Ramgopal Varma Ramaraju Vs ITO (ITAT Hyderabad)
Assessee, a non-resident, did not file a return believing no income was taxable in India. The AO issued notice u/s 148 and later passed a Draft Assessment Order u/s 144C(1) on 14.02.2024 proposing additions. The assessee filed objections before the DRP on 14.03.2024 within the statutory 30 days, triggering the mandatory DRP procedure.
However, without waiting for DRP directions, the AO went ahead and passed the Final Assessment Order u/s 147 r.w.s. 144 on 03.04.2024, which is a clear violation of Section 144C(5) & (13). When the DRP received the objections, it refused to adjudicate them, stating that since the final order was already passed, it lacked jurisdiction. Due to this, the assessee then filed an appeal before the CIT(A), who dismissed it on the ground of delay without appreciating that the assessee was already pursuing the DRP remedy.
The Tribunal held that once a draft order is issued, the AO cannot bypass the DRP and pass a final order. Since the assessee filed objections within time, the AO’s final order was illegal and void ab initio. The delay in filing appeal before CIT(A) was justified because the assessee was awaiting the DRP’s decision. The CIT(A) also erred in not condoning the delay and refusing to hear the appeal on merits.
Accordingly, the ITAT set aside both the AO’s final assessment order and the CIT(A)’s order, and restored the matter to the DRP for fresh adjudication on merits. The parallel appeal against the DRP became infructuous since the entire assessment was quashed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
