The Delhi Income Tax Appellate Tribunal has recently by observing the non-implementation of Dispute Resolution Panel directions by assessing officers directing the government to issue necessary guidelines.
Assessee Oxbow Energy Solutions LLC is a non-resident corporate entity incorporated in the United States of America (USA). From the information generated through the Annual Information Report (AIR) of the department, it was noticed that certain income earned by the assessee during the year was not offered to tax. The department further found that the assessee had not filed any return of income for the impugned assessment year. The same year the assessee had entered into a transaction of sale and purchase in National/Multi-commodity exchange. This came to the knowledge of the department and an NMS notice was sent to the assessee to furnish necessary information on financial transactions/activities made.
Assesesse did not give a response to the notice issued by the assessing officer hence the assessing officer initiated proceeding under section 133(6) of the Act to M/s DSP Merrill Lynch Ltd., M/s. City Bank Ltd. and M/s. Bombay Stock Exchange Ltd. From the information received from M/s DSP Merrill Lynch Ltd., which acted as a broker in respect of share transaction entered by the assessee. After the verification relating to the transaction, the assessing officer pass an order and made an addition. Against the order, the assessee filed an objection before the DRP. Therefore DRP direct the assessing officer to delete the addition but the assessing officer would not completely delete the addition. Against the action, the assessee filed an appeal before the ITAT.
S.K. Agarwal Counsel for the assessee submits that the action of the Assessing Officer is totally unacceptable as he has exceeded his jurisdiction provided under the statute.
As per sub-section (8) of section 144C, the DRP may confirm, reduce or enhance the variation proposed in the draft assessment order and issue necessary directions to the Assessing Officer. Sub-section (10) of section 144C makes it clear that every direction issued by learned DRP shall be binding on the Assessing Officer
Rashmita Jha counsel for the revenue confirmed the decision of the assessing officer.
After considering the contentions of both parties the ITAT bench comprising G.S.Pannu, ( President) And Saktijit Dey, (Judicial Member) allowed the appeal filed by the assessee and observed that in several instance the assessing officer did not implement the directions issued by the DRP it was a very disturbing trend and reflects poorly on the credibility of the department and shakes the confidence of taxpayers.
Moreover, DRP is a dispute resolution mechanism constituted by three senior Commissioner levels which were set up by the Government under the statute. As per the Statute, the Assessing Officer is duty-bound to implement the directions of the DRP.
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