2018 (8) TMI 2042 - HC - Income Tax

Assessment u/s 144(C) - draft assessment order not issued - HELD THAT - We notice that in the JCB India Limited 2017 (9) TMI 673 - DELHI HIGH COURT the Court had undoubtedly stated that the order which purports to be a final one to the extent it contravenes Section 144C(3) is a nullity, however, the Court refrains from expressing anything further, which implies that the Revenue s option to proceed afresh and conclude the assessment order, is kept open. Obviously in BSC C C Joint Venture 2018 (2) TMI 1915 - DELHI HIGH COURT the Court took the matter further and directed the completion of proceedings for issuance of final assessment order. Notably, however, BSC C C Joint Venture(supra) was premised upon consent of the parties to treat the final order a draft order. However, the consent is not forthcoming in the present case. In the present circumstances, the Court hereby quashes the impugned order of the A.O. dated 14.11.2017. The period summoned by the present proceedings under Article 226 of the Constitution of India shall hereby be excluded from reckoning the period of limitation for the purposes of making a fresh assessment order. The A.O. shall proceed in accordance with law and complete the final assessment under Section 144(C) of the Income Tax Act, 1961, in accordance with law.

Summary

Issues:
1. Failure to issue a draft assessment order by the Assessing Officer (A.O.) after proposals from the Transfer Pricing Officer (TPO).
2. Contravention of express provisions of law leading to the passing of a final assessment order without following due process.

Analysis:
Issue 1: The A.O. passed a final assessment order without issuing a draft order despite proposals from the TPO, which was not in compliance with the procedure. The timeline of events leading to the final assessment order was detailed, highlighting the failure to follow the correct sequence of actions as required by law. The ITAT's involvement and subsequent remittance of the matter to the TPO further complicated the process, ultimately resulting in the A.O. passing a final order instead of a draft assessment order.

Issue 2: The petitioner relied on a previous judgment to argue that orders contravening express provisions of law should be deemed null and void. The respondent, however, argued that the defect was curable and cited a different case to support their stance. The court examined the precedents cited by both parties and concluded that while the impugned order was quashed, the period during the legal proceedings would be excluded from the limitation period for making a fresh assessment order. The court directed the A.O. to proceed in accordance with the law and complete the final assessment under the Income Tax Act, keeping all rights and contentions of the parties open.

Overall, the judgment highlighted the importance of following due process in tax assessments, the consequences of non-compliance with statutory provisions, and the court's authority to intervene in such matters to ensure fair and lawful proceedings.