ST MICROELECTRONICS PRIVATE LIMITED vs. THE NATIONAL FACELESS ASSESSMENT CENTRE & ANR.

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W.P.(C)/7189/2021HC DelhiDLHC01022426202129 July 2021Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE NAVIN CHAWLA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that it is settled law that prior to passing a final assessment order, the Assessing Officer must mandatorily pass and forward a draft assessment order to the assessee under Section 144C(1) of the Act. The Court cited several precedents, including DCIT v. Control Risks India Pvt. Ltd. (SC), Turner International Pvt. Ltd. V. DCIT, JCB India Ltd. V. DCIT, International Air Transport Association v. DCIT, and CIT v. C-Sam (India) P. Ltd. Consequently, the impugned Assessment Order dated June 22, 2021, and the notices under Section 156, 274 read with Section 271(1)(c) of the Act for AY 2016-2017 were set aside. The matter was remanded back to the Assessing Officer, who was directed to issue a draft assessment order within two weeks, grant an opportunity of hearing to the petitioner, and pass a reasoned order in accordance with law. No other issues were expressly left undecided.

What were the facts?

The petitioner, ST Microelectronics Private Limited, filed a writ petition challenging the final assessment order dated June 22, 2021, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2016-17. The petitioner also challenged notices issued under Section 156 and Section 274 read with Section 271(1)(c) of the Act. The core of the challenge was that the Assessing Officer erred in assuming jurisdiction and passing the final assessment order without first issuing a draft assessment order, as required for eligible assessees under Section 144C(1) of the Act. The revenue, represented by the National Faceless Assessment Centre, accepted notice.

What were the issues?

1. Whether the Assessing Officer erred in assuming jurisdiction to pass a final assessment order dated June 22, 2021, under Section 143(3) read with Section 144B of the Income Tax Act, 1961, and consequential notices, without adhering to the mandatory requirement of passing a draft assessment order under Section 144C(1) for an eligible assessee for Assessment Year 2016-17? Assessee's Contention: The Assessing Officer erred in assuming jurisdiction and passing the final assessment order without following the statutory procedure of issuing a draft assessment order first, as mandated by Section 144C(1) for eligible assessees. The assessee relied on the judgment in Vijay Television Private Limited vs DRP. Revenue's Contention: Even if the averments in the writ petition were true, the Assessing Officer would be at liberty to continue proceedings and issue a fresh draft assessment order, as the limitation period for doing so had not expired.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 156,Section 274,Section 271(1)(c),Section 144C(1)

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W.P.(C) 7189/2021

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$~43 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 7189/2021

ST MICROELECTRONICS PRIVATE LIMITED ..... Petitioner

Through: Mr. Vishal Kalra, Advocate.

versus

THE NATIONAL FACELESS ASSESSMENT CENTRE & ANR. ..... Respondents

Through: Mr. Ruchir Bhatia, Advocate.

Date of Decision: 29th July, 2021

CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE NAVIN CHAWLA

J U D G M E N T

MANMOHAN, J 1. The petition has been heard by way of video conferencing. : (Oral) 2. Present writ petition has been filed challenging the final assessment order dated 22nd 3. Learned counsel for the Petitioner submits that the respondent no. 1 erred in assuming jurisdiction to pass the final assessment order dated 22 June 2021 passed under section 143(3) read with Section 144B of the Act, and the impugned notices issued under Section 156 and Section 274 read with section 271(1)(c) of the Act by the Respondent No. 1 in the case of the petitioner for Assessment Year [AY] 2016-17 and all proceedings initiated pursuant thereto. nd June 2021 under Section 143(3) read with Section 144B of the Act without Digitally Signed By:JASWANT SINGH RAWAT Signing Date:01.08.2021 12:59:49 Signature Not Verified

W.P.(C) 7189/2021

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adhering to the conditions laid down in case of an eligible assessee as per Section 144C(1) of passing first a draft assessment order. In support of his submission, he relies upon the judgment in the case of Vijay Television Private Limited vs DRP: [2014] 369 ITR 113 (Mad) wherein it has been held as under:- “33...In any event, such an order dated 26.03.2013 passed by the second respondent can only be construed as a final order passed in violation of the statutory provisions of the Act. The corrigendum dated 15.04.2013 is also beyond the period prescribed for limitation. Such a defect or failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the corrigendum dated 15.04.2013. By issuing the corrigendum, the respondents cannot be allowed to develop their own case. (emphasis supplied)”

4.

Issue notice. Mr. Ruchir Bhatia, learned counsel for the Revenue accepts notice. He states that even if the averments in the writ petition are believed to be true then also the respondent no. 1 would be at liberty to continue with the proceeding and issue a fresh draft assessment order, as in the present case the limitation period for issuance of the same has not expired. 5. This Court is of the view that it is a settled law that prior to passing a final assessment order, the Assessing Officer has to mandatorily pass and forward a draft assessment order to the Assessee under Section 144C(1) of the Act. [See: DCIT v. Control Risks India Pvt. Ltd. [2019] 264 Taxman 291 (SC) upholding the decision of the High Court in Control Risks India Pvt. Ltd. Vs. DCIT : [2019] 107 taxmann.com 82 (Del.), Turner International Pvt. Ltd. V. DCIT [2017] 398 ITR 177 (Del), JCB India Ltd. Digitally Signed By:JASWANT SINGH RAWAT Signing Date:01.08.2021 12:59:49 Signature Not Verified

W.P.(C) 7189/2021

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V. DCIT [2017] 398 ITR 189 (Del), International Air Transport Association v. DCIT [2016] 290 CTR 46 (Bom), CIT v. C-Sam (India) P. Ltd. [2017] 398 ITR 182 (Guj)] 6. Keeping in view the aforesaid, the impugned Assessment Order dated 22nd 7. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail June, 2021 and impugned notices under Section 156, 274 read with Section 271(1)(c) of the Act for Assessment Year 2016-2017 are set aside and the matter is remanded back to the Assessing Officer who shall issue a draft assessment order within two weeks and grant an opportunity of hearing to the petitioner and pass a reasoned order in accordance with law. With the aforesaid direction, the present writ petition stands disposed of.

MANMOHAN, J

NAVIN CHAWLA, J JULY 29, 2021 AS Digitally Signed By:JASWANT SINGH RAWAT Signing Date:01.08.2021 12:59:49 Signature Not Verified

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