Case Law Details
CWT India Private Limited Vs ACIT (Bombay High Court)
Bombay High Court held that failure to pass a draft assessment order under section 144C(1) of the Income Tax Act results in rendering the final assessment as one without jurisdiction.
Facts- Petitioner filed its return of income for the respective years and the return of income was processed u/s. 143(1) of the Income-tax Act, 1961. Subsequently, the case was selected for scrutiny and statutory notices were issued in both. As there were international transactions, a reference was made by the Assessing Officer (“AO”) to the Transfer Pricing Officer (“TPO”) under Subsection (2) of Section 92CA of the Act. The TPO passed an order u/s. 92CA(3) of the Act. The TPO passed an order u/s. 92CA(3) of the Act making upward adjustment.
Notably, this adjustment was a variation prejudicial to the interest of Petitioner. The AO, on receipt of the order from the TPO, proceeded to issue a final assessment order u/s. 143(3) read with Section 92CA and Section 254 of the Act. This order contained additions proposed in the TPO’s order but was passed without passing a draft assessment order u/s. 144C (1) of the Act. Petitioner has impugned this assessment order in the petitions.
Conclusion- Held that it is clear that the AO shall, in the first instance, forward a draft of the proposed order of assessment to the eligible assessee if he proposes to make any variation is prejudicial to the interest of such assessee. Certainly, there is a variation in the assessment order different from what was filed in the return of income and since it is by way of an addition made, the variation is prejudicial to the interest of Petitioner.
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