Ford India Private Limited Vs ITO (Madras High Court)
The Madras High Court, in Ford India Private Limited Vs ITO, set aside the assessment order dated 15 May 2021 for Assessment Year 2017–18 because the Assessing Officer had completed the assessment while the assessee’s objections were pending before the Dispute Resolution Panel (DRP). The Court held that the assessment could not be finalised without awaiting the directions of the DRP under Section 144C(5) of the Income-tax Act, 1961, read with Section 144C(13). The writ petition was decided on this narrow procedural issue without examining the merits of the underlying assessment.
The petitioner had approached the DRP against the proposed assessment. However, before the DRP issued its directions, the Assessing Officer passed the impugned assessment order under Section 143. During the hearing, the Revenue contended that if the petitioner had informed the Assessing Officer within thirty days of its intention to file objections before the DRP, the Assessing Officer would have awaited the DRP’s directions. The Revenue nevertheless acknowledged that the limitation period had been extended owing to the COVID-19 situation and that the documents on record established that the petitioner had approached the DRP.
The High Court examined the statutory framework under Section 144C. It noted that Section 144C(5) empowers the DRP to issue directions where objections have been received under Section 144C(2). Section 144C(13) requires the Assessing Officer, upon receiving those directions, to complete the assessment in conformity with them within the prescribed period. Since the petitioner’s objections remained pending, the Assessing Officer was required to await the DRP’s decision before proceeding further.
Accordingly, the Madras High Court quashed the assessment order dated 15 May 2021, bearing DIN ITBA/AST/S/143(3)/2021-22/1032928501(1), solely because the DRP’s directions had not been awaited. The Court directed the Assessing Officer to proceed with the assessment de novo, on its own merits and in accordance with law, after receiving the directions under Section 144C(5). It expressly clarified that no opinion had been expressed on the merits of the dispute and that the fresh assessment proceedings must remain uninfluenced by any observations in the judgment. The writ petition and connected miscellaneous petitions were disposed of without any order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Ms.Kamakshi, learned counsel representing the counsel on record for writ petitioner and Ms.Hema Muralikrihsnan, learned Senior Standing Counsel for all the three respondents are before this Virtual Court.
2. Though captioned writ petition is listed under the cause list caption ‘FOR EXTENSION OF INTERIM ORDERS’ with the consent of learned counsel on both sides, main writ petition is taken up as the matter turns on an extremely narrow compass.
3. An Assessment Order dated 15.05.2021 made under Section 143 of ‘The Income-tax Act, 1961 (43 of 1961)’ [‘IT Act’ for the sake of convenience and clarity] has been called in question.
4. The short point is, writ petitioner has approached the third respondent and though writ petitioner has approached the third respondent, which shall hereinafter be referred to as ‘DRP‘ denoting ‘Dispute Resolution Panel‘ for the sake of convenience, impugned order came to be passed.
5. Learned Revenue counsel, adverting to Paragraph 4 of the counter affidavit submits that if the petitioner had informed the first respondent within 30 days period that it intends to file objections before the DRP, first respondent would have awaited the directions of DRP. To be noted, this is a requirement under Section 144C(13) of IT Act. Further to be noted, directions of DRP are under 144C(5)
6. Aforementioned, Section 144C(5) and 144C(13) read as follows:
‘ Section 144C(5)
144C (1)
(2)
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(5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of Assessing Officer to enable him to complete the assessment.’
” Section 144C(13)
144C.Reference to dispute resolution panel.
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(13) Upon receipt of the directions issued under sub- section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 [or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.’
7. Learned Revenue counsel very fairly submits that the period of limitation stood extended owing to the Covid-19 situation and in the light of the typed-set of papers forming part of the case file, it is clear that the petitioner has gone before the DRP. Therefore, the first respondent has to await directions from DRP as the objections of the writ petitioner are pending with D
8. The above short point and the fair stand of the learned Revenue counsel draws the curtains on caption writ petition. Therefore, the following order is passed:
a) The impugned Assessment Order being 15.05.2021 bearing reference DIN & Document No.ITBA/AST/S/143(3)/2021-22/1032928501(1) for Assessment Year 2017-18 qua writ petitioner is set aside solely on the ground that objections before DRP are pending and directions of DRP under 144C(5) has to be awaited under 144C (13).
b. Though obvious it is made clear that this Court has expressed no opinion or view on the merits of the matter;
c. On DRP issuing directions, the first respondent shall proceed with the assessment de novo on its own merits, in accordance with law and complete the exercise as expeditiously as the business of the first respondent would
d. Though obvious, it is made clear that the above exercise will be uninfluenced by any process or trappings of observations on merits, which may come across as having been made in this order.
Captioned writ petition is disposed of with the above directives.
Consequently, connected WMPs are disposed of as closed. There shall be no order as to costs.
