2014 (1) TMI 1427 - AT - Income Tax

Tribunal Invalidates Assessment Order, Emphasizes Jurisdictional Limits

The Tribunal invalidated the assessment order dated 19.8.2010, emphasizing the jurisdictional limitations of the Assessing Officer in issuing multiple ... Assessment order u/s 143(3) r.w. section 144C(3) of the act challenged – Held that:- The request of the assessee for withdrawal of the objection was accepted by the DRP while passing the order/directions dated 13.7.2007, no directions per-se were passed by the DRP as per Section 144C(5) of the Act - Even otherwise once the objections were withdrawn and the assessee opted to proceed to file the appeal before the CIT(A) which was allowed by the DRP then they cannot be any directions under sub. Sec. 5 of section 144C of the Act – thus, the assessment order passed on 19.8.2010 by the Assessing Officer is without any jurisdiction and unwarranted and therefore the same is not sustainable under law - The order passed by the AO subsequent to the directions of the DRP is invalid and accordingly the same is quashed - the CIT(A) has dismissed the appeal of the assessee filed against the assessment order 25.2.2010 on the grounds that the AO has subsequently passed a order u/s 144C(13) dated 19.8.2010 which was challenged by the assessee before this Tribunal and thus no finding has been given on merits - As the order dated 19.8.2010 has already been quashed, the order of the CIT(A) set aside and the matter remitted back for deciding – Decided partly in favour of Assessee. Issues:1. Validity of assessment orders passed by the Assessing Officer.2. Jurisdiction of the Assessing Officer in passing multiple orders.3. Appeal process and jurisdiction of the CIT(A) and the Income Tax Appellate Tribunal.Analysis:Validity of Assessment Orders:The appeals arose from two assessment orders dated 25.2.2010 and 19.8.2010 passed under relevant sections for the assessment year 2006-07. The assessee, a banking entity from the USA operating in India, initially filed objections before the Dispute Resolution Panel (DRP) against a draft assessment order. However, following a CBDT circular, the assessee withdrew the objections and opted to appeal before the Commissioner of Income Tax (Appeals) (CIT(A)). The Assessing Officer (AO) subsequently passed two identical orders, one under section 144C(3) and another under section 144C(13), both demanding tax. The Tribunal found the order dated 19.8.2010 passed by the AO after DRP directions invalid and quashed it, as the assessee had chosen to appeal before the CIT(A) after withdrawing objections before the DRP. The Tribunal held the assessment order dated 19.8.2010 without jurisdiction and unsustainable under law.Jurisdiction of the Assessing Officer:The Tribunal determined that the AO's order dated 19.8.2010, issued after DRP directions, lacked validity as the assessee had already opted to appeal before the CIT(A). The Tribunal emphasized that once the assessee withdrew objections before the DRP and chose to proceed with CIT(A) appeal, there was no legal basis for the AO to issue a subsequent order under section 144C(13). The Tribunal concluded that the second order passed by the AO was unwarranted and lacked jurisdiction, rendering it unsustainable under the law.Appeal Process and Jurisdiction:The CIT(A) dismissed the appeal against the assessment order dated 25.2.2010, citing the subsequent order under section 144C(13) dated 19.8.2010. However, since the Tribunal invalidated the latter order, the CIT(A)'s decision was set aside, and the matter was remitted for a merits-based decision. The Tribunal dismissed the appeal related to the order dated 19.8.2010 as infructuous and allowed the appeal against the order dated 25.2.2010 for statistical purposes. The Tribunal emphasized the importance of deciding on the merits of the appeal and ensuring justice in the process.In conclusion, the Tribunal invalidated the assessment order dated 19.8.2010, emphasized the jurisdictional limitations of the AO in issuing multiple orders, and directed a merits-based review by the CIT(A) for the appeal related to the assessment order dated 25.2.2010.