Assessment Order Quashed: DRP Lacked Jurisdiction, Directions Invalid Due to Premature AO Order, Petition Disposed.

The court quashed the DRP's directions dated 16th September 2019 and the assessment order dated 31st October 2019, ruling that the DRP lacked jurisdiction to issue directions after the assessment order dated 24th December 2018 was passed. The premature passing of the assessment order by the AO violated the statutory period for filing objections, rendering it illegal. Consequently, the subsequent assessment order based on the DRP's invalid directions was also set aside. The petition was disposed of without any order as to costs.

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Issues Involved:
1. Validity of the assessment order dated 24th December 2018.
2. Jurisdiction of the Dispute Resolution Panel (DRP) to issue directions after the assessment order.
3. Legality of the assessment order dated 31st October 2019.

Summary:

1. Validity of the assessment order dated 24th December 2018:
The petitioner filed its return of income for the Assessment Year 2015-2016 and the case was selected for scrutiny. The Transfer Pricing Officer (TPO) proposed an adjustment, and a draft assessment order was issued. The petitioner informed the Assessing Officer (AO) about filing objections before the DRP and requested not to pass the assessment order until the DRP's decision. However, the AO passed the final assessment order on 24th December 2018 without waiting for the mandatory 30-day period u/s 144C(2) of the Income Tax Act, 1961. This premature action was deemed illegal as it violated the statutory period provided for filing objections.

2. Jurisdiction of the DRP to issue directions after the assessment order:
The petitioner contended that the DRP's directions dated 16th September 2019 were invalid because the DRP can only issue directions in pending assessment proceedings. Since the AO had already passed the assessment order on 24th December 2018, the DRP had no jurisdiction to issue directions. The court agreed, stating that the DRP's role is to guide the AO to complete the assessment, which presupposes pending assessment proceedings. Once an assessment order is passed, the proceedings end, rendering the DRP's directions void.

3. Legality of the assessment order dated 31st October 2019:
The assessment order dated 31st October 2019, based on the DRP's directions, was also challenged. The court held that since the DRP's directions were issued without jurisdiction, the consequent assessment order was invalid. The court quashed and set aside both the DRP's directions dated 16th September 2019 and the assessment order dated 31st October 2019.

Conclusion:
The court quashed the DRP's directions and the assessment order dated 31st October 2019, stating that the DRP had no jurisdiction to issue directions after the assessment order was passed. The petition was disposed of with no order as to costs.

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