lo e:rutble lhe .!s'-sessee lofile [their ][objections. ][On ][re-ceipt ][of ][lLrc ][c'orrigenctttrn ][doted]15.O4.2O13, the petitioner componA approachea the frrstrespondent, but the first respondent cleclined to Lssue angdirection fo the assessment off.cer on the ground thut the !.rstrespondent has got juisdiction onlg to et ertetr such onappeal if the order passed by the second respondent is a pre-assessment order- Therefore, [t is euident thot the rtrstrespondent declined to entertatn the objectiorts raised bA thepetitioner componA on the ground that the order pos.;ed lry the ' 12014) [46 taxmann.com ][100 (Madras)] second respondent is not a d.raft assessment order, rather it ba rtnal order. Thus, the ftrst respondent hod trealed the orderdated 26.03.2O13 of the second respondent as a final orderand therefore refused to entertain the objection-s filed on beholfof the petitioner companA". The said decision has been further affirmed by the DivisionBench of the Madras High Court in the case of theAssistant Commissioner o.f Income-tax, Media Circle-77, Chennai u. Vijag Teleuision (P.) Ltd.2 wherein, theDivision Bench at paragraph Nos.31 to 34 and 39 held asunder: ' 12014) [46 taxmann.com ][100 (Madras)] second respondent is not a d.raft assessment order, rather it ba rtnal order. Thus, the ftrst respondent hod trealed the orderdated 26.03.2O13 of the second respondent as a final orderand therefore refused to entertain the objection-s filed on beholfof the petitioner companA". The said decision has been further affirmed by the DivisionBench of the Madras High Court in the case of theAssistant Commissioner o.f Income-tax, Media Circle-77, Chennai u. Vijag Teleuision (P.) Ltd.2 wherein, theDivision Bench at paragraph Nos.31 to 34 and 39 held asunder: "A perusol of the moteials auoilable in the typedset of documents reueal that the order dated 26-3.13 notonlg has Jinalised lhe assessment, but goes one stepahead by making a demand for tcu, therebg implging thatthe assessment is ftnal ond. not prouisions. Adding insultto injury, penaLtA has ol-so been imposed in the uery sameorder. A notice of demand has also been made underSection 156 of the Act. Therefore, it is a conclusiue ordercompleting lhe as.se-ssrnent and making a consequentialdemand and by no stretch of imagination it can beconsttued as pre e-s-se.s-s,rrcnl order.set of documents reueal that the order dated 26-3.13 notonlg has Jinalised lhe assessment, but goes one stepahead by making a demand for tcu, therebg implging thatthe assessment is ftnal ond. not prouisions. Adding insultto injury, penaLtA has ol-so been imposed in the uery sameorder. A notice of demand has also been made underSection 156 of the Act. Therefore, it is a conclusiue ordercompleting lhe as.se-ssrnent and making a consequentialdemand and by no stretch of imagination it can beconsttued as pre e-s-se.s-s,rrcnl order. It is further sttident from the mateials auoilable onreard that uhen the cssessee approached the DRPagain-st the aboue assessment order u/s 144-C (2), theDRP hns categoricalLy refused to entertain the appealpointing out that no drolt assessment order hn-s beenplaced before it for takiry up the matter. In essence, theDRP itsetf has conftrmed that Lhe order passed by the AOis a f.nal order and not a d.raft assessment order. Tlerefore, it is uery clear that uthnt has beenr-ssued is not a Draft Assessment Order, as contemplatedu/s 144-C of the Income Tax Act, but a finol order, asmandated u/s 143(.3) o[ the Act. Hou-tever, tlrc contentionnou raised is that the mistake stood corrected by 'z[2018] [95 taxmann.com ][101 (Madras)] 2:::^: 2f [t\3 ][conisendum ][dated ][15.4.2()13 ][and,]I,neleJo:, -Jor all purposes the assessment ord,_:r shouldbe treated aslftnal assess ment order. t^:.: , . , z th_e corrigendum, uthich has been i:;sueci on^!:,1 and, tnerebA, rectifA ,U,i [S cure the defect ]the [that ]mistake [h,.s ][crept ]cimmitted [into ]tne bi orae,tneReuenue and enablZ- te"t^""l il tn" ["i","lrJ,i,iro"ra",]as a_drafi. assessrlent ord.er is ti" poiii,-iii.; ;;;;;,",lhe determination oI thb Court. . From the aboue it is unambiguously clear that theAssesstng officer is dutg bouni n iai.i'i.