PCIT Vs Alpha Elsec Defence and Aerospace Systems Pvt. Ltd. (Karnataka High Court)
Karnataka High Court held that re-adjustment of ALP without passing a Draft Assessment Order as required under section 144C of the Income Tax Act is not tenable in law. Accordingly, order passed thereon is void ab initio.
Facts- The assessee is a joint venture company promoted by M/s. Alpha Design Technologies Pvt Ltd., and M/s. ITL Optronics of Israel engaged in the business of manufacturing, assembling and testing of opto electronic equipment. During scrutiny assessment, TPO passed an order u/s. 92CA adjusting ALP. CIT(A) dismissed the appeal of the assessee. However, Tribunal under impugned order held that the order giving effect dated 22.11.2016 is void, ab-initio for not passing draft assessment order as required under Section 144C of the Income Tax Act, 1961. Being aggrieved, revenue has preferred the present appeal.
Conclusion- This Court in the case of M/S. CISCO SYSTEMS CAPITAL (INDIA) PVT. LTD., has held that it is mandatory for the Assessing Officer to pass a Draft Assessment Order under Section 144C of the Act. It is further held that if the Draft Assessment Order is not passed under Section 144C of the Act, the assessment order is void, ab initio. Thus, held that the law laid down by this Court in the judgment supra is squarely applicable to the facts of the present case. Hence, the appeal is meritless and accordingly stands dismissed.
