AO cannot Pass Final Assessment Order without Passing Draft as Prescribed u/s 144C (1) of Income Tax Act: ITAT quashes Order [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT )  quashed Assessing Officer ( AO )’s  final assessment order for failing to pass draft as required under Section 144C(1) of the Income Tax Act,1961.

The Assessee during the relevant assessment year has entered into some international transactions and, therefore, the case of the Assessee was referred by the ITO 7(3)(2), Mumbai on 19/07/2013 to the TPO / Addl. Commissioner of Income-tax, Transfer Pricing 4(3), Mumbai for the computation of arm’s length price  in relation to the international transactions as detailed in audit report in Form No.3CEB.

The Assessee challenged the assessment order before the  Commissioner, who partly allowed the appeal of the Assessee by sustaining the addition to the tune of Rs.36,15,481/- and Rs.3,63,846/- on account of sale margin qua Vapi TT and Vapi Rugs and interest on loan given; however, deleted the other remaining additions, including the disallowance of Rs.6,17,03,974/- made on account of disallowance  Under Section 144C(1) of the Income Tax Act,1961

The AO failed to first pass a draft assessment order Under Section 144C (1) of the Income Tax Act, 1961 and forward a copy thereof to the Appellant, and instead, has directly passed the impugned final assessment order dated 13-3-2015 under Section 143(3) r.w.s. 92CA of the Income Tax Act, resulting in a substantive lapse on part of the AO and thus, rendering the said final assessment order devoid of jurisdiction, illegal and bad in law.”

The two member bench of the tribunal comprising Mrs. Pathmavathy (Accountant member) and Narendar Kumar Choudhri (Judicial member) observed that the final assessment order dated 13/03/2015 under Section 143(3) read with section 92CA (4) of the Income Tax Act passed by the Assessing Officer, without passing the draft assessment order as prescribed Under Section 144C (1) of the Income Tax Act, 1961, was without jurisdiction and void-ab-initio. Hence, the assessment order itself was quashed.

ITAT already quashed the assessment order, and therefore, not delving into the merits of the case of the Assessee as well as the case of the Revenue as the appeal filed by the Revenue was becoming infructuous.

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