2018 (11) TMI 1629 - AT - Income Tax

Transfer pricing proceedings. u/s. 143(3) r.w.s. 144C without passing draft assessment order - Order of TPO u/s. 92CA(3) and proposed addition in respect of international transactions entered into by the assessee - HELD THAT - The provisions of section 144C(1) mandates that the Assessing Officer shall pass draft assessment order. The assessee within a period of 30 days of the receipt of the draft assessment order shall file his acceptance of variation or file his objections against the adjustments with the Dispute Resolution Panel (DRP). In the present case the Assessing Officer has directly passed the final assessment order usurping assessee s valuable right to file objections before the DRP against the draft assessment order. As in the case of International Air Transport Association Vs. DCIT 2016 (2) TMI 897 - BOMBAY HIGH COURT has held that the final assessment order passed without draft assessment order is without jurisdiction. In view of the settled legal position we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in quashing the assessment order dated 28-03-2013 passed u/s. 143(3) r.w.s. 144C of the Act. Accordingly the impugned order is upheld and the appeal of the Revenue is dismissed being devoid of any merit.

Summary

Issues:
1. Passing final assessment order without passing draft assessment order in transfer pricing proceedings.

Analysis:
The appeal by the Revenue was against the order of Commissioner of Income Tax (Appeals) for the assessment year 2009-10. The case involved international transactions, and the Transfer Pricing Officer (TPO) proposed an adjustment in respect of these transactions. The Assessing Officer passed a final assessment order without first passing a draft assessment order, which led to a dispute. The Commissioner of Income Tax (Appeals) held that the final assessment order passed without a draft assessment order is without jurisdiction, citing relevant legal precedents.

The Revenue raised several grounds in the appeal, arguing that the Assessing Officer had indeed passed a draft assessment order, and any defects were curable under the provisions of the Income Tax Act. They also contended that the assessee's conduct should be considered in the context of the proceedings. However, the assessee's representative cited a previous case where it was held that passing a final assessment order without a draft assessment order is unlawful.

The Tribunal considered the submissions from both sides and examined the orders of the authorities below. The key issue was whether the Assessing Officer erred in passing the final assessment order without a draft assessment order in transfer pricing proceedings. The Tribunal noted that the Assessing Officer's actions violated the mandatory provision of passing a draft assessment order under section 144C(1) of the Income Tax Act. Legal precedents were cited to support the position that final assessment orders passed without a draft assessment order are invalid.

In light of the legal position and precedents, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) in quashing the assessment order passed without a draft assessment order. The appeal of the Revenue was dismissed for lacking merit. Additionally, the Tribunal noted that certain grounds of appeal by the Revenue were misconceived due to the absence of a relevant assessment order. Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the decision of the lower authorities.

In conclusion, the judgment focused on the procedural requirement of passing a draft assessment order before a final assessment order in transfer pricing proceedings. The Tribunal emphasized the importance of adhering to statutory provisions and legal precedents in such matters to ensure the validity and legality of assessment orders.