M/s. A B Sandvik Coromant, Pune v. Assistant Commissioner of Income-tax(IT), Circle-1, Pune

ITA 224/PUN/2020 | 2007-2008
Pronouncement Date: 28-02-2020 | Result: Allowed

Appeal Details

RSA Number 22424514 RSA 2020
Assessee PAN AABCA5161C
Bench Pune
Appeal Number ITA 224/PUN/2020
Duration Of Justice 21 day(s)
Appellant M/s. A B Sandvik Coromant, Pune
Respondent Assistant Commissioner of Income-tax(IT), Circle-1, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2020
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-02-2020
Last Hearing Date 27-02-2020
First Hearing Date 27-02-2020
Assessment Year 2007-2008
Appeal Filed On 07-02-2020
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C PUNE BEFORE SHRI R.S. SYAL VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI JUDICIAL MEMBER ITA NOS.224 TO 226/PUN/2020 / ASSESSMENT YEARS : 2007-08 2009-10 & 2010-11 AB SANDVIK COROMANT C/O. SANDVIK ASIA PRIVATE LIMITED MUMBAI PUNE ROAD DAPODI PUNE 411 012 PAN : AABCA5161C VS. ACIT (IT) CIRCLE-1 PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL VP : THESE THREE APPEALS BY THE ASSESSEE RELATE TO THE ASSESSMENT YEARS 2007-08 2009-10 & 2010-11. SINCE COMMON ISSUES ARE RAISED IN THESE APPEALS WE ARE THEREF ORE PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FO R THE SAKE OF CONVENIENCE. A.Y. 2007-08 : 2. GROUND NO.2 CHALLENGES THE VALIDITY OF THE FINAL ASSESSMENT ORDER PASSED IN REMAND PROCEEDINGS WITHOUT ASSESSEE BY SHRI NIKHIL PATHAK REVENUE BY SHRI PRAKASH BHATT DATE OF HEARING 27-02-2020 DATE OF PRONOUNCEMENT 28-02-2020 ITA NOS.224 TO 226/PUN/2020 AB SANDVIK COROMANT 2 FOLLOWING STATUTORILY MANDATED PROCEDURE REQUIRING THE PASSING OF DRAFT ORDER AS WELL. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN ON 13-11-2017 DECLARING TOTAL INCOME OF RS.14 24 369/-. DRAFT ORDER WAS NOTIFIED ON 29-12-2010 PROPOSING ADDITIONS OF RS.32 40 082/- ON ACCOUNT OF RECE IPT OF LICENSE FEE FOR CAD/CAM SOFTWARE AND RS.25 92 070/- ON ACCOUNT OF RECEIPT OF SERVICES. THE DISPUTE RESOLUTION PANE L (DRP) AFFIRMED THE DRAFT ORDER FOLLOWED BY THE FINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) U /S. 144C(13) R.W.S. 143(3) OF THE INCOME-TAX ACT 1961 (HEREINAFTER ALSO CALLED ` THE ACT). THE ASSESSEE ASSAILE D THE FINAL ASSESSMENT ORDER BEFORE THE TRIBUNAL. VIDE ORDER D ATED 16-05-2016 THE TRIBUNAL ALLOWED THE ASSESSEES CLAIM ON ADDITION OF RS.25 92 070/- WHICH WAS TREATED BY THE AO AS FEES FOR TECHNICAL SERVICES. AS REGARDS THE OTHER ISSUE OF RECEIPT OF LICENSE FEE FOR CAD/CAM SOFTWARE AMOUNTING TO RS.32 40 082/ THE TRIBUNAL VIDE PARA NO.11 OF ITS ORDER REMITTED THE MATTER TO THE FILE OF AO FOR DECIDING IT AFRESH IN THE LIGHT OF A COORDINATE BENCH DECISION IN THE CASE OF SANDV IK ITA NOS.224 TO 226/PUN/2020 AB SANDVIK COROMANT 3 AUSTRALIA PTY LTD. VS. DDIT (IT). WHEN THE MATTER CAME UP BEFORE THE AO IN THE SECOND ROUND AN ORDER U/S.143(3) R.W.S. 254 OF THE ACT WAS PASSED ON 26-12-2017 REPEATING THE ADDITION OF RS.32 40 082/- MADE IN THE ORIGINAL ASSESSMENT ORDER ON ACCOUNT OF RECEIPT OF LICENSE FEE FOR CAD/CAM SOFTWARE. THE ASSESSEE REMAINED UNSUCCESSFUL BEFORE TH E LD. CIT(A). AGGRIEVED THEREBY THE ASSESSEE HAS COME UP I N APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THE CONTENTION RAISED ON BEHAL F OF THE ASSESSEE IS THAT THE AO IN THE SECOND ROUND OF THE E XTANT PROCEEDINGS FLOWING FROM THE ORDER OF THE TRIBUNAL RESTOR ING THE ISSUE FOR A FRESH DETERMINATION OUGHT TO HAVE FIRST PAS SED THE DRAFT ORDER BEFORE THE FINAL ORDER WHICH HE DID NOT. WE HAVE NOTICED FROM THE MATERIAL ON RECORD THAT THE AO STRAIGHTAWAY PASSED THE IMPUGNED ORDER U/S. 143(3) R.W.S . 