2021 (6) TMI 830 - HC - Income Tax

Validity of assessment u/s 144C - whether the 1 st respondent was justified in passing the impugned order dated 14.11.2017 without passing a Draft Assessment Order as was done in the 1 st round of the litigation? - HELD THAT - When the law mandates a particular thing to be done in a particular manner, then it has to be done in the manner Once the case was remitted back to the respondents, it was incumbent on the part of the 1 st respondent to have passed a draft Assessment Order under section 143 (3) read with Section 92CA (4) and Section 144C (1) of theIncome Tax Act, 1961. It was not open for the 1 st respondent to bypass the statutory safeguards prescribed under the Act and thereby deny the right of the petitioner to approach the Dispute Resolution Panel. It is only thereafter, Final assessment order can be passed by the 1 st respondent to Assessing Officer. It would have been different if the appeal that was dismissed by the Income Tax Appellate Tribunal in first round of litigation We find sufficient force in the arguments advanced by the learned counsel for the petitioner. In my view, the impugned order has been passed without jurisdiction. It was passed by by passing statutory safeguards prescribed under the provisions of theIncome Tax Act, 1961. Therefore, the present Writ Petition deserves to be allowed. The impugned order is quashed and case is remitted back to the 1 st respondent to pass a Draft Assessment Order. Since the dispute pertains to the assessment years 2009- 10, the 1 st respondent shall endeavour to pass Draft Assessment Order within period of 3 month

Summary

Issues:
Challenging assessment order for assessment years 2009-10; Passing of impugned order by assessing officer; Necessity of passing a Draft Assessment Order under Income Tax Act, 1961; Jurisdictional concerns; Statutory safeguards bypassed; Opportunity to approach Dispute Resolution Panel; Compliance with remand order by Income Tax Appellate Tribunal.

Analysis:
The petitioner challenged the impugned assessment order dated 14.11.2017 for assessment years 2009-10, passed by the assessing officer, which was based on a Transfer Pricing Order dated 14.8.2017 by the Transfer Pricing Officer, pursuant to a remand order from the Income Tax Appellate Tribunal dated 21.12.2016. The petitioner contended that a Draft Assessment Order under section 143(3) read with section 92CA(4) and section 144C(1) of the Income Tax Act, 1961 should have been passed instead of the impugned order directly. The petitioner argued that bypassing the Draft Assessment Order deprived them of the opportunity to approach the Dispute Resolution Panel under section 144C of the Act.

The petitioner relied on various court decisions to support their contention, emphasizing the importance of following due process in assessment proceedings. On the other hand, the respondents defended the impugned order, stating that passing a Draft Assessment Order was not necessary as the order was pursuant to a remand order from the Income Tax Appellate Tribunal. The respondents distinguished the cases cited by the petitioner and argued that the impugned order was passed in accordance with the remand order and the provisions of the Income Tax Act, 1961.

After considering the arguments and perusing the impugned order, the court focused on the jurisdictional aspect and the necessity of following statutory safeguards. The court noted that the impugned order was passed without passing a Draft Assessment Order, contrary to the provisions of the Act and the remand order from the Tribunal. The court emphasized that when the law mandates a specific procedure, it must be followed accordingly. Therefore, the court found merit in the petitioner's arguments and concluded that the impugned order was passed without jurisdiction, warranting its quashing and remitting the case back to the assessing officer to pass a Draft Assessment Order within three months.

In conclusion, the court's judgment highlighted the significance of adhering to procedural requirements and statutory safeguards in assessment proceedings under the Income Tax Act, 1961. The decision underscored the importance of following due process and ensuring that taxpayers have the opportunity to seek resolution through the appropriate channels provided by the law.