Case Law Details
Brightstar Infrastructure Private Limited Vs Additional/Joint/Deputy/ Assistant Commissioner of Income Tax/Income Tax Officer (ITAT Mumbai)
Introduction: In a recent case before the Income Tax Appellate Tribunal (ITAT) Mumbai, Brightstar Infrastructure Private Limited (the appellant) filed an appeal against the order passed by the Assessing Officer (AO) for the assessment year 2017-18. The primary contention of the appellant was that the AO, Transfer Pricing Officer (TPO), and Dispute Resolution Panel (DRP) erred in assessing a higher total income than the one declared by the appellant in its return of income. Additionally, the appellant challenged the transfer pricing adjustment related to the payment of interest on Fully Compulsory Convertible Debentures (FCCDs).
Analysis: During the course of the appellate proceedings, the appellant raised an additional ground challenging the validity of the final assessment order. The appellant contended that the draft assessment order was passed without following the procedure laid down under Section 144C of the Income Tax Act, 1961. The appellant highlighted that the assessing officer had issued a notice of demand under Section 156 along with the draft assessment order, which was in contravention of the prescribed procedure.
The ITAT Mumbai, while examining the issue, referred to similar cases and judicial precedents. It relied on the decision of the Hon’ble High Court of Karnataka in CIT(IT) vs. Cisco Systems Services B.V. and other ITAT decisions that held the issuance of demand notices along with draft assessment orders as void ab initio, making the final assessment orders invalid.
Conclusion: Based on the facts presented and the relevant legal precedents, the ITAT allowed the appeal of Brightstar Infrastructure Pvt. Ltd., declaring the final assessment order null and void due to the failure to follow the mandatory procedure laid down under Section 144C of the Income Tax Act, 1961. This decision serves as a reminder to the tax authorities to strictly adhere to the prescribed procedures while passing draft assessment orders to ensure the validity of final assessment orders.
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