Capsugel Healthcare Limited vs. ACIT (ITAT Delhi)

DATE: September 30, 2014 (Date of pronouncement)
DATE: October 18, 2014 (Date of publication)
AY: 2007-08
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Failure to pass draft assessment order after TPO's order renders proceedings void. SCN cannot be equated with draft assessment order

Even though a transfer pricing adjustment under section 92CA(1) was made to the income of the assesse, and accordingly the assessee is covered by the provisions of Section 144C(15), the Assessing Officer did not furnish to the assessee a draft assessment order, before passing a final assessment order. The assessee was thus deprived of an opportunity of approaching the Dispute Resolution Panel. Under Section 144 (C) of the Act, it is evident that the assessing officer is required to pass only a draft assessment order on the basis of the recommendations made by the TPO after giving an opportunity to the assessee to file their objections and then the assessing officer shall pass a final order. Where there is an omission on the part of the assessing officer to follow the mandatory procedures prescribed in the Act, such an omission cannot be termed as a mere procedural irregularity and it cannot be cured. The impugned assessment order is a legal nullity. The show cause notice issued by the Assessing Officer, before making the ALP adjustment cannot be treated as a draft assessment order nor the assessee could have approached the DRP against the same (Vijay Television Pvt Ltd Vs DRP [(2014) 46 taxmann.100 (Mad) followed].

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