Validity of incometax assessment under Section 144C(3) remitted to DRP; assessment and demand quashed, reassessment to follow

Validity of the assessment under Section 144C(3) was contested because objections to the draft assessment order remained pending with the DRP; the final assessment order and the demand notice for Rs. 56,76,09,018 were quashed and the matter remitted to the DRP for fresh consideration under Section 144C. Thereafter the assessing officer must pass the assessment in accordance with the procedure prescribed under Section 144B(1)(xxix)-(xxxi) and Section 144C, ensuring objections filed with the DRP are disposed of before finalisation.

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Issues:
Challenging final assessment order and demand notice under Income Tax Act, 1961.

Analysis:
The petitioner filed a writ petition challenging the final assessment order dated 30th June, 2021, passed under Section 143(3) read with Sections 144C(3) and 144B of the Income Tax Act, 1961, along with the demand notice of Rs. 56,76,09,018 issued for the Assessment Year 2017-18. The petitioner sought directions to the respondents not to take any further action based on the impugned assessment order and demand notice. The petitioner highlighted that due to the lockdown in Delhi, objections to the draft assessment order could not be filed within the stipulated 30 days and were filed late on 21st June, 2021. The petitioner relied on Circular No.12 of 2021 and Notification No.74/2021 dated 25th June 2021, which extended the time limits for certain compliances. The petitioner argued that the objections were filed within the extended time limit provided in the circular. The petitioner contended that the assessment order was passed erroneously without considering the extended time limits and while objections were pending with the Dispute Resolution Panel (DRP). The respondent accepted notice and did not object to remitting the matter to the DRP.

The court, after considering the submissions, quashed the final assessment order dated 30th June, 2021, and the demand notice of Rs. 56,76,09,018 issued under Section 156 of the Act for the assessment year 2017-18. The court remitted the matter to the DRP for consideration under Section 144(C) of the Act. The court directed that the assessment order should be passed in accordance with the procedure stipulated under Section 144B(1) (xxix) to (xxxi) as well as Section 144(C) of the Act. Consequently, the writ petition along with the pending application was disposed of, and the order was to be uploaded on the website and forwarded to the learned counsel through e-mail for reference.

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