In the recent ruling, the High Court of Delhi, set aside the Final Assessment Order passed by the Assessing Officer (AO) for AY 2022-23, as the assessee’s objections were still pending before the Dispute Resolution Panel (DRP).
Jackson Square Aviation Ireland Limited,petitioner-assessee,filed its Return of Income (RoI) for the assessment year (AY) 2022-23 on 25.10.2022. The case was selected for scrutiny, and the AO issued a show cause notice under Section 148A(b) asking why the receipts should not be taxed as interest income for that year.
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The assessee responded on 27.03.2023. Later, the AO issued a Draft Assessment Order, proposing an addition of Rs. 499,99,19,251/- by treating lease rentals from aircraft leasing as interest income, and also proposed a penalty.
The assessee, dissatisfied with the Draft Assessment Order dated 31.03.2024 passed under Section 144C(1) of the Act, had submitted its objections in Form No. 35A on 29.04.2024 to the DRP. The assessee asserted that it qualified as an eligible assessee under Section 144C(15)(b)(i) of the Act and that the objections were filed within the prescribed time limit under Section 144C(2)(b) of the Act.
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Despite the assessee’s objections dated 29.04.2024 being pending with the DRP, the AO passed the Final Assessment Order on 20.05.2024, revising the assessee’s income to Rs. 499,99,19,251/- for underreporting. The assessee argued that the AO lacked the authority to pass this order while the objections were pending and that its right to have the objections considered by the DRP had not been removed. The assessee also noted that no real-time alert was sent to its registered e-mail ID.
The assessee cited previous court rulings in Fiberhome India, Pepsico India Holding, and De Diamond Electric, where similar cases were sent back to the DRP for proper procedure under Section 144(C), requiring the department to wait for the DRP’s decision before issuing the Final Assessment Order.
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The Division Bench comprising Acting Chief Justice and Tushar Rao Gedela (Justice) after hearing the arguments, concluded that there was no need to examine the issue further, as it was clear that if an objection was pending with the DRP, the Assessment Order passed without considering it had to be set aside. As a result, the petition was allowed, and the impugned Final Assessment Order dated 20.05.2024 passed by the AO for AY 2022-23 was set aside.
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