With this appeal, the assessee has challenged the validity of the order dated 06.12.2019 framed u/s 143(3) r.w.s 144C of the [hereinafter referred to as 'the Act' for short] pertaining to Assessment Year 2015-16.
ITA No. 203/DEL/2020
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘I-1’ BENCH,
NEW DELHI [THROUGH VIDEO CONFERENCE]
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No. 203/DEL/2020
[Assessment Year: 2015-16]
M/s Mavenir India Pvt Ltd
[Previously known as M/s Comverse
Network Systems India Pvt Ltd
14th Floor, Tower B, Building No. 5
DLF Cyber City, New Delhi.
PAN : AABCC 3425 B
Circle - 2(1)
Date of Hearing: 24.09.2020
Date of Pronouncement: 28.09.2020
Assessee by: Shri Ravi Sharma, Adv
Shri Rishab Malhotra, Adv
Revenue by: Shri Sukesh Kumar Jain, CIT-DR
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
With this appeal, the assessee has challenged the validity of the order dated 06.12.2019 framed u/s 143(3) r.w.s 144C of the
[hereinafter referred to as 'the Act' for short] pertaining to Assessment Year 2015-16.
2. The challenge of the assessee is two-fold:
a) Firstly, the assessee has challenged the legality of the order dated 21.12.2018 by framing the so-called draft assessment
order. The Assessing Officer has completed proceedings by issuing demand notice and initiating penalty proceedings.
b) Second challenge is on merits of the addition, being upward adjustment on TP matte,r and additions on corporate tax matter.
4. Representatives of both the sides were heard at length. Soft copies of the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules and have also perused the judicial decisions relied upon by both the sides.
5. Briefly stated, the facts of the case are that the appellant company is engaged in the provision of software development services,
provision of professional services, provision of maintenance services, and provision of sales and post sales support services to its Associated Enterprises [AE] and third parties. In order to render services to its customers, the appellant has availed certain support and management services from its AEs during the year.
6. The return of income was filed declaring total income of Rs. 29.29 crores. The return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee. The matter was referred to the TPO who proposed TP adjustment of Rs. 16.99 crores to the income of the appellant by recomputing ALP for provision of software development services, provision of sales and post sales support services and management services.
7. On the basis of proposed adjustment, the Assessing Officer further made disallowance of deduction claimed by the assessee u/s 10AA of the Act amounting to Rs. 3.17 crores and framed an order dated 21.02.2018, which was captioned as ‘Draft Assessment Order’ 4 but was accompanied by notice of demand u/s 156 of the Act. The Assessing Officer also initiated penalty proceedings.
8. In our considered opinion, assessment proceedings concluded on 21.12.2018 and, therefore, any orders passed thereafter are non-est. In our considered view, provisions of section 144C of the Act triggers a series of steps prescribed in sub-section (2) to section 12 and as can be seen from the most relevant sub-sections (3) and (13) the assessment is complete either under subsection (3) or sub section (13).
9. Facts on record show that on 21.12.2018, the Assessing Officer quantified the taxable income and determined tax payable by issuing and serving demand notice u/s 156 of the Act. In our considered opinion, this action of the Assessing Officer has brought the proceedings to an end and the proceedings initiated u/s 144C of the Act stand concluded.
10. A perusal of Section 144C of the Act shows that the Assessing Officer shall, at the first instance, forward a draft of the proposed order of assessment and on receiving such order, the assessee may approach the DRP by raising objections. If the assessee accepts the 5 variation, then the Assessing Officer shall proceed by framing the final assessment order and if the objections are raised before the DRP, then, upon receipt of directions issued by the DRP, the assessee shall complete the assessment. However, we find that while framing the said draft assessment order, the Assessing Officer not only issued and served demand notice, but has also initiated the penalty proceedings.
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