Curable Defect in Form 35A: ITAT Sets Aside DRP Order [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Dispute Resolution Panel's ( DRP ) order, ruling that the defect in Form 35A, which was initially signed by the Authorized Representative ( AR ) instead of the assessee, was curable under Section 292B of the Income Tax Act.

Rajendra Ramjibhai Patel,the appellant-assessee, non-resident individual  filed his return for Assessment Year (AY) 2017-18 on 28th February 2022, declaring income of Rs. 13,90,590 after claiming a deduction of Rs. 37,016 under Chapter VI-A. This return was in response to a notice issued under Section 148 on 31st March 2021.

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The case was reopened as the assessee had not offered Rs. 12,04,383, received as surrender value from two life insurance policies, for taxation. The Assessing Officer (AO) computed the total income at Rs. 26,22,705 in the draft assessment order dated 30th March 2022.

The assessee, aggrieved by the draft assessment order, filed objections with the DRP. The DRP dismissed them, noting that Form 35A was filed late and signed by the AR instead of the assessee.The assessee, aggrieved by the rejection order, filed an appeal before the Tribunal.

The Tribunal heard the rival submissions and reviewed the available materials. The assessee had filed objections in Form 35A, along with annexures, on 21st April 2022, but the form had not been signed by the assessee, who was an NRI and not in India at the time.

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When the DRP pointed out this defect, the assessee requested rectification under Section 292B of the Act and submitted a digitally signed copy on 18th November 2022. However, the majority of the DRP ruled that the defect was not curable under Rule 4 of the DRP Rules, dismissing the objection as not maintainable.

The bench noted that the objection was filed within the 30-day statutory period, with the only defect being the signature of the AR instead of the assessee. Upon being notified by the DRP, the assessee rectified this by submitting a digitally signed Form 35A on 18th November 2022.

The appellate tribunal viewed this as a curable defect under Section 292B, citing that proceedings before the DRP are an extension of the assessment. The same Authorized Representative had signed the objections during the draft assessment, and a valid Letter of Authority had been provided.

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The tribunal also referenced case law, including decisions by the Gujarat and Delhi High Courts, affirming that procedural irregularities such as signatures can be cured and should not lead to dismissal if rectified in a timely manner.

The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member) in the interest of natural justice,set aside the DRP’s order and directed it to reconsider the objection and pass a new order on the merits after providing the assessee with a proper hearing.

In conclusion, the appeal was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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