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Judgment
PER S.RIFAUR RAHMAN,AM:
The appeal preferred by the assessee is directed against the assessment order dated 24.10.2024 passed by the Income Tax Department, Assessment Unit under section 143(3) read with section 144C(13)/144B of the Income-tax Act, 1961 (for short ‘the Act”) for AY 2021-22 pursuant to the directions of the Dispute Resolution Panel u/s 144C(5) of the Act.
At the time of hearing, ld. AR of the assessee specifically pressed Ground No.1.4 which is the legal issue. The assessee has raised this ground for the reason that the Assessing Officer has passed final assessment order without giving effect to the directions of ld. DRP which is contrary to the provisions of section 144C(1) of the Act. In this regard, he brought to our notice page 7 of the final assessment order and brought to our notice para 5 of the order wherein Assessing Officer has observed that ld. DRP decided the appeal of the assessee vide order dated 30.09.2024 giving the directions to modify the adjustments earlier proposed by the TPO. In this respect, order giving effect to the directions of ld. DRP has not been received from TPO till date. With the above observation, he proceeded to pass the final assessment order. In this regard, ld AR submitted that the Assessing Officer has not followed order giving effect passed by the TPO dated 28.10.2024 which is within time. He brought to our notice page 14 of the appeal set wherein OGE to directions of ld. DRP u/s 144C was passed by the TPO. He submitted that Assessing Officer has not followed the OGE passed by the TPO even though there was sufficient time to pass the final assessment order. He submitted that final assessment order passed by the Assessing Officer is vitiated. In this regard, he relied on the decision of ITAT, Delhi Bench in the case of Comparex India P. Ltd. vs. ITO in ITA No.2151/Del/2024 order dated 09.09.2024. The relevant decision is placed at pages 359 to 376 of the case law paper book. He brought to our notice ratio of the said decision at page 374 of the case law paper book. He submitted that the above decision is exactly similar to the facts of the present case.
On the other hand, ld. DR of the Revenue submitted that the due procedure was followed in the assessment order and there is no deviation.
Considered the rival submissions and material available on record. We observed that Assessing Officer has passed draft assessment order on 14.12.2023 u/s 144C(1) of the Act. Against the above order, assessee preferred an appeal before the ld. DRP and ld. DRP has passed the order dated 30.09.2024 and in the above order, ld. DRP has given direction to the Assessing Officer/TPO to incorporate the findings in respect of various objections suitably in the final assessment order. We further noticed that respectfully following the directions of the ld. DRP, TPO has passed the order giving effect to directions u/s 144C dated 28.10.2024. However, the Assessing Officer while passing the final assessment order passed impugned order dated 24.10.2024 without giving effect to the order passed u/s 144C(5) of the Act with the observation that he has not received the order giving effect from TPO till date i.e. before passing of the assessment order. However, the fact in the present case is that ld. TPO has passed the order giving effect on 28.10.2024 and Assessing Officer should have passed the order giving effect on receipt of OGE from the TPO and should have incorporated the OGE passed by the TPO within the limitation period prescribed u/s 144C. However, the Assessing Officer even though on receipt of OGE from TPO failed to pass the final assessment order incorporating the same. Since final assessment order is not passed before the due date and also failed to incorporate the directions of the ld. DRP, the above facts are exactly similar to the facts in the case of Comparex India P. Ltd. (supra). In the case of Comparex India P. Ltd. (supra), the coordinate Bench has held as under :-
“13.From the above decision, Hon’ble High Court insisted that when an authority acts contrary to law, the said act of the authority is required to be quashed and set aside as invalid and bad in law and they have also opined that an action is not required to establish prejudice to the assessee. Therefore, in the present case also, while passing the final assessment order, the Assessing Officer (jurisdictional Assessing Officer) has not followed the directions of ld. DRP as per section 144C (13) of the Act and further we observed that the relevant Assessing Officer has not taken any step to pass a rectification order till now. We further observed that the TPO has passed OGE order to give effect TP adjustments after DRP directions and this is consequently part of the assessment records and Assessing Officer no doubt made a mistake which has led to not following of statutory provisions and not followed it up for making it proper which is in line with the provisions of section 144C of the Act. This is gross violation on the part of the jurisdictional Assessing Officer and ld. DR for the Revenue vehemently argued that it is a mistake. If it is a mistake, the Department should have acted upon to rectify the mistake within reasonable time. In this case, no records were shown to make such efforts taken by the officer. It is clearly violation of law which deserves to be acted upon and the action of the Assessing Officer is contrary to the provisions of the Act and contrary to the law. For the purpose of any subsequent proceedings, what is relevant is the final assessment order for all purposes including the collection of tax. The assessment order so passed by the Assessing Officer deserves to be quashed. Accordingly, ground no.3 and additional ground no.16 raised by the assessee is allowed.
Respectfully following the aforesaid order, the assessment order so passed by the Assessing Officer is quashed and ground no.1.4 raised by the assessee is allowed.
Since we have decided the issue on legal issue, the other grounds raised by the assessee are kept open.
In the result, the appeal filed by the assessee is allowed.