S.144C IT Act | AO Not Having Info About Pending Objections Before Dispute Resolution Panel No Grounds To Sustain Final Assessment Order: Delhi HC
Kapil Dhyani
18 Dec 2024 8:46 PM IST
The Delhi High Court has made it clear that a Final Assessment order passed by the Income Tax Authorities under Section 143 of the Income Tax Act, 1961 is not sustainable, if it is passed in ignorance of pending objections before the Dispute Resolution Panel. A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela further clarified that lack of...
The Delhi High Court has made it clear that a Final Assessment order passed by the Income Tax Authorities under Section 143 of the Income Tax Act, 1961 is not sustainable, if it is passed in ignorance of pending objections before the Dispute Resolution Panel.
A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela further clarified that lack of information with the Assessing Officer regarding pendency of the objections is of no consequence. It said,
“...notwithstanding the lack of information with the AO, if an objection has been filed and is pending before the DRP, the Assessment Order passed in ignorance of the said objections, is required to be set-aside.”
The order was passed in a writ petition filed by Jackson Square Aviation Ireland Limited, challenging the Final Assessment Order passed under Section 143(3) read with 144C(3) of the Act for being passed without waiting for the decision of the Dispute Resolution Panel.
The AO had initially passed a Draft Assessment Order under Section 144C(1), proposing addition in Assessee's income on account of treating aircraft lease rentals received by it as interest income.
Assessee filed its objections in Form No. 35A with the DRP. Notwithstanding the same, the AO passed the impugned Final Assessment Order re-computing the income.
The Assessee contended that the AO could not have extinguished its right to get its objections disposed of by the DRP. It submitted that it is eligible in terms of Section 144C(15)(b)(i) of the Act and that the objections were duly filed before the DRP, within time in terms of Section 144C(2)(b) of the Act.
It further submitted that the Department is obligated to await the decision of the DRP before passing the Final Assessment Order, even in cases where the AO has not been notified by the Assessee, as long as the objections before the DRP have been submitted within time.
Agreeing with Assessee's submissions, the High Court granted relief and set aside the impugned Final Assessment Order.
Appearance: Advocate Shashwat Bajpai for Petitioner; SSC Ruchir Bhatia with JSC Anant Mann and Advocate Abhishek Anand for Department
Case title: Jackson Square Aviation Ireland Limited v. Assistant Commissioner Of Income Tax Circle Int Tax 2(1)(2) & Anr
Case no.: W.P.(C) 11636/2024
