One-day delay condoned; DRP order set aside, reconsider Form 35A and evidence under s.144C and grant hearing

ITAT COCHIN-AT condoned a one-day delay in filing the assessee's objection before the DRP, set aside the DRP order dated 05.08.2016 and directed the DRP to consider Form No.35A with annexures and evidence on merits. Relying on a relevant HC decision, the Tribunal ordered the DRP to afford adequate hearing to both parties, comply with the procedure under s.144C of the I.T. Act and dispose of the matter expeditiously.

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Issues Involved:
1. Timeliness of final assessment order under section 144C(3) of the Income-tax Act.
2. Rejection of objections by Draft Resolution Panel (DRP) due to delay in filing.
3. Legal implications of condoning the delay in filing objections before DRP.
4. Dismissal of stay application by the Tribunal.

Issue 1: Timeliness of Final Assessment Order:
The appeal challenged the final assessment order dated 22.08.2016 passed under section 143(3) read with section 144C read with section 92CA of the Income-tax Act for the assessment year 2012-2013. The counsel for the assessee contended that the final assessment order was barred by limitation as it was passed beyond the prescribed time limit. The counsel argued that as per section 144C(4), the Assessing Officer must pass the final assessment order within one month from the end of the month in which the time limit for filing objections under section 144C(2) expires. Citing relevant tribunal orders, the counsel sought to quash the final assessment order due to the delay.

Issue 2: Rejection of Objections by DRP:
The Draft Resolution Panel (DRP) rejected the assessee's objections to the draft assessment order due to a one-day delay in filing, as per section 144C(2)(b) of the Income-tax Act. The DRP held that it lacked the power to condone the delay, leading to the rejection of the objections. This rejection by the DRP played a crucial role in the subsequent passing of the final assessment order incorporating the proposed additions from the draft assessment order.

Issue 3: Legal Implications of Condoning Delay in Filing Objections:
The counsel for the assessee, supported by the Departmental Representative, proposed an alternative submission based on the judgment of the High Court in a similar case. They sought a direction to condone the one-day delay in filing objections before the DRP and to consider the objections on merits. The Tribunal, considering the interests of justice and equity, agreed to condone the delay and set aside the DRP's order. The Tribunal directed the DRP to consider the objections on merits, providing both parties with a fair hearing and complying with the procedures under section 144C of the Income-tax Act.

Issue 4: Dismissal of Stay Application:
The Tribunal disposed of the appeal concerning the stay application, rendering it infructuous. Consequently, the stay application filed by the assessee was dismissed as infructuous. The appeal filed by the assessee was allowed for statistical purposes, while the stay application was dismissed as it was no longer relevant due to the disposal of the appeal.

This comprehensive analysis of the judgment highlights the critical issues of timeliness of the final assessment order, rejection of objections by the DRP, legal implications of condoning the delay in filing objections, and the dismissal of the stay application by the Tribunal.

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