Case Law Details
Multicoreware India P. Ltd Vs Assessment Unit Income Tax Department (Madras High Court)
The Madras High Court recently rendered a crucial judgment in the case of Multicoreware India P. Ltd vs. Assessment Unit Income Tax Department. The court addressed the validity of an Income Tax assessment order issued while objections were pending before the Dispute Resolution Panel (DRP).
The petitioner had filed its income tax return for the assessment year 2021-22, following which a notice was issued under Section 143(2) of the Income Tax Act. Despite the petitioner’s objections filed with the Dispute Resolution Panel, the Income Tax Department proceeded to issue a draft assessment order under Section 144C(1) of the Act. The petitioner’s objections, duly acknowledged by the Dispute Resolution Panel, were pending consideration when the impugned assessment order was issued.
While the respondents argued that the petitioner should have informed the National Faceless Assessment Unit about the objections filed before the Dispute Resolution Panel, the court emphasized the prejudice caused to the petitioner by the premature issuance of the assessment order. Given that the objections were pending and the impugned order was subsequent to the filing of objections, the court concluded that the assessment order lacked sustainability.
In light of the foregoing analysis, the Madras High Court quashed the impugned assessment order and directed the assessing officer to await the decision of the Dispute Resolution Panel before issuing a fresh assessment order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order dated 13.02.2024 is assailed in this writ petition.
2. The petitioner had filed its return of income for assessment year 2021-22. In relation thereto, a notice was issued under Section 143(2) of the Income Tax Act, 1961 (the Income-tax Act), on 28.06.2022. The petitioner replied thereto. After issuing a show cause notice in respect of proposed variations on 13.12.2023, a draft assessment order under Section 144C(1) of the Income-tax Act was issued on 28.12.2023. The petitioner filed objections with regard to such draft assessment order before the Dispute Resolution Panel on 12.01.2023. It appears that the petitioner did not communicate the fact that objections were filed to the National Faceless Assessment Centre. A notice dated 06.02.2024 was issued to the petitioner calling upon the petitioner to communicate whether objections were filed before the Dispute Resolution Panel within five days. The petitioner did not reply thereto within the said period of five days. The impugned assessment order was issued in the said facts and circumstances.
3. Learned counsel for the petitioner invited my attention to the draft assessment order and to the objections filed in relation thereto before the Dispute Resolution Panel. She pointed out that the dispute resolution panel acknowledged receipt of the objections and that the same is evidenced by rubber stamp dated 12.01.2024. Since the objections are pending consideration before the Dispute Resolution Panel, learned counsel submits that the impugned assessment order is not sustainable.
4. Mr. V. Mahalingam, learned senior standing counsel, accepts notice for the respondents. He submits that the statute prescribes that a person filing objections before the Dispute Resolution Panel should inform the assessing officer that such objections were filed. Indeed, he points out that a notice was issued to the petitioner on 06.02.2024 asking the petitioner whether such objections were filed. Since the petitioner failed to respond to such notice, he submits that the impugned assessment order was issued.
5. The Income-tax Act enables a person who receives a draft assessment order under Section 144C to file objections before the Dispute Resolution Panel. In the case at hand, the petitioner filed objections and there is evidence that the Dispute Resolution Panel received such objections on 12.01.2024. The impugned order is clearly subsequent thereto. As contended by learned senior standing counsel for the respondents, the petitioner should have informed the National Faceless Assessment Unit that objections were filed before the Dispute Resolution Panel. Nonetheless, the issuance of the impugned assessment order while the objections of the petitioner are pending before the Dispute Resolution Panel causes great prejudice to the petitioner especially in view of the fact that the transfer pricing officer had directed variations in the income. For such reason, the impugned order calls for interference.
6. Therefore, the impugned assessment order is quashed and, as a consequence, the assessing officer is directed to await the decision of the Dispute Resolution Panel before issuing a fresh assessment order. W.P.No.7369 of 2024 is disposed of on the above terms. Consequently, connected miscellaneous petitions are closed. No costs.
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