Milacron India Private Limited Vs Assessment Unit (Gujarat High Court)
The Gujarat High Court examined the legality of a final assessment order passed for Assessment Year 2022–23 under the Income-tax Act, 1961, where the statutory procedure prescribed under section 144C was not followed. The petitioner had filed its return of income declaring total income of ₹2,38,68,25,940, and the case was selected for scrutiny due to significant international transactions and transfer pricing risk. The matter was referred to the Transfer Pricing Officer, who proposed an upward adjustment of ₹12,68,130 on account of notional interest for delayed realization of invoices from associated enterprises. Based on this, a draft assessment order was issued.
Aggrieved by the proposed variation, the petitioner filed objections before the Dispute Resolution Panel (DRP) within the statutory period of 30 days, which were duly acknowledged. Simultaneously, due to an inadvertent error, the petitioner filed objections before the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer. Despite the pendency of valid objections before the DRP, the Faceless Assessing Officer passed the final assessment order without awaiting directions from the DRP, and also initiated penalty proceedings.
The petitioner made repeated representations highlighting that the final order had been passed prematurely and in violation of section 144C. During the pendency of the writ petition, the DRP dismissed the objections on the ground that the final assessment order had already been passed and that it lacked jurisdiction. The High Court noted that filing of objections before the DRP within the limitation period was undisputed and that the error in filing objections before the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer was bona fide. The Court observed that once objections are filed before the DRP, the Assessing Officer is statutorily barred from passing the final assessment order until directions are issued under section 144C(5).
