Once assessment order is passed Dispute Resolution Panel not empowered to give direction

Undercarriage and Tractor Parts Pvt. Ltd. Vs Dispute Resolution Panel (Bombay High Court)

Bombay High Court held that Dispute Resolution Panel (DRP) could give directions only in pending assessment proceedings. Once assessment order is passed, DRP has not power to pass any direction.

Facts- Petitioner filed its return of income declaring loss of Rs. 11,69,32,126/-. Petitioner’s return of income was selected for scrutiny under CASS, and respondent issued a notice u/s. 143(2). In view of the international transactions and domestic transactions with AE, respondent referred the petitioner’s case to the Transfer Pricing Officer (TPO) u/s. 92CA(1). The TPO passed an order u/s. 92CA(3) proposing an adjustment of Rs. 11,92,16,671/- to the reported international and domestic related party transactions after working out the arm’s length price (ALP). After receiving the order from TPO, respondent passed the draft assessment order u/s. 143(3) read with Section 92CA(3) read with Section 144C(1). In the draft assessment order, respondent assessed the income of the petitioner at Rs. 1,24,01,490/- and also proposed to charge interest u/s. 234A/B/C and also initiate penalty proceedings u/s. 271(1)(c).

Petitioner informed respondent that the petitioner is in the process of filing an objection before the Dispute Resolution Panel (DRP) and requested not to pass an assessment order u/s. 143(3) until the DRP disposes of the objections. However, on 24^th December, 2018, respondent passed the final assessment order without waiting for the mandatory period of 30 days provided u/s. 144C(2) to confirm the draft assessment order. Petitioner has filed an appeal before the CIT (A) under Section 246A. The assessment order passed by DCIT was received by the petitioner only on 29^th December, 2018.

Unaware of the order, the petitioner filed its objections before the DRP. Once the petitioner received the assessment order, the petitioner informed the DRP that the assessment order, albeit illegally, had already been passed and, therefore, the DRP had no locus to proceed with the objections filed. The petitioner also informed the DRP that the petitioner has already filed an appeal before the CIT (A) impugning the assessment order dated 24^th December 2018. However, the DRP proceeded to issue the directions dated 16^th September, 2019, based on which another assessment order dated 31^st October, 2019 came to be passed. The DRP’s direction and assessment order dated 31^st October 2019 is what is impugned in this petition.

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