2018 (12) TMI 764 - HC - Income Tax

Validity of assessment - non issue of Draft Assessment Order corrected by issuing a corrigendum to a final Assessment Order - Held that - The time to pass any order, would expire in the present facts on 31st March, 2014, however, in case a Draft Assessment Order is issued, then the time to pass a final Assessment Order gets extended to one month after the passing of the directions by the DRP in terms of Section 144C(13) of the Act. Nevertheless, the Draft Assessment Order should have in the present facts been passed before 31st March, 2014 in terms of Section 153A(2A). In this case, undisputedly, a final order was passed on 12th March, 2014 and is being sought to be corrected by issue of corrigendum on 16th April, 2014 i.e. after the time to pass the Draft Assessment Order has expired. In International Air Transport Association v/s. Deputy Commissioner of Income Tax 2016 (2) TMI 897 - BOMBAY HIGH COURT this Court has held that the Draft Assessment Order is necessary in terms of Section 144C(1) of the Act before the Assessing Officer can proceed to pass a final Assessment Order. In the absence thereof, the order is without jurisdiction. So far the contention on behalf of the Revenue that the Respondent was estopped from challenging the corrigendum dated 16th April, 2004, as it was accepted by it and a representation also filed to the DRP. This submission overlooks the fact that there can be no estoppel on issue of law pertaining to jurisdiction. Therefore, if the corrigendum dated 16th April, 2014 and the order dated 12th March, 2014 of the Assessing Officer is without jurisdiction, the same can be raised at any time and the principle of estoppel will not apply. Mere consent of parties does not bestow jurisdiction, if the order is beyond jurisdiction. Therefore, we do not find any substance in this objection of the Revenue.

Summary

Issues:
Challenge to the jurisdiction of the Tribunal to entertain objection on assessment order validity.

Analysis:
The case involved a challenge to an assessment order dated 29th May, 2015 passed by the Income Tax Appellate Tribunal for the Assessment Year 2007-08. The key issue raised was whether the Tribunal was correct in considering the objection that the assessment order was without jurisdiction, null, void, and unenforceable. The Respondent, engaged in the business of software development and IT services, had faced assessment proceedings resulting in various additions. The Tribunal had set aside an earlier assessment order as the Dispute Resolution Panel had not addressed the objections. Subsequently, a new assessment order was passed, but a corrigendum was issued later, converting it into a draft order. The Respondent challenged this before the DRP, leading to a final assessment order dated 9th January, 2015, which was then appealed before the Tribunal.

The Tribunal found that the corrigendum issued after the expiration of the time to pass the assessment order was not permissible, following the decision of the Madras High Court in a similar case. The Tribunal held that the Assessing Officer had failed to follow the directions of the Tribunal, rendering the subsequent proceedings without jurisdiction. The Appellant argued that the Respondent's acceptance of the corrigendum precluded them from claiming the order was null and void due to the time limit. However, the Court emphasized the procedural requirements for determining the ALP of international transactions and the necessity of a draft assessment order before a final order can be passed.

The Court cited relevant sections of the Income Tax Act and legal precedents to support its decision that the order was indeed without jurisdiction. It rejected the Appellant's argument of estoppel based on the Respondent's acceptance of the corrigendum, stating that consent does not confer jurisdiction if the order is beyond the legal limits. The Court affirmed the Tribunal's decision that the Assessing Officer had exceeded the scope of the remand by the Tribunal, as the reference to the TPO for fixing the ALP was unnecessary. Ultimately, the Court dismissed the appeal, finding no substantial question of law in the case.

In conclusion, the judgment highlighted the importance of procedural compliance in assessment proceedings, emphasizing the need for a valid draft assessment order before passing a final order. It underscored the jurisdictional limitations on tax authorities and the significance of following tribunal directions. The case serves as a reminder of the legal principles governing tax assessments and the consequences of non-compliance with statutory requirements.