2018 (4) TMI 34 - AT - Income Tax

Validity of assessment u/s 144C - A.O. has failed to forward a draft assessment order to the assessee, which is in gross violation of the provisions of the Act and the procedure laid down in section 144C - Held that - From the conjoint reading of both the sections, it is quite ostensive that the appeal before the Tribunal against the assessment order would lie if it has been passed in pursuance of direction given by the DRP in terms of section 144C and no appeal can be filed before the first appellate authority in such a case. In the original round of proceedings, the appeal before the Tribunal has come through DRP route and that is the reason how this Tribunal has decided the appeal and thereafter has remanded the matter back to the file of the AO/TPO. Once an appeal has been disposed of by the Tribunal by remanding back the matter before the A.O. to be pass fresh assessment order in accordance with the law, then it relegates back to the stage of assessment proceedings as if it is a fresh assessment which has to be done by the A.O. Even if the matter is remanded with specific direction or purpose of verification or re-computation etc., then also the A.O. has to give effect to such direction and pass a fresh assessment order thereby determining the income of the assessee and work out the tax demand accordingly. If the assessee is aggrieved by such an assessment order giving effect to the appellate order, then in that case, the only remedy open for appeal is before the first appellate authority in terms of section 246 and 246A.

Summary

Issues Involved:
1. Legality of the final assessment order passed without issuing a draft assessment order.
2. Jurisdiction and maintainability of the appeal before the Tribunal.
3. Appropriate forum for filing the appeal.

Issue-Wise Detailed Analysis:

1. Legality of the Final Assessment Order:
The primary issue raised by the assessee was the legality of the final assessment order dated 7.11.2017, passed by the Assessing Officer (A.O.) under sections 143(3) r.w.s. 254/144C without issuing a draft assessment order. The assessee contended that this was in gross violation of the provisions of the Act and the procedure laid down in section 144C. The Tribunal noted that the A.O. was required to pass a draft assessment order to allow the assessee to file objections before the Dispute Resolution Panel (DRP) within 30 days. The failure to issue a draft assessment order rendered the final assessment order null and void as per the judgments of the Hon’ble Delhi High Court in Turner International India (P.) Ltd. v. Dy. CIT [2017] 398 ITR 177 and JCB India Ltd. v. Dy. CIT [2017] 398 ITR 189. These judgments established that the requirement to pass a draft assessment order is mandatory and failure to do so results in an incurable illegality.

2. Jurisdiction and Maintainability of the Appeal:
The Tribunal examined whether it had jurisdiction to entertain the appeal against the final assessment order passed by the A.O. The Tribunal observed that the appeal was not filed against an order passed in pursuance of directions given by the DRP under section 144C(13). Section 253(1)(d) allows appeals to the Tribunal against orders passed in pursuance of DRP directions. Since the present assessment order was passed following a remand by the Tribunal and not through the DRP route, the Tribunal held that the appropriate remedy for the assessee was to file an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The Tribunal emphasized that the statutory remedy of appeal must be pursued before the appropriate authority as provided under the Act.

3. Appropriate Forum for Filing the Appeal:
The Tribunal concluded that the appeal should have been filed before the CIT(A) and not directly before the Tribunal. The Tribunal clarified that even if the final assessment order was passed in contravention of statutory provisions, the remedy lies in filing an appeal before the CIT(A). The Tribunal directed the assessee to seek the statutory remedy of filing a first appeal before the CIT(A). The Tribunal also noted that the assessee could seek constitutional remedy before the Hon’ble High Court under extraordinary jurisdiction if deemed appropriate.

Conclusion:
The Tribunal dismissed the appeal in limine, holding it as non-maintainable before the Tribunal. The Tribunal directed the assessee to file an appeal before the CIT(A) and stated that the CIT(A) should entertain and decide the matter in accordance with the law. The Tribunal also mentioned that the assessee could approach the Hon’ble High Court for constitutional remedy if necessary. Consequently, the appeal of the assessee was dismissed.