ACIT, NEW DELHI V. M/S. AAMBY VALLEY LTD., MUMBAI

ITA 6052/DEL/2016

AI Insights

The case involves Aamby Valley Ltd., which appealed against the order of the CIT(A)-23, New Delhi, concerning the assessment year 2011-12. The primary contention was the absence of a draft assessment order before the final assessment order was passed by the Assessing Officer (AO). The Tribunal admitted the additional ground of appeal regarding the legality of the final assessment order due to the lack of a draft assessment order, citing precedents from the Supreme Court and Delhi High Court that supported the assessee's position. The Tribunal found that the final assessment order was invalid as it did not comply with the mandatory requirements of Section 144C(1) of the Income-tax Act, 1961.

• Duration Of Justice: 9 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Delhi
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2016
• Other Referred Cases: National Thermal Power Supply Ltd. Vs. CIT, Jute Corporation of India Vs. CIT, Turner International India Private Limited Vs. DCIT, Control Risks India Private Limited Vs. DCIT, JCB India Ltd. Vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 144

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘I’: NEW DELHI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCONTANT MEMBER ITA No.6020/Del/2016 Assessment Year 2011-12 Aamby Valley Ltd. Hotel Sahara Star, Opposite Domestic Airport, Ville Parle (East) Mumbai PAN No.AAGCA0045C Vs. DCIT Central Circle -1 New Delhi Appellant Respondent ITA No.6052/Del/2016 Assessment Year 2011-12 ACIT Central Circle -1 New Delhi Vs. Aamby Valley Ltd. Hotel Sahara Star, Opposite Domestic Airport, Ville Parle (East) PAN No.AAGCA0045C Appellant Respondent Cross Objection No.96/Del/2019 (In ITA No.6052/Del/2016) Assessment Year 2011-12 Aamby Valley Ltd. Hotel Sahara Star, Opposite Domestic Airport, Ville Parle (East) PAN No.AAGCA0045C Vs. ACIT New Delhi Appellant Respondent Printed from counselvise.com Page | 2 Appellant Sh. Neeraj Jain, CA Sh. Arpit Goyal, CA Respondent Sh. Dharm Veer Singh, CIT DR Date of Hearing 26.02.2026 Date of Pronouncement 25.03.2026 ORDER PER C.N. PRASAD, JM This appeal is filed by the assessee against the order of the Ld. CIT(A)-23, New Delhi dated 26.09.2016 for the A.Y.2011-12. 2. The assessee has raised following grounds of appeal :- a) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in holding that interest should be charged during the moratorium period on loan given by the appellant to Associated Enterprise. b) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in holding that interest should be charged during the moratorium period even after accepting the effective rate of interest which was determined after considering nil rate of interest in moratorium period & LIBOR + 300 bps in subsequent period. 3. The Ld. Counsel for the assessee submitted that the assessee has filed additional grounds of appeal contending that Printed from counselvise.com Page | 3 the final assessment order passed is bad in law for the reason that the AO never passed draft assessment order and therefore, the Ld. CIT(A) erred in not upholding that the impugned final assessment order passed by the assessee is void ab initio. 4. The Ld. Counsel for the assessee submitted that the additional ground being purely legal ground and the same be admitted and adjudicated. Reliance was placed on the decision of the Hon’ble Supreme Court in the case of National Thermal Power Supply Ltd. Vs. CIT 229 ITR 383 and Jute Corporation of India Vs. CIT (187 ITR 688). 5. The additional ground of appeal filed by the assessee is as under :- “1. That on the facts and circumstances of the case and in law, the CIT(A) erred in not holding the impugned final assessment order passed in the case of the Appellant, being an ‘eligible assessee’ in terms of section 144C(15), to be bad in law, without jurisdiction and void ab initio on the ground that no draft assessment order was passed in terms of section144C(1) of the Income- tax Act, 1961 (“the Act”) before finalizing the assessment.” 