The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that assessing officers could not pass a final assessment order without complying with the mandatory requirements under Section 144C of the Income Tax Act, 1961. Therefore, the Bench allowed the appeal filed by the assessee.
The assessee, Defsys Solutions Pvt Ltd, filed the appeal before the tribunal against the final assessment order passed without complying with the mandatory requirements under Section 144C of the Income Tax Act.
The fundamental facts are that the Assessing Officer referred to section 143(3) r.w.s. 144C of the Act when making the order dated 28.06.2022, calling it an “Assessment order.” Furthermore, the AO directed to calculate tax and charge interest as per the I.T. Act and further directed to give credit for prepaid taxes. As if this was not enough, he initiated penalty proceedings u/s 271AAB(1A)(b) r.w.s 274 of the Act.
During the proceedings, Neelesh Kumar Jain, Counsel for the assessee, argued that the assessment order so framed by the Assessing Officer, by any stretch of imagination, could not be called a “draft assessment order” and is, therefore, in violation of the provisions of Section 144C of the Income Tax Act. Vipul Kashyap, Counsel for Revenue, argued that the wording used by the Assessing Officer when proposing the contested additions makes it clear that the order, which has been claimed to be a non-draft assessment order, is, in fact, a draft assessment order. The order also mentioned that “if the assessee wants to file objections against the said draft order, he may do so by filing objections before the DRP within 30 days from the date of the issue of this order.”
The Tribunal, while considering the appeal, observed that while framing the said draft assessment order, the Assessing Officer not only issued and served a demand notice but also initiated the penalty proceedings. Thus, without hesitation, the tribunal declared that the proceedings came to an end on June 28, 2022, when the assessee received a demand notice and a penalty notice under Section 274 of the Act. As a result, any further proceedings and orders are no longer valid.
After reviewing the facts and records, the two-member bench of N.K. Billaiya (Accountant Member) and Astha Chandra (Judicial Member) held that assessing officers could not pass final assessment orders without complying with the mandatory requirements under Section 144C of the Income Tax Act.
Therefore, the Bench allowed the appeal filed by the assessee.
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