FOSTER WHEELER BENGAL PVT. LTD.,KOLKATA vs. THE DCIT, CIR-2(1), KOLKATA, KOLKATA

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ITA 104/KOL/2016Status: DisposedITAT Kolkata03 November 2017AY 2011-20123 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the final assessment order was passed beyond the statutory period prescribed under Section 144C(13) of the Income-tax Act. Therefore, the order was considered bad in law and non-est.

What were the facts?

The Assessing Officer (AO) passed a draft assessment order on 23.02.2015. The Dispute Resolution Panel (DRP) issued its directions on 27.08.2015, which were received by the AO on 07.09.2015. The AO passed the final assessment order on 09.11.2015.

What were the issues?

Whether the final assessment order passed by the AO was within the statutory time limit prescribed under Section 144C(13) of the Income-tax Act.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 153

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA

Hearing: 21.08.2017Pronounced: 03.11.2017

ORDER

Per Shri A.T.Varkey, JM

1.

This is an appeal filed by the assessee against the order of Dispute Resolution Panel- 2, New Delhi dated 27.08.2015 for AY 2011-12.

2.

At the outset itself, the Ld. Counsel for the assessee drew our attention to the additional ground of appeal preferred by the assessee. The additional ground of appeal reads as under: “On the facts and in the circumstances of the case, and in law, final assessment order passed by the Ld. AO under section 143(3) r.w.s. 144C(13), being beyond the statutory period, is bad in law and liable to be quashed.”

3.

None appeared for the revenue. However, after going through the facts emanating from the records before us, we are inclined to adjudicate the legal issue, which goes to the root of the matter. Since it is purely a legal issue, we admit this addition ground of appeal by relying on the decision of Hon’ble Supreme Court in NTPC Vs. CIT 229 ITR 383 (SC).

4.

We have heard Ld. AR and have carefully perused the material available on records. We note that the draft assessment order u/s. 144C of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) was passed by the AO on 23.02.2015. The DRP’s directions were “6.2.Upon receipt of the Draft Order, dated 23.02.2015, assessee company had submitted Application before the Dispute Resolution Panel (DRP). Hon’ble DRP-2, New Delhi, had passed ‘Directions’ as per provisions of section 144C(5) read with section 144(c)(8) of the I. T. Act on 27.08.2015, which was received in our office on 07.09.2015.” From a reading of the above, it is discernible that the AO got the direction of the DRP on 07.09.2015 and as per section 144C(13) of the Act, which reads as under:

“(13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 (or section 153B), the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.” From the reading of the above sec. 144C(13) of the Act, it is clear that the AO has to pass the final order within one month from the end of the month in which DRP’s direction is received by him. So, as per the law, the limitation to pass the final assessment order expires on 31.10.2015. We note that the impugned final order was passed by the AO on 09.11.2015 which the AO is not empowered to do and thus, makes the order fragile in the eyes of law. Therefore, the impugned order is bad in law and cannot be sustained in the eyes of law and, therefore, the order passed by the AO is held to be non-est in the eyes of law and does not survive. For this proposition, we rely on the decision of the Tribunal, Delhi Benches in IHG IT Services (India) (P) Ltd. Vs. DCIT (2016) 65 taxmann.com 154 (Del.Trib.) and the order of the Tribunal Cochin Bench in Envestnet Asset Management (India) (P) Ltd. Vs. ACIT (2015) 53 taxmann.com 430 (Cochin.Trib.). Accordingly, the impugned final order of the AO dated 09.11.2015 is hereby quashed. Since we quashed the assessment order itself, the other grounds are academic in nature and need not be adjudicated. Appeal of assessee is allowed.

5.

In the result, appeal of assessee is allowed.

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