Taxpayer Rights Upheld: Court Rejects Premature Assessment, Stresses Need for AO to Wait for DRP Decision.

The court set aside the Final Assessment Order issued by the AO, ruling it was without jurisdiction as it was passed before the DRP's decision on the petitioner's objections. The court emphasized adherence to statutory procedures, underscoring the necessity for the AO to await the DRP's decision before finalizing assessments, thereby protecting taxpayers' rights.

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Issues:
Jurisdiction of Assessing Officer to pass Final Assessment Order without waiting for decision of Dispute Resolution Panel (DRP).

Analysis:
The petitioner, an aviation company, challenged the Final Assessment Order passed under the Income Tax Act, alleging it was without jurisdiction as it was issued before the decision of the DRP. The petitioner had filed its Return of Income for the relevant assessment year and responded to show cause notices. The Assessing Officer proposed a significant addition to the income, treating lease rentals as interest income. The petitioner filed objections with the DRP against the Draft Assessment Order. Despite objections pending before the DRP, the AO issued the Final Assessment Order, re-computing the income and imposing penalties. The petitioner argued that the AO lacked jurisdiction to pass the Final Assessment Order while objections were pending before the DRP, and no real-time alert was sent regarding the order.

The petitioner relied on previous court judgments emphasizing the necessity for the tax department to follow the procedure laid out in the Act and await the DRP's decision before issuing Final Assessment Orders, even if the AO was not notified by the assessee. The Revenue argued that notices were communicated to the petitioner regarding the Draft Assessment Order. The court noted that if objections were filed and pending before the DRP, the Assessment Order passed in ignorance of these objections must be set aside. Ultimately, the court allowed the petition and set aside the Final Assessment Order, emphasizing the importance of following proper procedures and waiting for the DRP's decision before finalizing assessments.

This judgment highlights the significance of jurisdictional issues in tax assessments and the importance of following procedural requirements, especially concerning the role of the DRP in resolving disputes before Final Assessment Orders are passed. It underscores the need for tax authorities to adhere to statutory procedures and ensure that taxpayers' rights are protected during the assessment process.

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