The Kerala High Court set aside the assessment order as it deemed the assessing authority’s failure to file objections to the draft assessment order palpably wrong.
The Petitioner was a non-resident Indian and the petitioner was an eligible assessee under Section 144B of the Income Tax Act for finalizing the assessment order. The petitioner filed return of her income for the assessment year 2014-15 on 13.08.2014 declaring the total income at Rs. 41,92,510/-
A notice under Section 148 of the Income Tax Act, 1961, was followed by notices under Section 142(1) issued by the 1st respondent. A draft assessment order under Section 144C, of the Income Tax Act, 1961, dated March 19, 2022, was served on the petitioner, proposing to finalize the assessment by making additions against long-term capital gains in respect of the sale of properties during the relevant financial year for the assessment year 2014-15.
The counsels for the petitioner Harisankar V. Menon , Meera V. Menon, R.Sreejith, K.Krishna and Parvathy Menon argued that the assertion made by the assessing authority in the challenged assessment order, stating that no objection had been filed against the draft assessment order, was not in line with the facts. According to the notice accompanying the draft assessment order, the petitioner was instructed to submit objections solely before the Dispute Resolution Panel, with no direction to file objections before the assessing authority.
Additionally, it was contended that all pleadings and documents are accessible on the website due to the online nature of the proceedings, including the objection filed by the petitioner to the draft assessment order, thus refuting the assessment authority’s claim of non-filing of objections as erroneous and contrary to the law.
In contrast, Mr. Keerthivas Giri, the Standing Counsel representing for the Income Tax Department, contended that Section 144C(2) of the Income Tax Act, 1961, mandated an assessee to submitted objections to the draft assessment order before both the Dispute Resolution Panel and the assessing authority.
Hence, it was argued that even if there was no explicit instruction in the notice to file objections before the assessing authority, it was the responsibility of the petitioner/assessee to do so. In the absence of objections before the assessing authority, it was deemed by the assessing authority that no objections had been raised, leading to the issuance of the final assessment order.
The bench observed that If the assessing authority who issued the notice himself had not mentioned that the objection to the draft assessment order was to be filed before the Dispute Resolution Panel as well as the assessing authority, presuming that the petitioner must have known that the objection was required to be filed before the assessing authority was a very high expectation by the assessing authority from the assessee.
The objection to the draft assessment order was filed before the Dispute Resolution Panel, and the said objection must have been available on the web portal, thus the assessing authority’s recording that no objection was filed to the draft assessment order is incorrect. The assessing authority had proceeded in a highly technical manner. The Dispute Resolution Panel had already considered the objections and given direction in the copy of order issued by the second respondent as regards copy of objection filed by the petitioner before the second respondent , dated 13.04.2022 to the assessing authority.
The single bench of Justice Dinesh Kumar Singh observed that the challenged assessment order, wherein the assessing authority claimed that no objection to the draft assessment order was filed, was clearly erroneous. Such inaccurate findings rendered the assessment order flawed.
Therefore, the bench hereby overturned the assessment order and sent the matter back to the assessing authority for reconsideration, taking into account the directions issued by the Dispute Resolution Panel in copy of order issued by the second respondent as regards copy of objection filed by the petitioner before the second respondent, dated 13.04.2022, and to issue a fresh assessment order in compliance with the law. Consequently, the current writ petition was granted in the aforementioned terms.
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