ACIT's Section 144C(3) assessment order quashed for wrongly rejecting timely filed Form 35A objections

Gujarat HC held that the assessment order passed by ACIT under Section 144C(3) was invalid. The assessee had timely filed objections through Form 35A both online and physically within the 30-day period specified under Section 144C(2)(b). The AO incorrectly concluded that objections were not filed within the stipulated time. The court quashed the assessment order, noting that the concept of draft orders was introduced with Section 144B for faceless assessments. The DRP order and provisional attachment under Section 281B were also set aside as they became untenable following the quashing of the assessment order.

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Issues:
1. Challenge to Assessment Order under Article 227 of the Constitution of India.
2. Alleged failure to file objections within the stipulated time period under Section 144C of the Income Tax Act, 1961.
3. Dispute regarding the filing of objections and subsequent Assessment Order.
4. Provisional attachment order under Section 281(B) of the Act.

Detailed Analysis:
Issue 1:
The petitioner challenged the Assessment Order dated 29.05.2023 passed by the Assistant Commissioner of Income Tax, International Taxation, under Article 227 of the Constitution of India. The petitioner contended that the Assessment Order was based on the draft assessment order as the objections were not filed within the specified time period before the Distribution Resolution Panel (DRP) as required by Section 144C of the Income Tax Act, 1961.

Issue 2:
The petitioner received multiple notices alleging income escapement, but due to non-residency, some notices were not responded to promptly. The petitioner later informed the authorities about non-residency and submitted necessary documents on the Income Tax E-portal. The draft assessment order was passed, and objections were filed within the stipulated time frame, both electronically and physically. However, the Assessment Order was still passed based on the draft assessment order.

Issue 3:
The petitioner argued that objections were filed within the prescribed time limit, supported by evidence of uploading the appeal electronically and dispatching it physically. The respondent contended that the physical submission was delayed by a day, justifying the Assessment Order. The Court found that the objections were filed within the required timeframe, and the Assessment Order was unjustified under Section 144C of the Act.

Issue 4:
The respondent continued a provisional attachment order despite the Assessment Order, which the petitioner argued was no longer valid. The Court held that since the Assessment Order was quashed, the provisional attachment order and the DRP's order were also set aside. The matter was remanded to the DRP for further consideration in accordance with the law.

Conclusion:
The High Court quashed the Assessment Order, DRP's order, and the provisional attachment order. The matter was remanded to the DRP for reconsideration based on the objections filed by the petitioner within the specified time limit. The Court clarified that the decision was based on procedural grounds and did not delve into the merits of the case.

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