2024 (2) TMI 751 - HC - Income Tax

Validity of assessment order u/s 144C - petitioner filed objection to the draft assessment order well within the time of thirty days before the DRP - While the Dispute Resolution Panel was still considering the objection to the draft assessment, the assessing authority has finalised the impugned assessment order on the ground that the petitioner had not filed objection to the draft assessment order HELD THAT - If the assessing authority who issued the notice himself did not mention 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 is 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 be available on the web portal and, therefore, the assessing authority recording that no objection was filed to the draft assessment order is incorrect. The assessing authority has proceeded in a highly technical manner. The Dispute Resolution Panel has already considered the objections and given direction in Exhibit P-4 to the assessing authority. The impugned assessment order wherein the assessing authority had observed that no objection to the draft assessment order was filed by the assessing authority is palpably wrong. The assessment order gets vitiated for incorrect findings. Therefore, set aside the assessment order and remand the matter back to the assessing authority to consider the direction issued by the Dispute Resolution Panel and pass a fresh assessment order.

Summary

Issues Involved:
- Finalizing assessment order under Section 144B of the Income Tax Act
- Filing objection to draft assessment order before Dispute Resolution Panel and assessing authority
- Correctness of assessing authority's finding on objection filing
- Appealability of assessment order under Section 246A of the Income Tax Act

Summary:
The petitioner, a Non-Resident Indian, filed a return of income for the assessment year 2014-15. A draft assessment order was served proposing additions against long term capital gains. The petitioner objected to the draft assessment order before the Dispute Resolution Panel within the specified time. However, the assessing authority finalized the assessment order claiming no objection was filed. The Dispute Resolution Panel later issued directions. The assessing authority contended that objections should have been filed before both the Panel and the assessing authority. The court noted that the assessing authority's expectation for objections before both entities was unreasonable. The court found the assessing authority's conclusion on objection filing to be incorrect and technical. The court emphasized that the Dispute Resolution Panel had already considered the objections and issued directions. The assessing authority's decision was deemed incorrect, and the assessment order was set aside. The matter was remanded to the assessing authority to issue a fresh assessment order in line with the Panel's directions. The court allowed the writ petition on these grounds. The Income Tax Department argued that the assessment order was appealable under Section 246A, suggesting the petitioner should have pursued that route instead of approaching the court under Article 226 of the Constitution of India.