2012 (12) TMI 375 - AT - Income Tax

Assessment order quashed as tribunal finds lack of jurisdiction. Assessee's appeal allowed.

Bank of America NA Versus Assistant Director of Income-tax (IT) Cir. 3 (2), Mumbai

The Tribunal found the assessment order dated 20.8.2010 to be invalid due to lack of jurisdiction and quashed it. The appeal was allowed in favor of the ... Validity and maintainability of assessment order - withdrawal of objection submitted before DRP - assessee submitted that when the Assessing Officer has already passed the order u/s 144C(3) r.w.s 143(3) after the clarification issued by the CBDT, then the application/objection before the DRP is to be treated as non-est and the DRP became functus offico. He has further submitted that the objections were withdrawn by the assessee prior to the issue of notice of hearing in the matter and also prior to the expiry of 30 days from the date of receipt of the draft order from the Assessing Officer. Therefore, no direction ought to have been issued by the DRP. held that:- when the objections filed by the assessee were allowed to be withdrawn on the ground that the assessee intend to exercise the option to proceed to file appeal before the Commissioner of Income Tax(Appeals), then there cannot be any direction under sub-sec. (5) in the absence of any objection as required under sub-Sec. (2) of sec. 144C of the Act. It is clear from the order dated 13.7.2010 of the DRP that the DRP has not issued any direction on merits of the proposed draft assessment order; therefore, the Assessing Officer got no jurisdiction to pass any order u/s 144C(13). Hence, the order dated 20.8.2010 passed u/s 144C(13) r.w.s 143(3) by the Assessing Officer is without jurisdiction and accordingly is not sustainable. Even otherwise, when the Assessing Officer has already passed an assessment order dt 10.2.2010 u/s 144C(3), then the second order would result multiplicity of litigation. - Decided in favor of assessee. Issues involved:Validity and maintainability of the assessment order dated 20th Aug 2010.Detailed Analysis:Issue 1: Validity and maintainability of the assessment order dated 20th Aug 2010The appeal was against the assessment order dated 20.8.2010 passed under sections 144C(13) and 143(3) for the Assessment Year 2006-07. The assessee raised concerns regarding the validity of this order. The Assessing Officer had initially passed an order under section 144C(3) on 10.2.2010, which was served on the assessee on 16.2.2010. The assessee, after being informed about a CBDT circular allowing the option to file objections before the DRP or challenge the assessment through the normal appellate channel, decided to withdraw objections filed before the DRP and opt for the latter. The DRP dismissed the objections as withdrawn and directed the Assessing Officer to complete the assessment as proposed in the draft order. The Assessing Officer then passed the order dated 20.8.2010 pursuant to the DRP's directions.The contention was that the order dated 20.8.2010 was invalid as the objections before the DRP had been withdrawn in favor of pursuing an appeal before the Commissioner of Income Tax (Appeals). The DRP did not issue any directions on the merits of the draft assessment order, and the Assessing Officer lacked jurisdiction to pass the order under section 144C(13) in the absence of any objection under section 144C(2). The second order on 20.8.2010 was deemed unnecessary and would result in unnecessary litigation. The Tribunal held that the order dated 20.8.2010 was without jurisdiction and quashed it, allowing the appeal filed by the assessee.In conclusion, the Tribunal found the order dated 20.8.2010 to be invalid due to lack of jurisdiction and quashed it. The Tribunal did not address the dismissal of the appeal by the Commissioner of Income Tax (Appeals) in the present proceedings but stated that the assessee could pursue legal remedies as per law.This detailed analysis covers the issues related to the validity and maintainability of the assessment order dated 20th Aug 2010, providing a comprehensive understanding of the legal judgment delivered by the Appellate Tribunal ITAT Mumbai.