Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 262 - ITAT PUNENon-passing of separate draft order pursuant to restoration by the Dispute Resolution Panel (DRP) - non- adhering statutorily mandated procedure - Order of DRP restoring the matter to the AO/TPO for undertaking a fresh benchmarking altogether afresh - HELD THAT:- TPO in the second round carried out the benchmarking exercise all afresh treating the assessee as KPO service provider as against his earlier view of a BPO service provider in the first round. After passing of the order by the TPO on 21.11.2016, the AO proceeded to straightaway pass the final assessment order u/s.143(3) r.w.s. 144C(13) of the Act on 28-11-2016. It is, ergo, overt that pursuant to the fresh benchmarking done by the TPO in his second order, the AO omitted to pass a draft order which could have been challenged by the assessee before the DRP or the CIT(A). Law enjoins the passing of a draft order after the TPO’s order against which the assessee can raise objection before the DRP before finally coming to the Tribunal as was done in the first round of proceedings. Once the DRP set aside the exercise of benchmarking by the TPO and directed to determine the ALP altogether afresh, the earlier round of the proceedings came to an end and a fresh round of proceedings started with the AO making a reference to the TPO for fresh benchmarking on 7.10.2016. The entire procedure was once again required to be adhered to starting with the passing of the order by the TPO; passing of the draft order; objections to be raised by the assessee before the DRP; and passing of a final assessment order. AO in the second round, on receipt of the order from the TPO, proceeded to pass a final assessment order, thereby omitting to pass a draft order and eventually denying the assessee an opportunity to raise objections before the DRP as enshrined under sub-section (4) of section 144C of the Act. Statutorily mandated procedure must be adhered to by the authorities, non-observance of which renders the assessment order null and void. As statutorily mandated procedure has not been followed in the instant case in as much as neither any draft order was passed in the second round nor the assessee could raise objection before the DRP, the edifice of the final assessment order, being devoid of a legal bedrock, stands shaked, thereby frustrating the legality of the order. Instant assessment is a nullity for two reasons, viz., first for the DRP exceeding its jurisdiction in restoring the matter to the AO/TPO for undertaking a fresh benchmarking altogether afresh; and two, the AO not following the statutorily prescribed procedure of first passing a draft order and snatching away a forum from the assessee for assailing the variation in the income pursuant to the order of the TPO before approaching the Tribunal. Ex consequenti, we set aside the impugned order as null and void. Thus declaring the assessment order as a nullity - Decided in favour of assessee
|