2015 (10) TMI 390 - AT - Income Tax

Tribunal quashes assessment order for lack of DRP directions, deems other grounds academic.

M/s. Planet Online Private Limited Versus Asstt. Commissioner of Income Tax, Circle 16 (2), Hyderabad

M/s. Planet Online Private Limited Versus Asstt. Commissioner of Income Tax, Circle 16 (2), Hyderabad - TMI Issues Involved:1. Jurisdiction of ITAT to examine new legal questions.2. Timeliness and validity of the final assessment order under section 143(3) read with sections 92CA(3) and 144C(5).3. Validity of the assessment order in the absence of directions from the Dispute Resolution Panel (DRP).Issue-wise Detailed Analysis:1. Jurisdiction of ITAT to Examine New Legal Questions:The assessee raised additional grounds of appeal, citing the Supreme Court's decision in the case of National Thermal Power Co. Ltd. v. CIT, which allows ITAT to examine new legal questions not previously raised before the Assessing Officer (AO). The Tribunal agreed to admit and adjudicate these additional grounds since the facts were already on record.2. Timeliness and Validity of the Final Assessment Order:The assessee argued that the final assessment order dated 07.01.2015 was barred by limitation under section 144C(2) and thus non-est in law. The AO had passed a draft assessment order on 14.03.2014 following the Transfer Pricing Officer's (TPO) adjustment proposal. The assessee failed to file objections before the DRP within the specified 30-day period, leading to the AO passing the final assessment order.The Tribunal examined the statutory provisions under section 144C, which require the AO to pass the final assessment order within one month from the end of the month in which the period for filing objections expires. As the assessee did not file objections within the prescribed time, the AO was required to pass the final assessment order accordingly. However, the delay in filing objections by the assessee was not condoned by the DRP, rendering the objections inadmissible and the final assessment order unsustainable.3. Validity of the Assessment Order in the Absence of Directions from the DRP:The Tribunal found that the DRP's refusal to condone the delay meant no directions were issued for the AO to complete the assessment. This lack of directions invalidated the final assessment order. The Tribunal referenced a similar case, Bank of America NA v. Asstt. Director of Income Tax, where the DRP's non-issuance of directions led to the AO lacking jurisdiction to pass the final assessment order. Consequently, the Tribunal quashed the final assessment order dated 07.01.2015.Conclusion:The Tribunal concluded that the final assessment order passed by the AO was unsustainable due to the absence of directions from the DRP. Additionally, the Tribunal did not adjudicate other grounds of appeal on merits, deeming it an academic exercise. The assessee's appeal was allowed, and the assessment order was quashed.Order Pronounced:The order was pronounced in the Open Court on 4th September 2015.