AGFA INDIA PRIVATE LIMITED (NOW MERGED WITH AGFA HEALTHCARE INDIA PRIVATE LIMITED),THANE vs. ASSISTANT COMMISSIONER OF INCOME TAX 1, CIRCLE-1, THANE

In ground no.1, the assessee has challenged the validity of final assessment order on the ground that the order passed under section 2 AGFA India Pvt. Ltd. 263 of the Income Tax Act, 1961 (for short "the Act") in pursuance to which the draft assessment order was passed culminating into the final assessment order, in the mean while, has lost its relevance. Consequently, all proceedings pursuant to the order passed under section 263 of the Act would be invalid.

Before we proceed to deal with the aforesaid ground, it is necessary to briefly narrate the chronological dates and events leading to the final assessment order which is subject matter of challenge in the present appeal.

The learned Authorised Representative has submitted before us, in view of the fact that the assessment order passed under section 143(3) r/w section 147 of the Act and the order passed under section 263 of the Act were quashed by the Tribunal and consequent proceedings in pursuant to the order passed under section 263 of the Act would become invalid. Hence, the final assessment order passed has to be quashed.

The learned Departmental Representative has not controverted the factual position leading to the passing of the final assessment order. As could be seen from the sequence of events narrated above, learned PCIT in exercise of power under section 263 of the Act revised the assessment order passed under section 143(3) r/w section 147 of the Act and while setting aside the said assessment order dated 25th March 2013, had directed the Assessing Officer to make a reference to the Transfer Pricing Officer to determine the arm's length price of the 4 AGFA India Pvt. Ltd. international transaction with the AE. In pursuance to such directions of learned PCIT under section 263 of the Act, the Assessing Officer made a reference to the Transfer Pricing Officer and the adjustments to the arm's length price suggested by the Transfer Pricing Officer was added back in the draft assessment order dated 15th December 2016, passed in pursuance to the directions of the PCIT under section 263 of the Act. Against the said draft assessment order, the assessee raised objection before learned DRP and after disposal of the objections raised by the assessee, the Assessing Officer has passed the final assessment order challenged in the present appeal. In fact, learned DRP in their order has also acknowledged that the draft assessment order was passed in pursuance to the directions of learned PCIT under section 263 of the Act. Thus, from the aforesaid facts on record, it is clearly established that the draft assessment order was in pursuance to the directions of learned PCIT under section 263 of the Act and final assessment order is a culmination of the draft assessment order. It is a fact on record that the assessment order dated 25th March 2013, passed under section 143(3) r/w 147 of the Act was challenged by the assessee before learned Commissioner (Appeals) and thereafter before the Tribunal. The Tribunal while disposing off the assessee’s appeal in Pun./2015, dated 15th September 2017, has held the said order to be invalid and has quashed it. Subsequently, the appeal by the assessee challenging the order passed under section 263 of the 5 AGFA India Pvt. Ltd. Act was dismissed by the Tribunal as infructuous, since, it had already quashed the assessment order passed under section i43(3) read with section 147 of the Act. In other words, the order passed under section 263 of the Act lost its relevance. That being the case, any subsequent proceedings as a corollary to the order passed under section 263 of the Act, including, the draft assessment order and the final assessment order would have no legal force or validity. That being the case, we have no hesitation in holding that the final assessment order being an order in pursuance to the order passed under section 263 of the Act, which is no longer valid, has to be held as invalid. Accordingly, we do so and quash the impugned assessment order. This ground is allowed.

In view of our decision in ground no.1, the grounds raised on merits are of pure academic importance, hence; do not require adjudication in the present appeal. However, the issues raised in these grounds are left open for adjudication if they arise in any other assessment year.

In the result, appeal is partly allowed. Order pronounced in the open Court on 10.05.2019