AO cannot declare own assessment order void and substitute with fresh order under section 143(3)

The ITAT Delhi held that an AO lacks jurisdiction to declare a previously passed assessment order as null and void and substitute it with another assessment order. The AO had initially passed an assessment order under section 143(3) r.w.s. 144C(3), then attempted to declare it void and issue a fresh order after realizing procedural defects. The tribunal ruled that once an assessment order is communicated, the AO becomes functus officio and cannot modify it except through statutory provisions under sections 147 or 154. Only appellate or revisionary authorities can interfere with assessment orders. The appeal was dismissed, upholding the Commissioner (Appeals) decision declaring the assessment order invalid.

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Issues:
Validity of assessment orders passed by the Assessing Officer under sections 143(3) and 144C(3) of the Income Tax Act, 1961. Jurisdiction of the Assessing Officer to cancel, recall, or declare an assessment order as null and void.

Analysis:

The appeal before the Appellate Tribunal ITAT DELHI arose from an order passed by the Commissioner of Income Tax (Appeals) concerning the assessment year 2013-14. The Assessing Officer had referred the case to the Transfer Pricing Officer due to international transactions with Indian Associated Enterprises. The TPO proposed an adjustment to the income of the assessee, leading to the Assessing Officer passing an assessment order under sections 143(3) and 144C(3) of the Act, determining the total income. The assessee appealed this order before the first appellate authority.

Subsequently, the Assessing Officer issued a letter stating the initial assessment order was null and void due to an inadvertent mistake and passed a draft assessment order under section 144C(1) of the Act. The final assessment order was then issued, which was also appealed by the assessee. The first appellate authority held the initial assessment order invalid for not following the correct procedure under section 144C(1) of the Act, a decision not challenged by the Department.

The Department argued that the error in not passing the draft assessment order initially was a curable defect under section 292B of the Act. However, the assessee contended that once an assessment order is passed and appealed, the Assessing Officer cannot cancel or nullify it. The Tribunal analyzed the situation and found that the Assessing Officer lacked the authority to declare the initial assessment order null and void and issue a fresh assessment order while the first order was under appeal.

The Tribunal emphasized that the Assessing Officer's role ends once an assessment order is communicated, and any changes must adhere to the provisions of the Act, such as reopening assessments or rectification orders under sections 147 and 154. The Tribunal concluded that the Assessing Officer cannot unilaterally modify, withdraw, or substitute an assessment order previously passed. Allowing such actions would undermine the statutory scheme and legal principles. Therefore, the Tribunal upheld the decision of the first appellate authority, declaring the assessment order invalid, and dismissed the appeal.

In summary, the Tribunal dismissed the appeal, affirming that the Assessing Officer exceeded jurisdiction by declaring the initial assessment order null and void and issuing a fresh assessment order while the initial order was under appeal. The decision highlighted the limitations on the Assessing Officer's authority once an assessment order is passed and communicated to the assessee.

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