2023 (6) TMI 346 - AT - Income Tax

Validity of assessment order u/s 143(3) r.w.s. 144C(13) - DRP held that once the final order has been passed u/s 143(3) same cannot be annulled/modified/amended at a subsequent date on the ground that the same order passed inadvertently - HELD THAT - Surprisingly, while implementing the directions of DRP in terms of section 144C(13) AO has virtually replicated the draft assessment order, which is contrary to the statutory mandate of section 144C(13) , hence, in excess of jurisdiction or wholly without jurisdiction. Once, DRP has held that after passing of the assessment order u/s 143(3) the same cannot be annulled, modified, amended at a subsequent date, the only course left open to the AO was to implement the directions of DRP in letter and spirit and drop the assessment proceedings and nothing else. As per the scheme of the Act, once an assessment order has been passed under Section 143(3) of the Act in respect of any assessment year, the Assessing Officer cannot tinker with that assessment. The statue does not confer any powers on the AO to either withdraw or modify or substitute the assessment order passed u/s 143(3) of the Act with another assessment order. Thus the impugned assessment order passed, being wholly without jurisdiction or in excess of jurisdiction, is unsustainable, hence, deserves to be set aside - Appeal of assessee allowed.

Summary

Issues involved: Challenge to final assessment order under Section 143(3) read with section 144C(13) of the Income-Tax Act,1961 for assessment year 2017-18.

Summary:
The appeal was filed by the assessee challenging the final assessment order dated 27.06.2022. The primary issue raised was the non-compliance of the directions of the Dispute Resolution Panel (DRP) by the Assessing Officer. The assessee contended that the final assessment order was invalid as it was passed without following the DRP's directions. The DRP had upheld the assessee's objection regarding the validity of the draft assessment order. The Assessing Officer, however, repeated the draft assessment order in the final assessment order, contrary to the DRP's directions.

The DRP's directions were clear that once the final assessment order had been passed, it could not be annulled, modified, or amended at a subsequent date. The Assessing Officer's replication of the draft assessment order in the final assessment order was deemed to be without jurisdiction or in excess of jurisdiction. The Tribunal held that under the Act, once an assessment order is passed, the Assessing Officer cannot alter it arbitrarily. The Assessing Officer's actions were found to be unsustainable and the assessment order was set aside and quashed. The appeal was allowed based on these findings.