Welspun Global Brands Ltd Vs DCIT (ITAT Mumbai)
In a recent case between Welspun Global Brands Ltd and the Deputy Commissioner of Income Tax (ITAT Mumbai), the Income Tax Appellate Tribunal (ITAT) addressed the validity of a final assessment order without a draft order under section 144C(1) of the Income-tax Act, 1961.
The Assessee and the Revenue had filed cross-appeals against the order dated 1st July 2022 passed by the Commissioner of Income Tax (Appeals-58, Mumbai) for the assessment year 2011-12.
The Assessee, in its appeal, raised additional legal grounds, asserting that the final assessment order was invalid due to the absence of a draft order under section 144C(1) of the Act.
During the assessment proceedings, the Transfer Pricing Officer (TPO) had made upward adjustments, which the Assessing Officer (AO) sought to incorporate into the final assessment without issuing a draft order under section 144C(1). The Assessee, however, did not challenge this omission before the Dispute Resolution Panel (DRP).
The ITAT, after considering the arguments and relevant case law, concluded that the failure to issue a draft assessment order as required under section 144C(1) amounted to a jurisdictional error, rendering the final assessment order illegal and void ab-initio.
The ITAT cited precedents and emphasized that the issuance of a draft assessment order is not a mere formality but a statutory right given to the Assessee to object and have those objections considered by the DRP. Therefore, the final assessment order passed without adhering to this procedure is illegal and without jurisdiction.
