Delhi HC Rejects Challenge to Assessment Order u/s 143(3), Imposes Rs. 1 Lakh Cost for Frivolous Litigation [Read Order]

In a recent ruling, the Delhi passed under Section 143(3) of the Act. The High Court rejected a petition challenging the assessment order passed under Section 143( 3 ) of the Income Tax Act, 1961, as it was frivolous and imposed a Rs. 1 lakh cost.

In this case, the assessee, BT Global Communications India Pvt. Ltd., has appealed against the order passed by the Assessing Officer (hereafter AO) assessing the petitioner’s total income at Rs. 5,47,92,27,510.

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The issue involved in this above case was whether the impugned order was passed under Section 143(3) of the Income Tax Act or is required to be construed as an order under Section 144C of the Act.

Revenue contended that the petition was baseless and submitted that the impugned order is not an order passed under Section 144C of the Income Tax Act but under Section 143(3) of the Act.

The Delhi High Court, by going through the impugned order, observed that it is very clear that the order has been passed under Section 143(3) of the Income Tax Act. It further observed that the tabular statement in the opening sheet of the impugned order properly shows that the assessment of income chargeable to tax, as is reflected in the order, is made under Section 143(3) of the Income Tax statute.

Upon receiving the impugned order, the petitioner, in a letter dated 13.01.2020, stated that the order was identified as a draft assessment order under Section 144C of the Act. The petitioner contended that a draft assessment order under Section 144C is applicable only in cases involving foreign companies or transfer pricing adjustments, neither of which applied to them as an Indian company.

In response, the Assessing Officer ( AO ) clarified that the impugned order was issued under Section 143(3) of the Act. The AO explained that the reference to Section 144C was due to a systemic error and should be read as an assessment order under Section 143(3) of the Income Tax Act.

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The bench noted that there could be no misunderstanding about the nature of the order after the clarification made by the AO.

The HC, comprising Justice Vibhu Bakhru and Justice Swarna Kanta Sharma, noted that the clear language of the contents of the impugned order is unsustainable. There was no scope for raising such a challenge after the AO had amply clarified that the impugned order was issued under Section 143(3) of the Act and the assessee’s contentions to the contrary are insubstantial.

The HC dismissed the above petition and imposed a fine of Rs. 1 lakh due to frivolous litigation.

To Read the full text of the Order CLICK HERE

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