Spectro Analytical Labs Private Limited Vs AU Income Tax Department (ITAT Delhi)
The assessee challenged the final assessment order for AY 2021-22 on the ground that it was passed without giving effect to the binding directions of the Dispute Resolution Panel (DRP). Although the DRP had issued directions granting partial relief, the Assessing Officer passed the final order on 28.10.2024 merely repeating the draft assessment because the Transfer Pricing Officer had not yet passed an order giving effect to the DRP directions.
The Tribunal held that section 144C creates a mandatory and time-bound sequence: once DRP directions are issued, the final assessment must strictly conform to those directions. An order not in conformity with DRP directions is contrary to the statute and therefore void. Importantly, since even till the date of hearing the TPO had not passed any order to implement the DRP’s directions, the defect was continuing and could not be cured later.
Rejecting the Revenue’s plea to remand the matter for fresh compliance, the Tribunal ruled that such a remand would effectively extend the statutory time limit under section 144C(13), which neither the Assessing Officer nor the Tribunal is empowered to do. Following the Delhi High Court decision in ESPN Star Sports Mauritius and the coordinate bench ruling in Global One India Pvt. Ltd., it was held that a non-conforming final order is not a procedural irregularity but a jurisdictional defect rendering the assessment null and void. Later rectification or future compliance by the TPO/AO cannot revive a time-barred or void order.
Accordingly, the impugned final assessment order was quashed in entirety on this legal ground, and all issues on merits were left open as academic. The assessee’s appeal was thus allowed on the jurisdictional issue.
FULL TEXT OF THE ORDER OF ITAT DELHI