254 OF THE ACT ON 26-12-2017 CONTAINING A DIRECTION TO CHARGE INTEREST AS PER LAW AND ALSO INITIATING PENALTY PROCEEDINGS. THUS IT IS SEEN THAT IN THE CONSEQUENTIAL FRESH PROCEEDINGS FOLLOWING THE TRIBUNAL ORDER RESTORING THE ISSUE TO THE AO FOR ITA NOS.224 TO 226/PUN/2020 AB SANDVIK COROMANT 4 FRESH DETERMINATION THE AO CAME TO PASS THE FINAL ASSESSME NT ORDER DIRECTLY WITHOUT PASSING ANY DRAFT ORDER. NON-PASSIN G OF THE DRAFT ORDER DEPRIVED THE ASSESSEE FROM APPROACHING TH E FORUM OF THE DRP FOR REDRESSAL OF ITS GRIEVANCES. THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT VS. LIONBRIDGE TECHNOLOGIES PVT. LTD. (2019) 260 TAXMAN 273 (BOM.) HAS HELD THAT PASSING OF DRAFT ORDER EVEN IN RESTORED PROCEE DINGS IS MANDATORY WITHOUT WHICH THE FINAL ASSESSMENT ORDER IS INVALIDATED. IN TURNER INTERNATIONAL INDIA PVT. LTD. VS. DCIT (2017) 398 ITR 177 (DELHI) THE TRIBUNAL REMANDED MATTER TO AO FOR UNDERTAKING TRANSFER PRICING EXERCISE AFRESH AND TH EN FRAMING THE ASSESSMENT IN ACCORDANCE WITH LAW. PURSUANT TO SUCH AN ORDER THE AO PASSED THE FINAL ASSESSMENT ORDER CONFIRMING THE ADDITION AS ORIGINALLY PROPOSED BY THE TPO. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER ON THE GROU ND THAT THERE WAS NON-COMPLIANCE WITH THE MANDATORY PROVISION CONTAINED IN SECTION 144C(1) REQUIRING THE AO TO FIRST NOTIFY THE DRAFT ASSESSMENT ORDER. COUNTENANCING THE ASSESSEES STAND THE HONBLE HIGH COURT HELD THAT FAILURE BY AO TO ADHERE TO MANDATORY REQUIREMENT OF SECTION 144C (1) AND F IRST PASSING DRAFT ASSESSMENT ORDER WOULD RESULT IN INVALIDATION OF ITA NOS.224 TO 226/PUN/2020 AB SANDVIK COROMANT 5 FINAL ASSESSMENT ORDER AND THE CONSEQUENT DEMAND NOTICES A ND PENALTY PROCEEDINGS. AT THIS STAGE IT IS RELEVANT TO MENTION THAT THE HONBLE SUPREME COURT HAS DISMISSED THE DEPARTMENTAL SLP IN THE CASE OF CIT VS. CONTROL RISKS INDIA PVT. LTD. (2014) 408 ITR 23 (STATUTE) WHEREIN THE HONBLE HIGH COURT TOOK THE SAME VIEW FOLLOWING TURNER INTERNATIONAL INDIA PVT. LTD. (SUPRA) AND DECLARED THE FINAL ASSESSMENT ORDER INVALID WHICH WAS PASSED WITHOUT THE DRAFT ORDER. AS ADMITTEDLY NO DRAFT ORDER HAS BEEN PASSED IN THE SECOND RO UND OF PROCEEDINGS IN THE INSTANT CASE WHEREIN THE AO DIRECTLY PROCEEDED TO PASS THE FINAL ASSESSMENT ORDER WE DECLARE THE ASSESSMENT ORDER AS INVALID. A.YRS. 2009-10 & 2010-11 : 5. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT APPEALS ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF THE APPEAL FOR THE ASSESSMENT YEAR 2007 -08. FOLLOWING THE VIEW TAKEN HEREINABOVE WE DECLARE THE FINAL ASSESSMENT ORDERS INVALID FOR NOT HAVING FOLLOWED THE STATUTORILY MANDATED PROCEDURE OF FIRST PASSING THE DRAFT OR DERS ITA NOS.224 TO 226/PUN/2020 AB SANDVIK COROMANT 6 IN THE PROCEEDINGS FLOWING FROM THE TRIBUNAL ORDER RESTORING THE MATTER TO THE FILE OF AO FOR A FRESH DECISION. 6. IN THE RESULT ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDE NT PUNE; DATED : 28 TH FEBRUARY 2020 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-13 PUNE 4. THE CIT (IT/TP) PUNE 5. / DR C ITAT PUNE 6. / GUARD FILE / BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY / ITAT PUNE ITA NOS.224 TO 226/PUN/2020 AB SANDVIK COROMANT 7 DATE 1. DRAFT DICTATED ON 27-02-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27-02-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *