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2015 (10) TMI 390 - AT - Income TaxValidity of assessment order passed u/s 144C(2) - whether barred by limitation - determination of the Arms Length Price of the international transaction - Held that - Section 144C of the I.T. Act deals with the circumstances under which the AO can make a reference to the DRP and the procedure to be followed by the AO in making a reference to the Dispute Resolution Panel and also the procedure to be followed by the DRP while dealing with the objections raised before it by the assessee and the passing of the final assessment order by the AO. In the case before us, the assessee did not file the objections before the DRP within the prescribed time and therefore, the objections are not maintainable until the delay is condoned by the DRP. We find that the DRP has refused to condone the delay in raising of the objections before it by the assessee and therefore it amounts to non admission of the grounds and adjudication by the DRP. Therefore, there are also no directions issued by the DRP for the guidance of the AO to enable him to complete the assessment. Therefore, the final assessment order passed by the AO after rejection of the assessee s objections by the DRP in limini is thus not sustainable. The final assessment order passed by the AO dated 7.1.2015 allegedly u/s 143(3) r.w.s. 92CA(3) r.w.s. 144C(5) is therefore to be quashed. See Bank of America NA Versus Assistant Director of Income-tax (IT) Cir. 3(2), Mumbai 2012 (12) TMI 375 - ITAT MUMBAI - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of ITAT to examine new legal questions. 2. Timeliness and validity of the final assessment order under section 143(3) read with sections 92CA(3) and 144C(5). 3. Validity of the assessment order in the absence of directions from the Dispute Resolution Panel (DRP). Issue-wise Detailed Analysis: 1. Jurisdiction of ITAT to Examine New Legal Questions: The assessee raised additional grounds of appeal, citing the Supreme Court's decision in the case of National Thermal Power Co. Ltd. v. CIT, which allows ITAT to examine new legal questions not previously raised before the Assessing Officer (AO). The Tribunal agreed to admit and adjudicate these additional grounds since the facts were already on record. 2. Timeliness and Validity of the Final Assessment Order: The assessee argued that the final assessment order dated 07.01.2015 was barred by limitation under section 144C(2) and thus non-est in law. The AO had passed a draft assessment order on 14.03.2014 following the Transfer Pricing Officer's (TPO) adjustment proposal. The assessee failed to file objections before the DRP within the specified 30-day period, leading to the AO passing the final assessment order. The Tribunal examined the statutory provisions under section 144C, which require the AO to pass the final assessment order within one month from the end of the month in which the period for filing objections expires. As the assessee did not file objections within the prescribed time, the AO was required to pass the final assessment order accordingly. However, the delay in filing objections by the assessee was not condoned by the DRP, rendering the objections inadmissible and the final assessment order unsustainable. 3. Validity of the Assessment Order in the Absence of Directions from the DRP: The Tribunal found that the DRP's refusal to condone the delay meant no directions were issued for the AO to complete the assessment. This lack of directions invalidated the final assessment order. The Tribunal referenced a similar case, Bank of America NA v. Asstt. Director of Income Tax, where the DRP's non-issuance of directions led to the AO lacking jurisdiction to pass the final assessment order. Consequently, the Tribunal quashed the final assessment order dated 07.01.2015. Conclusion: The Tribunal concluded that the final assessment order passed by the AO was unsustainable due to the absence of directions from the DRP. Additionally, the Tribunal did not adjudicate other grounds of appeal on merits, deeming it an academic exercise. The assessee's appeal was allowed, and the assessment order was quashed. Order Pronounced: The order was pronounced in the Open Court on 4th September 2015.
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