6. Ongoing through the above additional ground filed by the assessee we observed that the said ground is purely a legal ground going to the very root of the matter and validity of the final assessment order passed by the AO and therefore, following the decisions of the Hon’ble Supreme Court referred to above we admit the additional ground for adjudication on merits. Printed from counselvise.com Page | 4 7. Coming to the additional ground the Ld. Counsel for the assessee submitted that the AO never passed a draft assessment order enabling the assessee to file objections before the DRP/ CIT(A). The Ld. Counsel for the assessee submitted that the AO without passing draft assessment order passed final assessment order on 27.03.2015 even though a reference was made by the AO to the TPO for benchmarking the international transactions and the TPO framed order u/s. 92CA (3) of the Act on 07.01.2015 which was communicated to the AO on 16.01.2015. The Ld. Counsel for the assessee submits that the AO without passing a draft assessment order has passed final assessment order on 27.03.2015 and such final assessment order is bad in law and void ab initio. The Ld. Counsel for the assessee further submitted that this contention was raised by the assessee before Ld. CIT(A) and the submissions of the assessee were also noted by the Ld. CIT(A), however, no finding was rendered by the Ld. CIT(A). The Ld. Counsel for the assessee placed reliance on the decision of the Delhi High Court in the case of Turner International India Private Limited Vs. DCIT (398 ITR 177) and the decision in the case of Control Risks India Private Limited Vs. DCIT (107 taxmann.com 82) Delhi where the SLP filed by the department was also dismissed and reported in 264 taxmann 291. Ld. Counsel submitted that on identical circumstances the Delhi High Court annulled the final assessment order which was passed without framing draft assessment order. 8. The Ld. Counsel for the assessee also submitted that whether such mandatory requirement as per Section 144 C(1) Printed from counselvise.com Page | 5 where a draft assessment order was necessarily to be passed can be cured u/s. 292B was also considered by the Hon’ble Delhi High Court in the case of JCB India Ld. Vs. DCIT (398 ITR 189) and held that 292B of the Act cannot save an order not passed in accordance with the provisions of the Act. 9. The Ld. DR strongly supported the orders of the authorities below. 10. Heard rival submissions and perused the orders of the authorities below. The fact of not passing a draft assessment order was never disputed by the department in this case. Whether the final assessment order framed without passing draft assessment order, is valid in the eyes of law came up before consideration of various High Courts and the Hon’ble Delhi High Court in the case of Turner International India Pvt. Ltd. Vs. DCIT (supra) held that failure of AO to adhere to mandatory requirement under section 144C(1) of the Act and first not passing draft assessment order would result in invalidation of final assessment order and consequent demand notices and penalty proceedings. Similar view has been taken by the Delhi High Court in the case of DCIT Vs. Control Risks India Pvt. Ltd. (107 taxmann.com 82) and SLP filed by the revenue in DCIT Vs. Control Risks India Pvt. Ltd. was dismissed by the Hon’ble Supreme Court which is reported in 264 taxmnan.com 291. 11. Thus, respectfully following the decision of the Hon’ble Jurisdictional High Court we hold that the final assessment order passed by the assessing Officer dated 27.03.2015 is Printed from counselvise.com Page | 6 without passing draft assessment order and is null and void and consecutively the same is hereby quashed. The additional ground raised by the assessee is allowed. 12. Since we have quashed the assessment order for the A.Y.2011-12 the appeal filed by the revenue in ITA No.6052/Del/2016 and the cross objection filed by the assessee in Cross Objection No.96/Del/2019 would become infructuous and the same are liable to be dismissed. 13. In the result, the appeal of the assessee is partly allowed as indicated above and appeal of the revenue as well as cross objection filed by the assessee are dismissed as infructuous. Order pronounced in the open court on 25.03.2026. Sd/- Sd/- [M. BALAGANESH] [C.N. PRASAD] ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.03.2026 *Neha, Sr.PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "