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2022 (2) TMI 924 - HC - Income TaxValidity of assessment u/s 144C - Mandation of granting opportunity to file objections to the Draft Assessment Order - HELD THAT - Section 144C of the Act mandates that an assessment order under Section 143(3) of the Act shall be passed only after the assessee is granted an opportunity to file objections to the Draft Assessment Order. The petitioner has filed its objections to Ext. P1 DAO, within the extended time as per Ext. P2 Circular, which is binding on the respondents. However, the 1st respondent without considering the same, has passed Ext. P3 final assessment order. I find that Ext. P3 is issued in violation of the principles of natural justice and against the provisions of Section 144C and Ext. P2 Circular issued by CBDT. Accordingly, Ext. P3 Final Assessment Order is set aside. During the pendency of this writ petition, the DRP, by Ext. P8 order, considered and rejected Ext. P4 objection to DAO on the ground that it has no jurisdiction to entertain the same since Ext. P3 Final Assessment Order has already been passed. Since Ext. P3 order is set aside, consequently, Ext. P8 also stands set aside. The 5th respondent shall consider Ext. P4 objection afresh in accordance with law, after affording an opportunity of hearing to the petitioner.
Issues:
Challenge to Ext. P3 assessment order under Section 143(3) of the Income Tax Act, 1961 and Ext. P8 order passed by the Dispute Resolution Panel (DRP) under Section 144C(5) rejecting objections to the Draft Assessment Order. Analysis: 1. The petitioner contested the Ext. P3 assessment order and Ext. P8 order issued by the DRP. The petitioner argued that Ext. P3 was passed in violation of Section 144C and principles of natural justice. 2. The petitioner had initially filed Ext. P4 objections to the Draft Assessment Order (DAO) within the extended time provided by Ext. P2 Circular issued by the Central Board of Direct Taxes (CBDT) due to the Covid-19 pandemic. The CBDT circular extended the time for filing objections before the DRP until 31.05.2021. 3. Despite the petitioner filing objections within the extended time frame, the 1st respondent passed Ext. P3 assessment order before the expiry of the extended deadline. The petitioner argued that the assessment was completed prematurely, contrary to the provisions of Section 144C and the CBDT circular. 4. The Court noted that the CBDT circular, being issued under Section 119 of the Act, is binding on the Income Tax Authorities. The petitioner's objections filed within the extended time frame were deemed valid, and the premature completion of assessment by the 1st respondent was considered a violation of natural justice. 5. The Court referred to Section 144C(1) to (3) of the Act, which mandates that an assessment order under Section 143(3) shall only be passed after the assessee is given an opportunity to file objections to the Draft Assessment Order. The premature passing of Ext. P3 without considering the objections filed by the petitioner was deemed unjust and against the provisions of the Act and the CBDT circular. 6. Consequently, the Court set aside the Ext. P3 final assessment order and the Ext. P8 order issued by the DRP. The DRP was directed to reconsider the petitioner's objections afresh in accordance with the law and after providing an opportunity for a hearing. Conclusion: The Court allowed the writ petition, setting aside both Ext. P3 assessment order and Ext. P8 order. No costs were awarded in the matter.
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