Court quashes assessment order, emphasizes due process in tax assessments

The court found that the Assessing Officer's failure to issue a draft assessment order after receiving proposals from the Transfer Pricing Officer and passing a final assessment order without due process was not in compliance with the law. The court ruled that the final assessment order was quashed, but the time during legal proceedings would be excluded from the limitation period for a fresh assessment order. The Assessing Officer was directed to proceed lawfully under the Income Tax Act, with all parties retaining their rights and contentions open. The judgment emphasized the importance of adhering to due process in tax assessments and the court's role in ensuring fair proceedings.

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Issues:
1. Failure to issue a draft assessment order by the Assessing Officer (A.O.) after proposals from the Transfer Pricing Officer (TPO).
2. Contravention of express provisions of law leading to the passing of a final assessment order without following due process.

Analysis:
Issue 1: The A.O. passed a final assessment order without issuing a draft order despite proposals from the TPO, which was not in compliance with the procedure. The timeline of events leading to the final assessment order was detailed, highlighting the failure to follow the correct sequence of actions as required by law. The ITAT's involvement and subsequent remittance of the matter to the TPO further complicated the process, ultimately resulting in the A.O. passing a final order instead of a draft assessment order.

Issue 2: The petitioner relied on a previous judgment to argue that orders contravening express provisions of law should be deemed null and void. The respondent, however, argued that the defect was curable and cited a different case to support their stance. The court examined the precedents cited by both parties and concluded that while the impugned order was quashed, the period during the legal proceedings would be excluded from the limitation period for making a fresh assessment order. The court directed the A.O. to proceed in accordance with the law and complete the final assessment under the Income Tax Act, keeping all rights and contentions of the parties open.

Overall, the judgment highlighted the importance of following due process in tax assessments, the consequences of non-compliance with statutory provisions, and the court's authority to intervene in such matters to ensure fair and lawful proceedings.

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