Anand NVH Products Private Limited Vs National E Assessment Centre Delhi & Anr. (Delhi High Court)
The Delhi High Court, in Anand NVH Products Private Limited Vs National E Assessment Centre Delhi & Anr., held that a final assessment order passed without awaiting the decision of the Dispute Resolution Panel (DRP) violated the mandatory procedure prescribed under Income-tax Act, 1961. The dispute concerned Assessment Year 2017–18, for which the National E Assessment Centre had passed a final assessment order dated 15 May 2021 under Section 143(3) read with Section 144C. The petitioner challenged the assessment order, the consequential demand notice under Section 156 and the notice initiating penalty proceedings under Section 271AAC(1).
The petitioner submitted that the draft assessment order was issued on 6 April 2021 and objections were filed before the DRP on 5 May 2021, within the statutory period of thirty days prescribed under Section 144C(2). Despite the pending objections, the assessing authority proceeded to issue the final assessment order on 15 May 2021 without waiting for the DRP’s decision. The petitioner also relied upon CBDT Circular No. 8/2021 dated 30 April 2021, which had extended the time for filing objections before the DRP until 31 May 2021. It was contended that the premature final assessment caused serious prejudice, including a demand of ₹58,72,510.
The High Court examined the record and accepted that the mandatory procedure under Section 144C had been violated. It observed that the assessing authority had passed the final assessment order without awaiting the DRP’s decision, notwithstanding the statutory requirements and the CBDT circular extending the objection-filing timeline. Accordingly, the Court set aside the final assessment order dated 15 May 2021, the demand notice under Section 156 and the notice initiating penalty proceedings under Section 271AAC(1). The proceedings were restored to the DRP stage, and the writ petition and pending applications were disposed of. The decision reinforces the requirement that the statutory DRP procedure must be followed before finalising an assessment where that procedure applies.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
The petition has been heard by way of video conferencing.
CM Appl. 24646/2021 (for exemption)
Allowed, subject to just exceptions.
Accordingly, present application stands disposed of.
1. Present writ petition has been filed challenging the Assessment Order dated 15 th May, 2021, notice of demand issued under Section 156 and notice for initiating penalty proceeding under section 271AAC(l) of the Income Tax Act, 1961 [‘the Act’] passed by Respondent No. 1 under Section 143(3) read with Section 144C for the assessment year 2017-18 and restoring the proceedings at the level of Dispute Resolution Panel (‘DRP’).
2. Learned counsel for the Petitioner states that Respondent No.1 erred in passing the impugned Final Assessment Order on 15 waiting for the decision of the DRP. He states that the petitioner had filed objections before the DRP on 5th May, 2021 against the Draft Assessment Order dated 6th April 2021 i.e., within the prescribed thirty-day time period from the date of the Draft Assessment Order as per Section 144C(2) of the Act. He states that the impugned Assessment Order is in blatant violation of the mandatory procedure prescribed in Section 144C of the Act. He emphasises that Respondent No. 1 acted in undue haste in passing the Final Assessment Order on 15th May 2021, even though the Ministry of Finance [through Central Board of Direct Taxes (CBDT)], vide Circular No. 8 of 2021 dated 30th April 2021, had extended the timeline for filing of objections before the DRP until 31st May 2021. He contends that the action of Respondent No. 1 has resulted in grave and serious prejudice to the Petitioner inasmuch as demand of INR 58,72,510/- (Rupees Fifty Eight Lakhs Seventy Two Thousand Five Hundred and Ten Only) has been raised.
3. Issue notice. Mr. Sanjay Kumar, Advocate, accepts notice on behalf of the respondents. He states that he has no instructions in the present case.
Since an advance copy of the present writ petition had been served upon the petitioner, this Court has no other option but to proceed with the matter. However, the respondents are given liberty to seek variation/modification of the order in the event facts have been suppressed from this Court or facts have been mis-stated by the petitioner.
4. Having perused the paperbook, this Court finds that the Assessment Order has been passed in violation of mandatory procedure prescribed under Section 144C of the Act as well as the aforementioned CBDT Circular inasmuch as without waiting for the decision of the DRP, Respondent No. 1 has passed the final Assessment Order.
5. Keeping in view the aforesaid, the final Assessment Order dated 15th May, 2021, notice of demand issued under Section 156 and notice for initiating penalty proceedings under Section 271AAC(1) of the Act passed by Respondent No. 1 under Section 143(3) read with Section 144C for the assessment year 2017-18 are set aside and the proceeding is restored at the level of the DRP. With the aforesaid direction, the present writ petition along with pending applications stand disposed of.
The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.