- in"mandatory requtrement *oidot.d. unan x"tioui l i"+ r: o1,!:1, o:, 2, firs.t passing a drat osrers^.ni- ,rnr", ' rnJa -ure of u_thich uLould inuatidate the Jinat o_rder 11d the consequent demand. i"ii"", i.i',r.irrv".r.r..r=)n,,",proceedings". 16. Similar view has also been taken by t ee Division Bench of the High court of Karnataka in the case ofCommission er of Income-tax (International Taxation) u.Cisco Systems Senrices B. t/.swherein at paragraphCisco Systems Senrices B. t/.swherein at paragraph Nos. 13 to 16 it was held as under: "Undisputed facts of the case ore, in th( dr(Lftassessmen, order, the ACIT has ordered issuc,rce o7demand notice sec.tion 271(t)(c) and. of tLe to inittate Act. Bith p.""ttg ,i; ;ri"."Ji"r'"7o*,,4";;,;Zr:^.,.,order and the demand notice are a"ria-'o"f,")"i,,'r'zs,2018.order and the demand notice are a"ria-'o"f,")"i,,'r'zs,2018. 16. Similar view has also been taken by t ee Division Bench of the High court of Karnataka in the case ofCommission er of Income-tax (International Taxation) u.Cisco Systems Senrices B. t/.swherein at paragraphCisco Systems Senrices B. t/.swherein at paragraph Nos. 13 to 16 it was held as under: "Undisputed facts of the case ore, in th( dr(Lftassessmen, order, the ACIT has ordered issuc,rce o7demand notice sec.tion 271(t)(c) and. of tLe to inittate Act. Bith p.""ttg ,i; ;ri"."Ji"r'"7o*,,4";;,;Zr:^.,.,order and the demand notice are a"ria-'o"f,")"i,,'r'zs,2018.order and the demand notice are a"ria-'o"f,")"i,,'r'zs,2018. d.emand Argument nottce has cnnuassed. been issuei, by assessee the Reuenue ioi r'na.l,l*onis, tilouqhthe-order dated December 28, 2'otB as-i1r$ ;;;'r:s;.",ana "^::?r.^":d .ts a curable [fit"!.its ]one. [objectiotts before ]On the other hnnd, Shi. [the ]oni. ii. w"i"'ri*ru,t.,:,*t ,fRao's argument b that tn icrr ioi'"r,^i!r'")" ,n,oraer ::..:,""-rT, ancl ssued. [at ][the.stage ]the demand [of ][passing ]notice. [the ][draft ]Thus, [o".r.,.,n",,,]thc re, r lzOZ:1 t+s taxmann.com 486 (Karnataka) ossessment [proceeding ][LDas ][complete' ][This ][procedure]jitio-.a bg ACIT is cintrary to tau. Lttid doun [in ][Vijag]'Tetevision (supra) and other [authoities']iP.) ttd. "or" Section 144C [lags ][dotun o detailed ][procedure',Under]Sedion 144C(1), [the ][Ab ][ls ][required ][to ][fonaard ][a ][draft ][of the]proposed order of [assessment ][to the ][assessee ][Assessee]'*ig frt a its acceptance or objection before tle DRP andth.e AO. I/ [assessee ][intimates ][its ][acceptancc ][or ][no]ii1.iUo"" ["are ][receiued ][taithin ][3o ][dags, ][the ][AO slnll]ii"rpt"t" th.e [assessment. ][where ][the ][DRP receiues ang]obieAion from [the ][assessee, ][it ][shcJl ][issue ][necessary]diiections' to [tle ] [to ][enable ][him ][to ][complete ][the]o.rt"s-rrt afier [consideing ][the ][doanments/ ][material]ientioned in *ction [14aC ]@)(a) [to ][(g) ][tuhich ][includes ][the]drai order. [Before ][issuing the directtons, ][tlrc ] [mny ][also]make such [uiher [enquiry ][bg ][any ][lncome ][tax ][Authoilg ]['] Upon receipt of [the ][directions ]from [under ][sub-]section 5, the [shau, ][in ][conJomuty ][with ][the ][d.irecttons']i"rpit"'rt* [assessment ][tuithin ][one ][month ][from ][the ][end' ][of]ii"'i"tn in which such [direction ][is ][receiued ] [notice ][of]d.emand" und.er [section ][156 ][mag be ][lssued after completion]of the assessment [under section ][144C(13)" ]['] L7. The Bombay [High ][Court ][eLlso ][in ][somewhat similar] circlrmstances [in ][the ][case ][of ] [(India) Prluate ][Limlted] Vs. Deputg Commissioner [o! ][Income ][Tdx ][at ][paragraph] Nos.25 and [26 held ][as ][under:] "In [our ][uieul, ][the ]follouing [principles ][emerge ][from ][the ][aboue]disczssion [:-] (t) thcit the procedure [prescnbed ][under ][Sectton ][144C ][of]the IT Act is a [mandatory procedure ][and ][not]directorythe IT Act is a [mandatory procedure ][and ][not]directory(it) -would failure [io ]follotu [the ][procedure ][under ][Section ][144C(1)]bL a iurisdictional error and. not merelybL a iurisdictional error and. not merelyprocedural ercor or ireguLaritg.