2024 (7) TMI 510 - HC - Income Tax

Validity of assessment orders passed u/s 144C - Objections rejected by respondents due to failure to file before Dispute Resolution Panel (DRP) - petitioner is a Non Resident Indian, who has been charged for suppressing the income - as argued petitioner is an employee in UAE and that the amounts are not liable to be taxed - respondents rejected the objections filed by the respective petitioner on the ground that the petitioners have not filed objections before the Dispute Resolution Panal (DRP) as is contemplated u/s 144C(2) HELD THAT - The respective petitioners appear to have entertained a view that the objections with the respondent were sufficient for the purpose of Section 144C(2) of the Income Tax Act, 1961, though the petitioners ought to have filed their objections not only with the respondent but also with the Dispute Resolution Panel. The objections of the petitioners, which has been considered by the respondents, were an incomplete representation by the objections of the petitioners as it ought to have been filed before the Dispute Resolution Panel. Under these circumstances, we inclined to dispose of these writ petitions by quashing the impugned orders and by remitting the case back to the respondent to pass a fresh order on merits and in accordance with law subject to the respective petitioners filing their objections with the Dispute Resolution Panel within a period of 15 days from the date of receipt of a copy of this order. Subject to the petitioners filing the objections before the Dispute Resolution Panel, the assessment shall be completed in accordance with Section 144C of the Income Tax Act, 1961. It is made clear that in case the petitioners fail to file their objections before the Dispute Resolution Panel within such time, the respondent is at liberty to proceed against the petitioners in the manner known to law, as if this order has not been passed. The submission of the petitioners that the petitioners will withdraw their respective appeals filed before the Appellate Commissioner stands recorded. Writ Petitions stand allowed

Summary

Issues:
1. Assessment orders for the assessment years 2019-20 and 2020-21 challenged by husband and wife petitioners.
2. Non-Resident Indian petitioner accused of income suppression.
3. Petitioners argue against taxation of amounts earned in UAE.
4. Fixed deposits reinvested by petitioners leading to objections filed against assessment orders.
5. Objections rejected by respondents due to failure to file before Dispute Resolution Panel (DRP).
6. Violation of principles of natural justice alleged in appeal process.
7. Interpretation of Section 144C(2)(b) of the Income Tax Act, 1961.
8. Respondents argue for dismissal of writ petitions citing alternate remedy available.
9. Respondents claim objections were duly considered in assessment orders.

Analysis:
The High Court of Madras addressed the challenge brought by a husband and wife against their respective assessment orders for the years 2019-20 and 2020-21. The husband, a Non-Resident Indian working in the UAE, was accused of suppressing income. The petitioners contended that the amounts earned abroad should not be subject to taxation. They had responded to the draft assessment orders, highlighting reinvestment of matured fixed deposits and accrued interest. However, the objections filed by the petitioners were rejected by the respondents for not being submitted before the Dispute Resolution Panel (DRP) as required by Section 144C(2) of the Income Tax Act, 1961.

The Senior Counsel for the petitioners acknowledged that appeals were made to the Appellate Commissioner but argued that the orders violated principles of natural justice. The respondents, represented by the Senior Standing Counsel, maintained that objections should have been filed with both the Assessing Officer and the DRP. They contended that the petitioners had properly utilized the remedy under Section 246A of the Income Tax Act, 1961 by appealing to the Appellate Commissioner.

The Court noted that the petitioners' objections, though considered by the respondents, were incomplete as they failed to involve the DRP as required by law. Consequently, the Court quashed the impugned orders and directed the case to be reconsidered by the respondent, emphasizing the need for the petitioners to file objections with the DRP within 15 days. Failure to comply would allow the respondent to proceed with the assessment. The Court allowed the writ petitions, with no costs imposed, and closed the connected Miscellaneous Petitions. The petitioners' intention to withdraw appeals before the Appellate Commissioner was also noted.