Assessee's Failure To Respond To Draft Assessment Order In Timely Manner No Grounds For AO To Exceed Limitation U/S 144C(4) Of IT Act: Delhi HC
Kapil Dhyani
9 Oct 2024 2:00 PM IST
The Delhi High Court has made it clear that an assessee's failure to timely respond to the 'draft assessment order' issued under Section 144C of the Income Tax Act, 1961 does not give leeway to the Assessing Officer (AO) to exceed the limitation period for passing the final assessment order.
Section 144C prescribes special procedure whereby an 'eligible assessee' is issued a draft assessment order. The assessee is required to respond to the draft order within thirty days, by either filing its acceptance or objections. If the assessee files acceptance or fails to respond, AO has to issue the final assessment order- within one month from the end of the month in which the period for filing objections expires. In case of objections, the Dispute Resolution Panel comes into picture.
In the case at hand, draft assessment order was passed on March 04, 2022, thus, the assessee was required to file its acceptance or objections within a period of one month, by April 04, 2022.
The Assessing Officer was then required to pass an assessment order within one month from April 30, 2022.
However, the assessee filed its objections only on April 06, 2022 and the final assessment order came to be passed on December 27, 2022.
Revenue approached the High Court under Section 260A after ITAT allowed the assessee's appeal against the above said order on ground that it was passed beyond the period prescribed under Section 144C .
It argued that the assessee cannot be allowed to take advantage of its own wrong as it had filed the objections beyond the period of 30 days.
However, the High Court found this argument “insubstantial”. It said a combined reading of Section 144C(3)(b) and (4)(b) reflects that if no objections from the assessee are received within 30 days of draft order, the AO “shall” pass the assessment order within one month from the end of the month in which the period of filing of objections expires.
“There is no ambiguity in the language of subsection (4) of Section 144C of the Act and notwithstanding that the assessee had not filed its objections within the period of thirty days, the AO was required to pass the final order, within the period as stipulated under subsection (4) of Section 144C of the Act,” a division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma held and dismissed Revenue's appeal.
Appearance: Senior Standing Counsel Ruchir Bhatia, Junior Standing Counsel Anant Mann and Advocate Abhishek Anand for Revenue; Advocates Manuj Sabharwal, Drona Negi and Devvrat Tiwari for Respondent
Case title: The Commissioner Of Income Tax – International Taxation -2 v. Mavenir Uk Holdings
Case no.: ITA 504/2024
