Assessee is Microsoft Research Lab India Private Limited.
The assessee is engaged in providing research and development services in the field of advanced technology and innovation.
Assessee's Contentions | Revenue's Contentions | ITAT Judgement |
|---|---|---|
The assessee contended that the final assessment order was void ab initio as it was passed in clear violation of the mandatory procedure prescribed u/s 144C of the Act. | The Revenue submitted that a draft assessment order was duly prepared. According to the Revenue, the statutory procedure prescribed for cases involving reference to TPO was properly followed before finalising the assessment. | The ITAT held that compliance with Section 144C of the Act is mandatory in nature and cannot be treated as a mere procedural formality. |
In accordance with Section 144C(2), the Assessing Officer(AO) is required to first issue a draft assessment order and grant the assessee a period of 30 days to either file objections or convey acceptance of the proposed variations. | It was further contended that the assessee did not file any objections to the draft assessment order within the prescribed time, and accordingly, the AO passed the final assessment order in conformity with the statutory provisions governing completion of assessment proceedings. | The ITAT observed that, the final assessment order dated 23.04.2021 was passed without proper service of the draft assessment order and before the expiry of the statutory period available to the assessee. |
In the present case, no draft assessment order was issued, and the AO directly passed the final assessment order, in violation of the procedure prescribed under sections 144C(3) and (4). Consequently, the assessee contended that the impugned assessment order was procedurally defective and legally unsustainable. | The Revenue maintained that the assessment proceedings were conducted strictly within the prescribed statutory framework and was valid. It was also asserted that the additions made in the final assessment order, based on the findings and directions of the TPO, were legally sustainable. | The Tribunal concluded that by passing the final assessment order in such a manner, the AO acted in violation of Sections 144C(3) and 144C(4) of the Act. Consequently, the impugned assessment order was held to be unsustainable in law and was accordingly quashed. |
The Bangalore ITAT quashed the final assessment as void ab initio, holding that passing an order without serving a draft assessment order violates the mandatory procedure prescribed u/s 144C.
