Draft Assessment barred by Limitation is void ab initio: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that the draft assessment passed under section 144C of the Income Tax Act, 1961 is barred by limitation, and therefore, the same is void ab initio.

The assessee, A.T. Kearney Ltd. challenged the validity and legality of the impugned assessment on the ground that the provisions of section 144C of the Act introduced by the Finance (No. 2) Act, 2009 with effect from April 1, 2009, has no application for the impugned assessment year.

The original assessment for the year under consideration was completed by the AO vide order dated March 28, 2006, framed under section 143(3) of the Act. The said assessment order was assailed in appeal before the CIT(A) but without any success. The matter traveled up to the Tribunal and the Tribunal vide order dated August 31, 2009, set aside the assessment for denovo consideration by the AO. In the proceedings to give effect to the order of the Tribunal the Assessing Officer passed draft assessment order on December 30, 2010, the DRP issued Instructions on August 10, 2011, and culminated in the final assessment order dated August 19, 2011, which is impugned in the present appeal.

The coram of Judicial Member, Kuldip Singh, and Accountant Member, N.K.Billaiya noted that the original assessment was framed under section 143(3) of the Act vide order dated March 28, 2006, and when the dispute travelled up to the Tribunal set aside the matter back to the files of the AO to frame denovo assessment. While giving effect to the order of the Tribunal the AO has erroneously framed a draft assessment order following the provisions of section 144C(1) of the Act which was clearly not applicable on the facts of the case in hand. After receiving the directions from the DRP the final assessment order was framed on 19.08.2011 which is definitely barred by limitation in the light of the provisions of section 153(2A) as applicable during the year under consideration

The coram after considering the facts in totality in the light of the judicial decisions decided in favor of the assessee and against the Revenue the assessment order is barred by limitation.

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