INCOME TAX ACT, 1961

Section 154 Section 144(13) Section 143(3)

Assessment - Rectification - Non-compliance of directions of DRP while passing draft order by AO -

AO passed a draft assessment order on 30-3-2016 (erroneously mentioned as 30-3-2015 in the draft order) under section 143(3) read with section 144C(1). The assessee objected to the draft assessment order by filing its objections before DRP, which disposed of the objections of the assessee by its Order, dated 22-12-2016. Accordingly, the AO passed the final assessment order under section 143(3) read with section 144C(13) on 31-1-2017. In the final assessment order, referred above, the AO did not make certain adjustments/additions, which were directed to be made by the DRP. However, the AO suo motu passed a rectification order on 6-2-2017 under section 154 rectifying the final assessment order in respect of items mentioned in DRP order. However, he did not comply with the directions of DRP in respect of PF/ESI in the rectification order also. Held: AO has omitted to comply with the directions issued by DRP. Hence the AO, on noticing the mistake, has corrected his mistake by passing a rectification order under section 154 suo moto. It was contended that the rectification order was passed beyond the time limit prescribed for passing the final assessment order. However, the fact would remain that the final assessment order was passed within the prescribed time limit and the rectification order under section 154 was also passed within the time limit prescribed for the purpose. One has to examine the action of the AO objectively, i.e., whether there was conscious omission or complete disregard to comply with the provisions of section 144C or whether it was only an inadvertent omission. In the instant case, the AO had actually passed the order under section 143(3) read with section 144C(13), meaning thereby, he had intended to comply with the directions issued by DRP. There was inadvertent omission on the part of the AO in not complying with the directions issued by DRP, which had been duly rectified by him by passing the rectification order under section 154. AR submitted that the AO had only partially complied with the directions, i.e., he had not followed the direction in respect of addition relating to belated payment of PF/ESI. This omission should also be treated as mistake apparent from record, which could have been brought to the notice of the AO by the assessee himself. Hence the said omission, would not be fatal to the final assessment order.

Distinguished:Software Paradigms Infotech (P) Ltd. v. Asstt. CIT (IT(TP)A No. 150/Bang./2014) : 2018 TaxPub(DT) 670 (Bang-Trib), July Systems & Technologies (P) Ltd. v. Dy. CIT (IT(TP)A No. 479/Bang./2016) and Addl. CIT v. Oracle India (P) Ltd. (2018) 93 Taxmann.com 8 (Del-Trib.) : 2018 TaxPub(DT) 2212 (Del-Trib).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 92C

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