9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (9) TMI 157 - HC - Income TaxValidity of final assessment order passed without passing a draft assessment order - mandation to Reference to Dispute Resolution Panel ignored - HELD THAT - It becomes pertinent to note that the issue of whether the AO could ignore the requirement of drawing up a draft assessment order and pass a final order and the same being in violation of the procedure contemplated u/s 144C appears to have arisen before our Court on previous occasions also. The consistent view which this Court appears to have taken in that respect was that a failure to frame an assessment order in draft would clearly be violative of the mandatory prescriptions of Section 144C and the final order of assessment framed in violation thereof liable to be viewed as a nullity. Validity of final assessment order passed after the expiration of the limitation period prescribed u/s 153 - As we have arrived at is that it was imperative for the AO to frame an order in draft as opposed to a final order of assessment. Any consequential direction that could be framed would have to be in consonance with the aforesaid finding. That direction would additionally and necessarily have to be in accordance with the scheme of the Act and the statutory prescriptions comprised therein. The same would clearly not warrant or justify the Court enlarging the period of limitation as statutorily prescribed. As is well settled, while courts may, where legally permissible, consider condonation of delay, they are not entitled to expand or enlarge a period of limitation as statutorily prescribed. It becomes relevant to note that Grindlays Bank 1980 (1) TMI 2 - SUPREME COURT was a decision where the Explanation to Section 153 applied and the court was mandated to exclude the period during which a stay order operated. That is not the position which obtains in these matters since the only injunction which operated was with respect to the consequential demands which stood created. There was no interim order which restrained the AO from proceeding with assessment. We thus find ourselves unable to accede to the submission addressed by the respondents on this score. Once it is conceded that the period for completion of the assessment exercise in terms of sub-sections (3) and (4) of Section 153 has expired, it would be wholly impermissible for us to expand or enlarge the period prescribed for completion of assessment. Concededly, these are also not cases where the Explanation to Section 153 was asserted to be applicable. Thus, we find it unnecessary and inexpedient to either examine or rule upon the additional challenges which were raised to the final orders of assessment including that of those orders as framed not being compliant with the time frames created by Section 153 of the Act - WP allowed.
Issues Involved:
1. Whether a final assessment order passed without passing a draft assessment order as mandated under Section 144C of the Income Tax Act, 1961, is tenable or not. 2. Whether it is mandatory for the assessing officer to pass a draft assessment order under Section 144C of the Act during remand proceedings. 3. Whether the final assessment order is valid if passed after the expiration of the limitation period prescribed under Section 153 of the Act. 4. Whether the court can remand the matter to the AO to pass a fresh order despite the expiration of the limitation period. Issue-wise Detailed Analysis: 1. Whether a final assessment order passed without passing a draft assessment order as mandated under Section 144C of the Income Tax Act, 1961, is tenable or not: The court held that the failure to pass a draft assessment order as mandated under Section 144C of the Act renders the final assessment order invalid. The court referred to numerous decisions, including JCB India Ltd. v. Deputy Commissioner of Income-tax and Another, Turner International India Pvt. Ltd. v. Deputy Commissioner of Income-tax, and Nokia India Private Limited v. Additional Commissioner of Income Tax, which consistently held that non-compliance with the draft order requirement under Section 144C is a violation of mandatory procedures and renders the final assessment order null and void. 2. Whether it is mandatory for the assessing officer to pass a draft assessment order under Section 144C of the Act during remand proceedings: The court emphasized that Section 144C is a self-contained provision that mandates the passing of a draft assessment order for eligible assessees. The court rejected the contention that the requirement could be bypassed during remand proceedings. The court cited the decision in Headstrong Services India Pvt. Ltd., which clarified that the Assessing Officer must follow the procedure of passing a draft assessment order even in remand proceedings, and failure to do so would invalidate the final assessment order. 3. Whether the final assessment order is valid if passed after the expiration of the limitation period prescribed under Section 153 of the Act: The court noted that the limitation period for completing the assessment, as prescribed under Section 153, had expired in several cases. The court held that the final assessment orders passed after the expiration of the limitation period are invalid. The court referred to the statutory prescriptions of limitation created by Section 153 and emphasized that the period for completion of the assessment exercise cannot be expanded or enlarged by the court. 4. Whether the court can remand the matter to the AO to pass a fresh order despite the expiration of the limitation period: The court rejected the contention that it could remand the matter to the AO to pass a fresh order despite the expiration of the limitation period. The court referred to the judgment of the Constitution Bench in Income Tax Officer, A Ward, Sitapur v. Murlidhar Bhagwan Das, which explained that a "finding" or "direction" must be necessary for the disposal of the appeal and cannot be used to extend the period of limitation. The court held that it would be impermissible to expand or enlarge the period prescribed for completion of assessment under Section 153. Conclusion: The court allowed the writ petitions and quashed the impugned final orders of assessment and all consequential notices issued pursuant thereto. The court upheld the view taken by the Tribunal in ITA Nos. 52/2023, 451/2024, and 454/2024, and dismissed those appeals. The petitioners were entitled to all consequential reliefs.
|
