Court sets aside DRP order in W.P.No.5499 of 2016, remands for fresh consideration.

The court allowed W.P.No.5499 of 2016, setting aside the order passed by the DRP and subsequent assessment order. The matter was remanded for fresh consideration, emphasizing that the petitioner/assessee cannot raise the plea of limitation against the Assessing Officer and the DRP during the reassessment process.

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Issues Involved:
1. Violation of principles of natural justice.
2. Adequacy of opportunity provided by the Dispute Resolution Panel (DRP).
3. Validity of the DRP's order and subsequent assessment order.
4. Availability of alternative remedies.
5. Computation of the time limit under Section 144C(12) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Violation of principles of natural justice:
The petitioner argued that the DRP hurriedly passed the order within seven days after directing the petitioner to appear for a personal hearing on 16.12.2015. The petitioner requested an adjournment due to floods affecting their factory premises, making it difficult to retrieve records. Despite the request, the DRP compelled the petitioner to appear and submit whatever documents were available, leading to the contention of a total violation of natural justice.

2. Adequacy of opportunity provided by the DRP:
The petitioner contended that the DRP did not provide a fair and reasonable opportunity to present their case. The DRP scheduled the hearing on 16.12.2015, and the petitioner submitted written submissions on 16.12.2015 and 17.12.2015. The petitioner argued that the opportunity was not effective, especially since the DRP passed the order within a short span of seven days without properly addressing the request for adjournment.

3. Validity of the DRP's order and subsequent assessment order:
The court noted that the DRP is a special mechanism created under the Act to provide speedy disposal of disputes. The DRP's order dated 23.12.2015 and the subsequent assessment order dated 29.01.2016 were challenged. The court observed that the DRP did not take a realistic view of the petitioner's request for adjournment, given the extraordinary circumstances of the floods. The court held that the DRP's hurried manner of closing the proceedings and passing the order was improper, leading to the conclusion that there was a violation of natural justice.

4. Availability of alternative remedies:
The respondents argued that the petitioner had an effective alternative remedy by filing an appeal before the Tribunal (ITAT) under Section 253(1)(d) of the Act. However, the court held that if the DRP's order was passed in violation of principles of natural justice, the petitioner was entitled to challenge it before the court under Article 226 of the Constitution of India. The court emphasized that the availability of an alternative remedy does not bar the petitioner from approaching the court in such circumstances.

5. Computation of the time limit under Section 144C(12) of the Income Tax Act, 1961:
The court discussed the computation of the nine-month time limit for the DRP to pass orders under Section 144C(12). The court held that the time should be computed from the date on which the Draft Assessment Order is received by the assessee. In this case, the Draft Assessment Order was received on 04.04.2015, and the objections were filed on 17.04.2015. The court noted that the DRP had until 31.12.2015 to pass the order but failed to provide a realistic opportunity for the petitioner to present their case.

Judgment:
The court allowed W.P.No.5499 of 2016, setting aside the impugned order passed by the DRP and the subsequent assessment order dated 29.01.2016. The matter was remanded to the DRP for fresh consideration. The court emphasized that the petitioner/assessee is not entitled to raise the plea of limitation against the Assessing Officer and the DRP while proceeding afresh to complete the assessment.

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