AO fails to Implement DRP Directions while Passing Final Assessment Order: ITAT quashes Assessment Order [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order after finding that the Assessing Officer ( AO ) failed to implement Dispute Resolution Panel ( DRP ) directions while passing the final assessment order.

The AO has not implemented the directions of DRP as mandated under Section 144C (10) read with section 144C (13) of the Income Tax Act, 1961. Surprisingly, even though, the AO has reproduced the directions of DRP in the body of the assessment orders, however, he failed to implement the specific direction of  DRP and has merely done a cut paste job of the draft assessment order by repeating the additions made therein treating the receipts as FTS/FIS.

Deepak Chopra representing the assessee submitted that it is a clear case of non-implementation of directions of DRP by the Assessing Officer while framing the final assessment orders. He submitted, as per the mandate of section 144C of the Income Tax Act, every direction of  DRP is binding on the Assessing Officer and he has to pass the final assessment order in conformity with the directions of  DRP.

Further submitted, the Assessing Officer has merely repeated the contents of the draft assessment order without following the specific directions of learned DRP.

The bench stated that the non-implementation of directions of DRP in terms of Section 144C renders the final assessment order wholly without jurisdiction and void-ab initio. Therefore, assessment orders under challenge in these appeals deserve to be quashed

The coram of G.S Pannu ( Vice president ) and Sakti Jit Dey ( Vice President ) observed that the non-implementation of directions of DRP by the AO while passing final assessment orders. There is no gainsaying that in the hierarchy of tax administration, the DRP holds a higher position than the Assessing Officer. Therefore, for that reason and as per statutory mandate, the Assessing Officers are bound to follow the directions of DRP.

It was noted that the repeated instances of non-implementation of directions from the Dispute Resolution Panel ( DRP ) by the Assessing Officers highlight a deficiency in proper orientation and training. The ITAT expressed hope and expectation that the relevant authorities would investigate this matter and address it with the seriousness it merits. Consequently, the appeal of the assessee was granted.

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