Case Law Details
De Diamond Electric India Private Limited Vs Assessment Unit, National faceless Assessment Centre (Delhi High Court)
The case of De Diamond Electric India Private Limited vs. Assessment Unit, National Faceless Assessment Centre before the Delhi High Court concerns the challenge against a final assessment order dated November 16, 2023, passed under various sections of the Income Tax Act, 1961, along with notices of demand and penalty for the assessment year 2020-21.
The petitioner argued that they had filed detailed objections before the Dispute Resolution Panel (DRP) on October 27, 2023, and thus, the National e-Assessment Assessment Centre/Assessing Officer had no jurisdiction to pass the final assessment order without waiting for directions from the DRP. However, the petitioner acknowledged that they had inadvertently failed to inform the Assessing Officer regarding the filing of objections under Section 144C(2)(b)(ii) of the Act.
The court issued notice to the senior standing counsel representing the revenue department, who stated that the petitioner, upon receipt of the draft assessment order, was required to file objections before the Assessing Officer in addition to the DRP. Furthermore, if no objections were received within the specified time period, the Assessing Officer was obligated to complete the assessment based on the draft assessment order.
Referring to a similar case, Pepsico India Holdings Private Limited vs. Assessment Unit Income Tax Department National Faceless Assessment Centre & Ors., the court noted that once objections were filed by the assessee against a draft assessment order within the prescribed time limit, the rest of the procedure should be followed, and the final assessment order should be passed by the Assessing Officer in accordance with the DRP’s directions.
In light of this precedent, the court set aside the impugned assessment order and related notices, allowing the petition and granting liberty to the revenue department to pass a fresh assessment order after receiving directions from the DRP.
The court clarified that its decision did not comment on the merits of the controversy, leaving the rights and contentions of the parties open.
In summary, the Delhi High Court’s ruling in De Diamond Electric India Private Limited vs. Assessment Unit, National Faceless Assessment Centre underscores the importance of following statutory procedures and ensuring that assessments are conducted in accordance with the law, particularly in cases involving objections filed before the DRP.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Present writ petition has been filed challenging the final assessment order dated 16th November, 2023 passed under Section 144 read with Section 144C(3) read with Section 144B of the Income Tax Act,1961 (“the Act”) along with the notice of demand issued under Section 156 and notice of penalty issued under Section 274 read with Section 270A of the Act, both dated 16th November, 2023 for the assessment year 2020-21.
2. Learned counsel for the petitioner states that the petitioner had filed detailed objections before the Dispute Resolution Panel (in short ‘DRP’) on 27th October, 2023. She contends that since the matter is sub-judice before the DRP, National e-Assessment Assessment Centre/Assessing Officer had no jurisdiction to pass the impugned final assessment order without waiting for the directions from the DRP. She, however, candidly admits that the petitioner had inadvertently failed to intimate the respondent no.1/Assessing Officer regarding filing of the objections under Section 144C(2)(b)(ii) of the Act.
3. Issue notice. Mr. Vipul Agrawal, senior standing counsel accepts notice on behalf of the respondents-revenue.
4. He states that under Section 144C(2)(b)(ii) of the Act, the petitioner on receipt of the draft assessment order was statutorily required to file its objections before the Assessing Officer in addition to the DRP. He further submits that under Section 144C(3)(b) of the Act, the Assessing Officer was obligated to complete the assessment on the basis of the draft assessment order if no objections were received within the time period specified under Section 144C(2) of the Act i.e. within thirty days of the receipt of the draft order.
5. Recently, this Court has decided a similar controversy in Pepsico India Holdings Private Limited vs. Assessment Unit Income Tax Department National Faceless Assessment Centre & Ors., W.P.(C) No.15322/2023. In the said judgment, it has been held as under:-
“7. Having heard learned counsel for the parties, this Court is of the view that the issue at hand is no longer res integra as it has been decided by the Bombay High Court in Sulzer Pumps (supra) wherein it has been held as under:-
“6. In our view since petitioner had already filed a reference raising his objections to the DRP and Section 144C (4) of the Act requires the Assessing Officer to pass the final order including the view expressed by the DRP, we will be justified in setting aside the order of the Assessing Officer dated 28th June, 2021 which is impugned in this petition. We would also observe that the Assessing Officer cannot be faulted for passing the impugned order. At the same time, the Assessing Officer will also have benefit of considering the views of DRP while passing afresh Assessment Order.”
8. This Court is in agreement with the view expressed by the Bombay High Court in the aforesaid decision. Once the objections have been filed by the assessee against a draft assessment order within the time limit prescribed under Section 144C(2)(b), the rest of the procedure should be followed as prescribed and the final assessment order ought to be passed by the Assessing Officer in accordance with the directions issued by the DRP.
9. This Court is further of the view that no prejudice will be caused to the Respondent-Department if the present petition is allowed and the impugned assessment order is set aside as Respondent-Department would be well within its rights to pass a fresh assessment order post the receipt of direction from the Respondent No. 3-DRP.”
6. Keeping in view the aforesaid decision, the impugned assessment order dated 16th November, 2023 as well as the notices of demand and penalty, both dated 16th November, 2023, are set aside and the writ petition is allowed with liberty to the respondents-revenue to pass a fresh assessment order post the receipt of direction from the DRP.
7. Accordingly, the writ petition along with the applications stands disposed of. This Court clarifies that it has not commented on the merits of the controversy. The rights and contentions of the parties are left open.
Author Bio
