2025 (3) TMI 234 - HC - Income Tax

Final assessment order u/s 143 (3) r.w.s. 144C (3) along with consequential notices of demand - Petitioner lodged objections to the draft order but failed to inform the assessing officer about the objections being filed before the DRP. Consequently the final assessment order was made - HELD THAT - We are inclined to set aside the impugned order and remit the matter to the DRP. The facts in this case are comparable in Sulzer Pumps India Private Limited 2021 (12) TMI 891 - BOMBAY HIGH COURT where a Coordinate Bench of this Court after recording that the assessing officer was not at fault still granted the assessee in the same matter an additional opportunity since factually objections had been filed with DRP and such objections were pending. The relief in Sulzer Pumps (supra) was granted based on facts like those in the present case. Therefore it is not as if the Sulzer Pumps (supra) or this order is a precedent for exercising discretion in every matter of this nature irrespective of the factual position. At the same time we also agree that the assessing officer who made the impugned assessment order in this case was not at fault because there was no intimation by the Petitioner about the pendency of objections before the DRP. Though in the peculiar facts of the present case which are quite similar to those in Sulzer Pumps (supra) we are indulging the Petitioner it is only appropriate that the Petitioner for her lapse she pays costs of Rs. 10, 000/- favouring the High Court employees medical welfare fund at Mumbai.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the final assessment order dated 28 May 2024 under Section 143 (3) read with Section 144C (3) of the Income Tax Act, 1961, along with consequential notices of demand dated 28 May 2024, should be challenged by the Petitioner and remitted to the Dispute Resolution Panel (DRP) for consideration following the law.Issue-wise detailed analysis:The Petitioner's returns for the assessment year 2022-23 were selected for scrutiny assessment, and a show cause notice seeking justification of certain expenses and claims was issued. The Petitioner responded, and a draft order was passed. The Petitioner lodged objections to the draft order but failed to inform the assessing officer about the objections being filed before the DRP. Consequently, the final assessment order was made, and notices under various sections were issued to the Petitioner.The Petitioner's counsel admitted the Petitioner's omission but argued that the objections were pending before the DRP. The Respondent's counsel contended that once the final assessment order is made, even the DRP would be functus officio. The Court considered the arguments and relevant case law.Significant holdings:The Court set aside the impugned order and remitted the matter to the DRP based on the factual similarities with a previous case. The Court noted that the assessing officer was not at fault, but the Petitioner's lapse warranted a cost of Rs. 10,000 to be paid to the High Court employees' medical welfare fund at Mumbai within two weeks. Upon payment of the costs, the impugned assessment order would stand set aside, and the matter would be remitted to the DRP to proceed following the law.The Court's decision was based on the specific circumstances of the case and the principles established in relevant precedents. The core principle established was that while the assessing officer was not at fault, the Petitioner's failure to inform about objections before the DRP warranted a cost but allowed for the matter to be remitted for further consideration.The final determination was to set aside the impugned assessment order and remit the matter to the DRP, subject to the Petitioner paying the specified costs within the stipulated timeframe.This judgment provides a detailed analysis of the legal issues surrounding the final assessment order under the Income Tax Act and the appropriate course of action to be taken in such circumstances.