INCOME TAX ACT, 1961

Section 144C

Assessment - Best judgment assessment - Final assessment order passed by AO without a draft assessment order -

Assessee was engaged in providing software development services to its AE. Assessment was completed under section 143(3) read with section 144C(1) wherein TPA under section 92CA was incorporated. DRP confirmed the TP adjustment. ITAT set aside the issue of adjustment under section 92CA to AO/TPO with a direction to re-do the exercise of determination of ALP. TPO thereafter gave opportunity to the assessee-company for hearing and passed fresh orders under section 92CA read with section 254 by making TP adjustment. AO passed final assessment order under section 143(3) read with sections 92CA(3) and 254 without passing a draft assessment order. Held: As decided in Turner International India Pvt. Ltd. [(2017) 398 ITR 177 (Delhi) : 2017 TaxPub(DT) 1685 (Del-HC)] it was held that final assessment order passed by AO without a draft assessment order was to be quashed. Supreme Court in the case of DCIT v. Control Risks India (P.) Ltd. [(2018) 107 taxmann.com 83 (SC) : 2018 TaxPub(DT) 4533 (SC)] had held that when TPO proposed additions to assessee's ALP, AO was duty bound to pass a draft assessment order. Final assessment order which was passed without a draft assessment order depriving the assessee an opportunity of questioning the draft assessment order before the DRP was in contravention of the provisions of section 144C.

Followed:Turner International India Pvt. Ltd. v. Dy. CIT (2017) 398 ITR 177 (Del-HC) : 2017 TaxPub(DT) 1685 (Del-HC) and ESPN Star Sports Mauritius S.N.C. ET Compagnie (Now Known As Ess Advertising (Mauritius) S.N.C ET Compagnie) v. UOI & Anr. & Vice-Versa (2016) 388 ITR 383 (Del) : 2016 TaxPub(DT) 2166 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-2008

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