AO not empowered to withdraw or modify or substitute assessment order passed by him

DCIT Vs Mondon Investments Ltd. (ITAT Delhi)

ITAT Delhi held that law does not confer any power on the Assessing Officer to either withdraw or modify or substitute one assessment order passed by him earlier with another assessment order subsequently.

Facts- Based on the proposal of TPO, AO passed an assessment order, purportedly, u/s. 143(3) read with section 144C(3) of the Act on 31.10.2016 determining total income at Rs.29,06,35,700/-. Against the said assessment order, the assessee preferred an appeal before learned first appellate authority.

Subsequent to passing of the assessment order, AO issued a letter dated 09.11.2016 to the assessee stating that the assessment order dated 31.10.2016 was passed due to an inadvertent mistake/oversight and should be treated as null and void. He further stated that since the assessee is an eligible assessee as per section 144C of the Act and a variation to the income returned by the assessee is proposed, which is prejudicial to the assessee, a draft assessment order in terms of section 144C(1) of the Act was required to be passed. Accordingly, on 09.11 .2016, he passed a draft assessment order, purportedly, u/s. 143(3) read with section 144C(1) of the Act. Since, the assessee did not raise any objections against the draft assessment order within the statutory period of limitation, AO passed the final assessment order on 19.01.2017 u/s. 143(3) read with section 144C(3) of the Act determining total income at Rs.29,06,35,700/-. Against the second assessment order as well, the assessee preferred an appeal before learned first appellate authority.

Commissioner (Appeals) held that AO should have passed a draft assessment order u/s. 144C(1) of the Act instead of passing the final assessment order u/s. 143(3) read with section 144C(3) of the Act. Thus, he held that non-framing of a draft assessment order u/s. 144C(1) of the Act is not a curable defect under section 292B of the Act. Hence, he held the assessment order dated 31.10.2016 to be invalid. Admittedly, against this order of learned Commissioner (Appeals), the Department is not in appeal.

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