Once the AO has finalized the assessment order, the Dispute Resolution Panel cannot issue directions for another assessment
Tribunal Invalidates Second Assessment Order for Hazira Port Pvt. Ltd. The ITAT Ahmedabad Bench rules against passing two assessment orders for the same assessment year, declaring the second order void.
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Ahmedabad, has invalidated a second assessment order issued for Hazira Port Pvt. Ltd. for the assessment year 2017-18, emphasizing that passing two assessment orders for the same year contravenes the provisions of the Income Tax Act, 1961. The judgment was delivered by the bench comprising Smt. Annapurna Gupta, Accountant Member, and Shri Siddhartha Nautiyal, Judicial Member, on September 26, 2025.
The case involved the issuance of two separate assessment orders by the Assessing Officer (AO) for the same assessment year. The first order was dated September 15, 2021, followed by another on May 31, 2022. The first order had been challenged by Hazira Port Pvt. Ltd. and was pending before the Commissioner of Income Tax (Appeals). Despite this, a second order was passed following directions from the Dispute Resolution Panel (DRP).
The core legal issue addressed by the ITAT was whether the AO could issue a second assessment order after finalizing the first one. The Tribunal concluded that once an assessment order is finalized under Section 143(3) of the Income Tax Act, the AO becomes functus officio, meaning they have no further authority to pass another order for the same year.
The Tribunal's decision was based on several judicial precedents, including the rulings in the cases of Cadmatic O Y v. ACIT and Undercarriage and Tractor Parts Pvt. Ltd. v. DRP-3. These cases establish that the DRP has jurisdiction to issue directions only during pending assessments and not after an assessment order has been finalized.
Hazira Port Pvt. Ltd. had argued that the final assessment order dated September 15, 2021, was prematurely issued without waiting for the DRP's directions, rendering it void ab initio. Furthermore, the second order was deemed unsustainable, as it was issued without jurisdiction, following the DRP's directions, which themselves lacked jurisdiction since the proceedings had already reached finality with the first order.
In its defense, the Revenue argued that the first order was valid as the assessee failed to properly notify the AO of their objections filed with the DRP. However, the Tribunal found that the DRP improperly proceeded with issuing directions despite being informed of the finalized status of the first order and the pending appeal.
Ultimately, the ITAT set aside the second assessment order dated May 31, 2022, as invalid in the eyes of law, allowing Hazira Port Pvt. Ltd. to continue its appeal against the first order.
Bottom Line:
Assessment proceedings - Once the Assessing Officer has finalized the assessment order for a particular assessment year, the Dispute Resolution Panel (DRP) cannot issue directions leading to another assessment order for the same year. Passing two assessment orders for the same assessment year is against the provisions of the Income Tax Act.
Statutory provision(s): Income Tax Act, 1961 - Sections 143(3), 144C(3), 144B, 144C(5).
