Assessment Order Overturned; Assessing Officer to Reconsider Post-DRP Decision for AY 2017-18.

The HC set aside the impugned Assessment Order, Notice of Demand, and Show Cause Penalty Notice for AY 2017-18, acknowledging the Assessing Officer's lack of fault. The Court issued a writ of Certiorari, directing the Assessing Officer to consider the DRP's views in a fresh Assessment Order after the DRP's decision. The petition was allowed and disposed of accordingly.

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Issues: Impugning Assessment Order under Income Tax Act for AY 2017-18, Interpretation of Section 144C requirements, Failure to communicate reference to Assessing Officer, Setting aside Assessing Officer's order, Consideration of DRP's views in fresh Assessment Order.

In this case, the petitioner challenged the Assessment Order dated 28th June, 2021, passed by Respondent No.2 under the Income Tax Act for the Assessment Year 2017-18, along with the consequential Notice of Demand and Show Cause Notice for penalty. The petitioner contended that Section 144C (2) of the Act mandates the assessee to file a reference before the Dispute Resolution Panel (DRP) within 30 days from the receipt of the Draft Assessment Order and to communicate a copy of the reference to the Assessing Officer within the prescribed time limit. However, the petitioner believed that the reference filed electronically with the DRP would automatically be communicated to the Assessing Officer due to the faceless assessment system. As a result, the Assessing Officer, unaware of the reference, proceeded to pass the impugned Assessment Order after the prescribed period had lapsed.

The Court noted that the reference before the DRP was still pending, and the petitioner had failed to directly communicate the reference to the Assessing Officer. Considering the arguments and submissions, the Court opined that since the petitioner had raised objections by filing a reference with the DRP, as per Section 144C (4) of the Act, the Assessing Officer should pass the final order, taking into account the views expressed by the DRP. Therefore, the Court decided to set aside the impugned Assessment Order, acknowledging that the Assessing Officer was not at fault but should consider the DRP's views while issuing a fresh Assessment Order.

Consequently, the petition was allowed, and a writ of Certiorari was issued to quash the impugned Assessment Order, Notice of Demand, and Show Cause Penalty Notice. The Assessing Officer was directed to take further steps in the matter after the DRP passes its order on the reference filed by the petitioner. Finally, the petition was disposed of in light of the above findings and directions provided by the Court.

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