(ii/ Therefore, Section 2928 [of the ] [Act ][cannot soue ][on]order passed in breach of [the ][prouisions ][of ][Section]144C(1), the same betng on incurable illegotitg.order passed in breach of [the ][prouisions ][of ][Section]144C(1), the same betng on incurable illegotitg. It b important to note [Lhat ][Seclion ][l44C(1) ][is o ][non']obstante pg-uision, tuhich [requires ][its ][compliance irrespectiue] (t) thcit the procedure [prescnbed ][under ][Sectton ][144C ][of]the IT Act is a [mandatory procedure ][and ][not]directorythe IT Act is a [mandatory procedure ][and ][not]directory(it) -would failure [io ]follotu [the ][procedure ][under ][Section ][144C(1)]bL a iurisdictional error and. not merelybL a iurisdictional error and. not merelyprocedural ercor or ireguLaritg.(ii/ Therefore, Section 2928 [of the ] [Act ][cannot soue ][on]order passed in breach of [the ][prouisions ][of ][Section]144C(1), the same betng on incurable illegotitg.order passed in breach of [the ][prouisions ][of ][Section]144C(1), the same betng on incurable illegotitg. It b important to note [Lhat ][Seclion ][l44C(1) ][is o ][non']obstante pg-uision, tuhich [requires ][its ][compliance irrespectiue] of the other proutsions that [m@A ]be contained [in ][the IT ][Act.]Th.ere is no dispute tlat Petitioner [i.s ]an [eLigibLe ][as.sessee ][and]also there is no dispute as to tlrc [applicabilitg ]of [Section]144C. It is also nof in dbpute that [the ]final [Assessment]Order h:i,s been [passed ]uitlaut tle [drofi ][Assessrnent ][Order]as contemplated. under Section 144C(1) [of ][the IT ][Act. ][The]Assessing OIJicer ought to haue in the firs'l [in-stance]Jonaarded [a ][drofi ][of ][the ][proposed order ][of ][ass(,ssment ][[o]Petltioner, o-s thare tua.s a [proposed ]uariation [prt:.ludicial ][to]the interest of the assessee. This [important ][step has ][been]completely omitted bg the Respondent [taktng ][a ][u,sA ][a ][uery]necessary ight of Petitioner to [jile ]objections [to ][the' ][proposed]uariation uith the DRP and the A-ssessing [Officer ][uthich ][in]our uiew, strikes to the root of the [procedure ][contemptated]by Section 144C". 18. Given the aforesaid legal position as it [:;tands, ][as ][is] required under Section 144-C of the Act and [a-lso ][taking]note of the contents of the operative [part ]of [the ][so ][called]assessment order, in the considered opinion [ol ][this ][Bench]Ieads to the only conclusion of the order [being ][a ][hnal]assessment order, more particularly, when [ttre ][authorifi']concerned has also ordered and directed [for ][initiation ][of]penalty proceedings simultaneously along [vvith ][the ][draft]assessment order. Hence, [this ][Bench ][has ][no ][he ][sitation ][in]reaching to the conclusion [that ][the ][findings ][alrived ][at ][by]the Tribunal while allowing [the ][appea ][I of ][the]respondent/ assessee was [proper, ][legal and ][justified ][That]the present appeal thus being [devoid ][of merits, ][dest:rves ][to] be and is [accordingly, rejected' There ][shall ][be ][no ][order ][as] to costs. As a sequel, [miscellaneous ][petitions' ][if ][any ][pending'] shall stand [closed.] one Fair Coov ' to the Hon'ble [P.SAM ][KOSHY, ][Justice]iFor His LordshiP kind Perusal) one Fair Coov to the Hon'ble LA(MI [NARAYANA ALISHETTY, ][Justice]' iFor His LordshiP kind Perusal) Sd/.K.SRINIVASA RAOJOINT REGISTRAR(]3 //TRUE COPY// SECTION OFFICER To, 1 . The lncome [Tax Appellate Tribunal, Hyderabad Bench ]['B''] 2. The Commissioner of [lncome ][Tax ][(Appeals) ]- [2 Hyderabad] 3. The Deputy Commissioner [of ][lncome ][tax, ][Cncle ][2(2\, ][Hyderabad'] 4. 11 LR Copies 5. The Under [Secretary, Union ][of ][lndia Ministry ][of ][Law, Justice and Company]Affairs, New DelhiAffairs, New Delhi 6. The Sesetary, [Advocates Association Library, High Court for the State ][of]Telangana, Higtr [Court Buildings ][at ][Hyderabad]Telangana, Higtr [Court Buildings ][at ][Hyderabad] 7. One CC to SRl. K. [Advocate ][OPUCI 8. One CC to SRl. K. [RAGHAVENDRA RAO Advocate ] 9. Two CD Copies DL DLAKx,r HIGH COURTDATED:11/09/2023 JUOGMENTlTTANo.zg of 2023 APPEAL IS REJECTED 13"A\'it5u[O,\f] /1/;?t::r$ [1$B]l-,\'[\.,J\r:A'