Delhi HC Sets Aside ₹160.43 Crore Addition as AO Ignored Mandatory DRP Directions

LX Pantos India Private Limited Vs Assessment Unit National Faceless Assessment Centre (Delhi High Court)

The Delhi High Court considered a writ petition challenging an assessment order dated 18 December 2025 on the ground that it was contrary to directions issued by the Dispute Resolution Panel (DRP) on 29 November 2025. The dispute related to an addition made under Section 40(a)(i) of the Income Tax Act.

The petitioner contended that the DRP had issued a clear direction that no addition under Section 40(a)(i) should be made if the Department had not filed any appeal against earlier orders of the Income Tax Appellate Tribunal (ITAT). According to the petitioner, despite this direction, the Assessing Officer (AO) proceeded to make the addition without verifying whether any appeal against the Tribunal’s orders for Assessment Year 2017-18 and earlier years had actually been filed.

The petitioner asserted that a search of the Delhi High Court website revealed no pending departmental appeal against the Tribunal’s orders. It was argued that the AO incorrectly recorded in the assessment order that such an appeal was pending and, on that basis, raised a tax demand of ₹75.75 crore. Earlier, while issuing notice, the High Court had stayed the operation of the assessment order and restrained coercive action for recovery of the demand.