Court directs Dispute Resolution Panel to review petitioner's objections, emphasizing judicial discipline and natural justice.

The court disposed of the writ petition without expressing any opinion on the merits of the case. It directed the Dispute Resolution Panel to consider the petitioner's objections, particularly the decision of the Income-tax Appellate Tribunal for the assessment year 2014-15 and the Supreme Court's judgment in Smifs Securities, emphasizing adherence to judicial discipline and principles of natural justice in the assessment proceedings.

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Issues Involved:
1. Validity of the draft assessment order dated September 28, 2021.
2. Disallowance of depreciation on goodwill.
3. Compliance with judicial precedents and principles of natural justice.
4. Prematurity of the writ petition.

Detailed Analysis:

1. Validity of the Draft Assessment Order:
The petitioner challenged the draft assessment order dated September 28, 2021, passed by respondent No. 1, seeking its quashing and a direction for a reasoned order addressing all objections raised. The court noted that the draft assessment order was issued under section 144C of the Income-tax Act, 1961, which mandates the Assessing Officer to forward a draft order to the eligible assessee if any variation prejudicial to the assessee is proposed.

2. Disallowance of Depreciation on Goodwill:
The petitioner argued that the disallowance of depreciation on goodwill was erroneous. The draft assessment order disallowed depreciation claimed on goodwill amounting to Rs. 1247,45,31,301, citing that the issue had not attained finality as the Department had appealed against the Income-tax Appellate Tribunal's decision in the petitioner’s favor for the assessment year 2014-15. The petitioner contended that this disallowance was contrary to the Supreme Court's judgment in CIT v. Smifs Securities Ltd. [2012] 348 ITR 302 (SC), which held that goodwill is a depreciable asset.

3. Compliance with Judicial Precedents and Principles of Natural Justice:
The court observed that the Assessing Officer's approach in disregarding the Income-tax Appellate Tribunal's decision and attempting to distinguish the Supreme Court's judgment in Smifs Securities was problematic. The court emphasized that the principles of judicial discipline require that decisions of higher appellate authorities be followed unreservedly by subordinate authorities unless stayed by a competent court. The court cited several precedents, including Union of India v. Kamlakshi Finance Corporation Ltd. [1992] Supp (1) SCC 443 and Collector of Customs v. Krishna Sales (P.) Ltd. [1994] Supp (3) SCC 73, reiterating that mere filing of an appeal does not operate as a stay or suspension of the order appealed against. The court also noted that the draft assessment order violated principles of natural justice by not considering binding judicial precedents.

4. Prematurity of the Writ Petition:
The respondents argued that the writ petition was premature as it was directed against a draft assessment order, which had not yet attained finality and was subject to scrutiny by the Dispute Resolution Panel (DRP). The court acknowledged this argument, stating that interfering at this stage might pre-empt decision-making by the DRP. However, the court expressed hope that the DRP would consider all aspects of the matter, including the petitioner’s objections and the binding judicial precedents, while passing appropriate orders.

Conclusion:
The court disposed of the writ petition without expressing any opinion on the merits of the case. It directed the Dispute Resolution Panel to consider the petitioner’s objections, particularly the decision of the Income-tax Appellate Tribunal for the assessment year 2014-15 and the Supreme Court's judgment in Smifs Securities, keeping in mind the discussions made. The court emphasized the need for adherence to judicial discipline and the principles of natural justice in the assessment proceedings.

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