Zarah Rafique Malik Vs ITO (Bombay High Court)
Bombay High Court has set aside a final assessment order against Zarah Rafique Malik for the assessment year 2022-23, while simultaneously imposing costs of ₹10,000 on the petitioner for inadvertently failing to inform the assessing officer (AO) about objections pending before the Dispute Resolution Panel (DRP). The ruling, delivered recently, emphasizes procedural adherence in tax matters but allows for reconsideration where factual objections are on record.
The case, Zarah Rafique Malik Vs ITO, arose from a scrutiny assessment of the petitioner’s income tax returns for the financial year 2022-23. Following a notice issued under Section 143(2) of the Income Tax Act, 1961 (IT Act), the first Respondent, the Income Tax Officer (ITO), issued a show cause notice on March 28, 2024, seeking justification for certain expenses and claims. The petitioner responded to this notice on March 29, 2024. Subsequently, on the very same day, March 29, 2024, the AO passed a draft assessment order under Section 144C (1) of the IT Act.
In response to the draft order, Zarah Rafique Malik lodged objections with the Dispute Resolution Panel on April 24, 2024. However, a critical procedural oversight occurred: the petitioner failed to inform the assessing officer that these objections had been filed and were pending before the DRP. Unaware of the ongoing DRP proceedings, the AO proceeded to issue the final assessment order on May 28, 2024, under Section 143(3) read with Section 144C (3) of the IT Act. Consequential notices of demand, and notices under Sections 156, 270A, and 274, were also issued based on this final order.
