The Delhi High Court recently ruled that the final assessment should be passed by the Assessing Officer (AO) in accordance with directions issued by DRP on filing of objections against draft assessment order within time limit
The present writ petition has been filed by the petitioner, Pepsico India Holdings Private Limited, challenging the order dated 21st November, 2023 passed by the Respondent No.1 under Section 143(3) read with Section 144C(4) of the Income Tax Act, 1961 for Assessment Year 2020-21 as well as the computation sheet and demand notice issued under Section 156 of the Income Tax Act.
The Petitioner also challenged the notice dated 21st November, 2023 issued under Section 274 read with Section 270A of the Income Tax Act initiating penalty proceedings against thePetitioner. Petitioner also sought directions to the Respondent No.3-Dispute Resolution Panel (‘DRP’), to decide the objections dated 20th October, 2023 in accordance with law.
The counsel for the Petitioner stated that though the Petitioner had preferred its objections against the draft assessment order dated 26th September, 2023 before the Respondent No.3-DRP within limitation as provided under Section 144C(2)(b)(i) read with Section 144B(1)(xxiv)(b)(I) of the Income Tax Act, yet the Petitioner inadvertently failed to intimate the Respondent No.1-Assessing Officer regarding the objections in terms of Section 144C(2)(b)(ii) of the Income Tax Act.
The counsel stated that due to the inadvertent lapse on behalf of the Petitioner, Respondent No.1- Assessing Officer passed the impugned final assessment order dated 21st November, 2023, thereby closing the assessment for the year under consideration.
A Division Bench of Acting Chief Justice Manmohan and Justice Mini Pushkarna observed that “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.”
“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” the Court concluded.
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