ACIT Vs Google Ireland Limited (Supreme Court of India)
The Revenue challenged an order of the Karnataka High Court that had quashed assessment orders dated 24.12.2018 passed under Sections 143(3), 147, 92CA and 144C of the Income Tax Act, 1961 for Assessment Years 2009-10 and 2010-11.
Before the Karnataka High Court, the central issue was whether the impugned orders dated 24.12.2018 were merely Draft Assessment Orders as contemplated under Section 144C of the Income Tax Act or whether they were in fact Final Assessment Orders.
The assessee contended that the orders could not be treated as Draft Assessment Orders. Reliance was placed on the operative portion of the assessment orders, which, while referring to Section 144C and granting an opportunity to file objections before the Dispute Resolution Panel (DRP), also proceeded to conclude the assessment, compute income and tax liability, issue a demand notice under Section 156, and initiate penalty proceedings under Section 274 read with Section 271(1)(c) of the Act.
The assessee further relied upon the Karnataka High Court Division Bench decision in Commissioner of Income-tax (International Taxation) v. Cisco Systems Services B.V., where it had been held that when an assessment order simultaneously computes tax liability, issues a demand notice and initiates penalty proceedings, the order cannot be regarded as a Draft Assessment Order. The Division Bench had observed that any subsequent attempt by the Revenue to characterize such an order as a draft order would amount to an effort to cure an incurable defect.
