Whether Assessing Officer can travel beyond the directions of Dispute Resolution Panel?

Respected Members

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Short note of today's case law for quick reference:

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[2024] 120 ITR (Trib) 106 (ITAT[Del])

[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — DELHI "D" BENCH]

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GOLDEN STATE CAPITAL PTE LTD.

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DEPUTY COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION)

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KUL BHARAT (Judicial Member) and M. BALAGANESH (Accountant Member)

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August 23, 2023.

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1. A.O. while passing final assessment order, had not followed the directions of the D.R.P. whose directions were binding on him.

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2. A.O. is not empowered to raise any new issue in giving effect to the proceedings.

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3. The A.O. had not doubted the quantum of the sale consideration but only the cost of acquisition of unlisted equity shares because of huge variation between the premium paid by the assessee while acquiring shares in FS in two tranches.

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4. Strangely, in the final assessment order, in rejecting the assessee’s claim, the A.O. stated that the assessee had not submitted any documentary evidence such as valuation report to justify the share premium.

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5. This was in gross violation of the D.R.P.’s directions since the non-submission of valuation report, which was never asked by the A.O. in draft assessment proceedings or in the final assessment proceedings, could not be considered as anomaly.

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6. There was no need for the assessee to even furnish such a report to justify the premium component of the share acquisition.

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7. No provision of the act mandated such a requirement.

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8. In terms of section 144C(13), the A.O. was prohibited from requisitioning documents from the assessee post issue of directions by the DRP.

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9. The assessing officer’s disregard of the directions of the DRP rendered the final assessment order bad in law.

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10. There was no need for the assessee to furnish any documentation to prove either the acquisition of shares or the source of making payments since it had been duly drawn from the books of account.

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11. When shares which were reflected in the audited balance sheets were sold by the assessee during the year under consideration, there was absolutely no case for the revenue to deny the benefits of such cost, including the premium component, as deduction.