Urvashi Narain Vs ITO (ITAT Delhi)
ITAT Delhi held that statue doesn’t empower the Assessing Officer to withdraw or modify or substitute the assessment order passed under Section 143(3) of the Income Tax Act with another assessment order.
Facts-The assessee is a nonresident individual. For the assessment year under dispute, AO completed the assessment u/s. 143(3) of the Act vide order dated 15.09.2021 determining the total income at Rs.6,31,98,895. Immediately thereafter, on 30.09.2021, AO passed a draft assessment order purportedly u/s. 144C(1) of the Act determining the total income at the very same figure of Rs.6,31,98,875. Against the draft assessment order, the assessee raised objections before learned Dispute Resolution Panel (DRP), inter alia, challenging the validity of the draft assessment order.
After considering the submissions of the assessee in the context of facts and material on record, DRP upheld assessee’s objection challenging the validity of the draft assessment order and accordingly issued directions to AO. However, instead of complying with the directions of DRP, AO passed the final assessment order on 27.06.2022 repeating the draft assessment order.
Conclusion- Held that once an assessment order has been passed under Section 143(3) of the Act in respect of any assessment year, the Assessing Officer cannot tinker with that assessment. Of course, he can either reopen the assessment or rectify the assessment order after strictly complying with the conditions of section 147 and 154 respectively. The statue does not confer any powers on the Assessing Officer to either withdraw or modify or substitute the assessment order passed under Section 143(3) of the Act with another assessment order. If the Assessing Officer is allowed to do so, it will lead to disastrous consequences and will give a free hand to the Assessing Officer to pass an assessment order and subsequently withdraw or modify it according to his own whims and caprices. This is not only against the scheme of the Act but against all cannons of law.
FULL TEXT OF THE ORDER OF ITAT DELHI
Captioned appeal has been filed by the assessee challenging the final assessment order dated 27.06.2022 under Section 143(3) read with section 144C(13) of the Income-Tax Act,1961 pertaining to assessment year 2017-18.
2. At the outset, learned counsel appearing for the assessee drew out attention to ground no. 5 and urged the Bench to decide the appeal on this preliminary issue.
3. Ground no.5 reads as under:
On the facts and circumstances of the case, the learned A.O has erred both on facts and in law in not complying with the directions of DRP has held that once the final order dated 15.09.2021 has been passed under Section 143(3) of the Act, the same cannot be annulled/modified/amended at a subsequent date on the ground that the same order passed inadvertently.
4. Briefly, the facts relating to this issue are, the assessee is a nonresident individual. For the assessment year under dispute, assessee filed her return of income on 23.10.2017 declaring income of Rs.10,33,910. The return of income filed by the assessee was selected for scrutiny under CASS. In compliance to the statutory notices issued under Section 142(1) and 143(2) of the Income-Tax Act,1961, assessee appeared before the Assessing Officer from time to time and ultimately the Assessing Officer completed the assessment under Section 143(3) of the Act vide order dated 15.09.2021 determining the total income at Rs.6,31,98,895. Immediately thereafter, on 30.09.2021, the Assessing Officer passed a draft assessment order purportedly under Section 144C(1) of the Act determining the total income at the very same figure of Rs.6,31,98,875. Against the draft assessment order, the assessee raised objections before learned Dispute Resolution Panel (DRP), inter alia, challenging the validity of the draft assessment order.
5. After considering the submissions of the assessee in the context of facts and material on record, learned DRP upheld assessee’s objection challenging the validity of the draft assessment order and accordingly issued directions to the Assessing Officer. However, instead of complying with the directions of learned DRP, the Assessing Officer passed the final assessment order on 27.06.2022 repeating the draft assessment order.
6. Before us, learned counsel appearing for the assessee submitted that the final assessment order is a nullity in the eyes of law as it has been passed without complying with the directions of learned DRP. Thus, he submitted, the final assessment order has to be declared as invalid and set aside.
7. In support of such contention, learned counsel for the assessee relied upon the following decisions:
1. M/s. Olympus Medical Systems Pvt. Ltd. Vs. the ACIT, Circle 3(1), Gurgaon;
2. M/s. Global One India Pvt. Ltd. Vs. DCIT, Circle-12(1), New Delhi;
3. M/s. Software Paradigms Infotech Pvt. Ltd. Vs. ACIT, Circle 1(2), Mysore; &
4. Flextronics Technologies (India) Pvt. Ltd. Vs. ACIT, Circle-3(1)(1), Bangalore.
8. Learned Departmental Representative submitted, the final assessment order cannot be declared as invalid as the Assessing Officer has passed it complying with the directions of learned DRP.
9. Drawing our attention to section 144C(13) of the Act, he submitted, as per the statutory mandate the Assessing Officer has to pass final assessment order as per the directions of learned DRP and accordingly, he has passed the assessment order.
10. We have considered rival submissions in the light of decisions relied upon and perused the material available on record.
11. Before we proceed to decide the issue, it is necessary to bear in mind the following dates and events:
