Assessing Officer's Jurisdiction Overturned for Issuing Final Assessment Order Without DRP Directions

The Tribunal held that the Assessing Officer (AO) lacked jurisdiction to pass the final assessment order without awaiting the Dispute Resolution Panel's (DRP) directions. The final assessment order issued on 27.01.2020 was deemed null and void, and subsequently quashed. The assessee's appeal was allowed, leading to the cancellation of the final assessment order by the AO. The order was pronounced on 18th December 2020.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) to pass the final assessment order under section 143(3) read with section 144C(3) of the Income-tax Act, 1961 without awaiting the direction of the Dispute Resolution Panel (DRP).

Issue-wise Detailed Analysis:

1. Jurisdiction of the AO to Pass Final Assessment Order Without Awaiting DRP Directions:

The assessee company challenged the final assessment order passed by the AO under section 143(3) read with section 144C(3) of the Income-tax Act, 1961, dated 27.01.2020, arguing that it was issued without awaiting the directions of the DRP, despite the assessee having filed objections before the DRP within the prescribed time.

The assessee received a draft assessment order on 28.12.2019 and filed objections before the DRP on 24.01.2020. The assessee also notified the AO of this filing on 27.01.2020. The AO, however, issued the final assessment order on the same day, 27.01.2020, without waiting for the DRP's directions.

Legal Framework:

- Section 144C of the Act outlines a complete code for the assessment of eligible assessees, providing them with the option to object to a draft assessment order before the DRP or to accept it.
- Sub-section (2) of section 144C allows the assessee 30 days to file objections before the DRP from the date of receiving the draft order.
- Sub-section (5) mandates that the AO must await the DRP's directions before passing the final assessment order.
- Sub-section (13) specifies that the AO must complete the assessment in conformity with the DRP's directions.

Arguments and Findings:

- The assessee argued that the AO's action to pass the final assessment order on 27.01.2020 was without jurisdiction as it failed to follow the mandatory procedure prescribed under section 144C, which requires awaiting the DRP's directions.
- The revenue contended that the AO acted within the law by passing the final order within 30 days of the draft order, suggesting that the assessee might have filed the objections after the final order was issued.

Tribunal's Analysis:

- The Tribunal emphasized that section 144C sets a mandatory procedure that must be followed by the AO, providing a valuable right to the assessee to object to the draft order before the DRP.
- The Tribunal noted that the AO is required to wait for the DRP's directions if objections are filed within the prescribed 30 days.
- The Tribunal found that the AO erroneously issued the final assessment order on 27.01.2020, despite being notified of the objections filed before the DRP on 24.01.2020.
- The Tribunal highlighted that even if the assessee had not filed any objections, the AO could only pass the final assessment order within the time frame specified in sub-section (4) of section 144C, i.e., between 01.02.2020 and 28/29.02.2020.

Conclusion:

The Tribunal concluded that the AO lacked jurisdiction to pass the final assessment order on 27.01.2020 without awaiting the DRP's directions. The final assessment order dated 27.01.2020 was declared null and void in the eyes of law and was quashed.

Result:

The appeal of the assessee was allowed, and the final assessment order passed by the AO dated 27.01.2020 was quashed.

Order Pronouncement:

The order was pronounced in the open court on 18th December 2020.

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