2015 (10) TMI 390

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....e AO erred in not passing the final assessment order u/s 143(3) r.w.s. 92CA(3) r.w.s. 144C of the Act dated 07.01.2015 within the time limit provided u/s 144C(4) and therefore, the assessment order passed is null and void. 3. The assessment order passed u/s 143(3) r.w.s. 92CA(3) r.w.s. 144C of the Act dated 07.01.2015 is void ab initio as the same is not based on any directions of the DRP since no directions were issued by DRP in view of non-admission of objections". 2. Brief facts of the case necessary for admission and adjudication of the additional grounds of appeal are that the assessee company which is engaged in the business of providing software development services to its Associated Enterprise (AE) in USA, had filed its return of income for A.Y 2010-11 on 29.09.2010 admitting a total income of Rs. 56,29,645 under the normal provisions of the Income Tax Act and book profit u/s 115JB of the Act at Rs. 99,17,033. During the assessment proceedings u/s 143(3) of the Act, AO observed that the assessee has entered into international transactions with its AE during the previous year relevant to the A.Y 2010-11. Therefore, he made a reference to the TPO for determination of th....

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..... In support of his above contentions, he placed reliance upon a decision of the Coordinate Bench of the Tribunal at Mumbai in the case of Bank of America NA vs. Asstt. Director of Income Tax (IT) in ITA Nos.7100/Mum/2010 and ITA No.109/Mum/2011 dated 30.10.2012 and 16.11.2012 respectively. 6. Having regard to the rival contentions and the material on record, we find that the additional grounds of appeal raised by the assessee are legal grounds and the facts relating to the issue are already on record. Therefore, respectfully following the judgment of the Hon'ble Supreme Court in the case of NTPC (229 ITR 383 (S. C), the additional grounds of appeal are admitted and adjudicated as under. The relevant facts are not in dispute. The draft assessment order was admittedly passed on 14.03.2014. Now the question to be considered is whether the final assessment order passed by the AO u/s 143(3) r.w.s. 144C(5) on 7.01.2015 is sustainable?. For the sake of convenience and ready reference, the provisions of section 144C are reproduced hereunder: "144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a dr....

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.... assessment order on 14.03.2014. Sub section 2 of section 144C provides that on receipt of the draft assessment order, the eligible assessee shall, within 30 days of receipt by him of the draft assessment order, file his acceptance of the variations to the AO or file its objections, if any, to such variation with the DRP and the AO. Sub-section (3) provides that if the assessee does not exercise the options provided in sub section-2, the AO shall pass the final assessment order. Sub section (4) provides the time limit within which the final assessment order is to be passed i.e. one month from the end of the Month in which the assessee exercises the option of accepting the variation or fails to file its objections within the period prescribed under sub section (2) of section 144C. In the case before us, the assessee has not exercised any of the two options within the specified period of 30 days of the receipt of the draft assessment order. The consequence of this inaction by the assessee is provided for, under sub sections 3 and 4 of section 144C of the Act. From the above, it is clear that on the expiry of the period of one month from the end of the month in which the prescribed ti....

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....the assessee it had immediately filed a letter dated 29.1.2010 before the DRP for expressing the exercise of the option of filing an appeal before the Commissioner of Income Tax(Appeals) and withdrawing the objections filed u/s 144C(2). 4.1 Though, the assessee had an option to exercise either to file the objection before the DRP against the proposed draft assessment order or to opt for an appeal before the Commissioner of Income Tax(Appeals) against the assessment order passed u/s 144C(3). However, once the assessee has filed the objection before the DRP, even though the assessee has liberty to withdraw the same, the proceedings before the DRP would not automatically close because the DRP is having the powers of enhancement of the variation as proposed in the draft order. Therefore, without permission of the DRP, the application/objection, once filed, cannot be withdrawn by the party in view of sub. Sec. 7 & 8 of section 144C of the I T Act which read as under: 7. The Dispute Resolution Panel may, before issuing any directions referred to in sub. section (5)- a) make such further enquiry, as it thinks fit; or b) cause any further enquiry to be made by....