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6. He further submits that on receipt of the objections under Section 144C(2) of the IT Act, DRP shall issue directions under Section 144C(5) of the IT Act to the Assessing Offcer providing guidance to enable completion of the assessment, which directions are binding upon the assessee under Section 144C(10) of the IT Act. He submits that the Assessing Offcer has to pass the fnal Assessment Order under Section 143(3) read with Section 144(13) of the IT Act, in conformity with the directions issued by the DRP and that Respondent No.2 is not authorised to pass any fnal order without the directions of the DRP.

(ii) any non-resident not being a company, or any foreign company.

20. Whether the provisions of Section 144C(1) of the IT Act are mandatory in nature came to be considered by the Andhra Pradesh High Court in the case of M/s. Zuari Cement Limited Vs. Mugdha 16 of 30 17 Judgment-WPL 11293-21.odt The Assistant Commissioner of Income Tax, Circle-2(1), Tirupathi (Andhra Pradesh High Court) (supra). This was a case where the Transfer Pricing Offcer had passed an order under Section 92CA(3) of the IT Act recommending a Transfer Pricing Adjustment, which was forwarded to the Petitioner. The Respondent -Assessing Offcer, after receiving the order of the TPO and after examining the information furnished by the Petitioner therein, passed the Assessment Order dated 23rd December, 2011 under Section 143(3) of the IT Act raising a demand of Rs.27,40,71,913/- and a demand notice for the said amount was issued under Section 156 of the IT Act. The Petitioner submitted a letter dated 20 th January, 2012 raising objections to the said assessment order contending that the provisions of Section 144C of the IT Act were not followed before passing the order. The Andhra Pradesh High Court, after considering the provisions of Section 144C(1) of the IT Act, held that provisions of Section 144C are mandatory as the Assessing Offcer under Section 144C(1) is mandated to frst pass a draft assessment order, communicate it to the assessee, hear his objections and then complete assessment. The following paragraphs from Pages 7, 8 and 9 of the said decision are relevant and are quoted as under :-

(iii) therefore, Section 292B of the IT Act cannot save an order passed in breach of the provisions of Section 144C(1), the same being an incurable illegality.

26. It is important to note that Section 144C(1) is a non- obstante provision, which requires its compliance irrespective of the other provisions that may be contained in the IT Act. There is no dispute that Petitioner is an eligible assessee and also there is no dispute as to the applicability of Section 144C. It is also not in dispute that the fnal Assessment Order has been passed without the draft Assessment Order as contemplated under Section 144C (1) of the IT Act. The Assessing Offcer ought to have in the frst instance forwarded a draft of the proposed order of assessment to Petitioner, as there was a proposed variation prejudicial to the Mugdha 26 of 30 27 Judgment-WPL 11293-21.odt interest of the assessee. This important step has been completely omitted by the Respondent taking away a very necessary right of Petitioner to fle objections to the proposed variation with the DRP and the Assessing Offcer, which in our view, strikes to the root of the procedure contemplated by Section 144C.

28 Judgment-WPL 11293-21.odt length price considered as Nil by Petitioner and to that extent the said adjustment was evidently prejudicial to the interest of Petitioner. Depriving Petitioner of this valuable right to raise objection before DRP would be denial of substantive rights to the assessee, for which, in our view, the Assessing Offcer has no power under the statute, as the provision clearly mandates the Assessing Offcer to pass and furnish a draft Assessment Order in the frst instance in such a case. The legislature, in our view, has intended to give an important opportunity to Petitioner, who is an eligible assessee, which in our view, has been taken away. In our view, failure to follow the procedure under Section 144C(1) would be a jurisdictional error and not merely procedural error or a mere irregularity. The Assessment Order has not been passed in accordance with the provisions of Section 144C of the IT Act. This is not an issue, which involves a mistake in the said order, but it involves the power of the Assessing Offcer to pass the order. By not following the procedure laid down in Section 144C(1) to pass and furnish a draft Assessment Order to Petitioner and directly passing a fnal Assessment Order and without giving Petitioner an opportunity to raise objections before the DRP, there is a complete contravention of Section 144C, the Assessing Offcer having wrongly Mugdha 28 of 30 29 Judgment-WPL 11293-21.odt assumed jurisdiction to straight away pass the fnal order. This is not a mere irregularity but an incurable illegality. Even the provisions of Section 292B of the IT Act would not protect such an order as Section 292B of the IT Act cannot be read to confer jurisdiction on the Assessing Offcer, where none exists. The Supreme Court decision in the case of Income-Tax Offcer Vs. M. Pirai Choodi; [2011] 334 ITR 262 (SC) referred to in the Revenue's reply is also not applicable to the issue at hand as that was a case where the assessee was not given an opportunity to cross-examine the concerned witness and which assessee also had a statutory appellate remedy which the assessee had failed to avail of, whereas there is no such right available to Petitioner in this case. In fact, Petitioner has lost a substantive right due to the failure of the Respondents to pass and forward a draft assessment order in the frst instance on a variance, prejudicial to the interest of Petitioner. In our view, this is clearly a case of jurisdictional error. The fnal assessment order passed by the Assessing Offcer stands vitiated on account of lack of jurisdiction, which is incurable and deserves to be set aside as void ab initio.