2025 (1) TMI 894 - HC - Income Tax

Court Quashes Assessment Order Due to Technical Glitches; Remands Case for Fresh Consideration by Dispute Resolution Panel.

The HC quashed the Assessment Order dated 25.11.2021 due to procedural lapses, specifically the inability of the petitioner to file objections with the ... Validity of assessment order passed - Proceedings/directions of the Dispute Resolution Panel pursuant to a Draft Assessment Order - Certain technical glitches which disabled the petitioner to comply with the second requirement of filing an objection with the AO - HELD THAT:- Since the petitioner was disabled from forwarding the objection to the AO, the order has been now passed by the AO without awaiting for the order of the Dispute Resolution Panel. Therefore, the impugned Assessment Order dated 25.11.2021 is liable to be quashed and it is accordingly quashed. Since the Dispute Resolution Panel has rejected the application filed by the petitioner, in view of the impugned Assessment Order dated 25.11.2021, directions of the Dispute Resolution Panel dated 13.06.2022 is also liable to be set aside. Accordingly, the matter is remitted back to the Dispute Resolution Panel to pass a fresh order on merits. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the impugned Assessment Order dated 25.11.2021, issued by the Assessing Officer, is valid given the procedural lapses in filing objections with the Assessing OfficerRs.Whether the directions issued by the Dispute Resolution Panel on 13.06.2022 should be set aside due to the procedural irregularities associated with the Draft Assessment OrderRs.What are the implications of technical glitches that prevented the petitioner from fulfilling the statutory requirement of filing objections with the Assessing OfficerRs.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of the Assessment Order dated 25.11.2021Relevant legal framework and precedents:Under Section 144C of the Income Tax Act, 1961, an eligible assessee who is aggrieved by a Draft Assessment Order must file objections with both the Dispute Resolution Panel and the Assessing Officer. The case references a similar situation in W.P.No.7369 of 2024, where the court intervened due to procedural lapses.Court's interpretation and reasoning:The court noted that the petitioner was unable to file objections with the Assessing Officer due to technical glitches. The court emphasized that procedural fairness requires the Assessing Officer to await the decision of the Dispute Resolution Panel before finalizing the assessment.Key evidence and findings:The petitioner filed objections with the Dispute Resolution Panel, but due to technical issues, failed to file with the Assessing Officer. The court found this procedural lapse significant enough to quash the Assessment Order.Application of law to facts:The court applied the principles of procedural fairness and determined that the issuance of the Assessment Order while objections were pending was prejudicial to the petitioner.Treatment of competing arguments:The respondents argued that the petitioner should have informed the National Faceless Assessment Unit about the objections filed. However, the court found that the procedural error warranted quashing the order.Conclusions:The court quashed the Assessment Order dated 25.11.2021 and directed the Assessing Officer to await the decision of the Dispute Resolution Panel before issuing a new order.Issue 2: Directions of the Dispute Resolution Panel dated 13.06.2022Relevant legal framework and precedents:The Dispute Resolution Panel's role is to provide directions on objections filed against Draft Assessment Orders. The court referenced its decision in W.P.No.7369 of 2024 to support its reasoning.Court's interpretation and reasoning:The court reasoned that since the Assessment Order was quashed, the directions of the Dispute Resolution Panel, which were based on the impugned order, must also be set aside.Key evidence and findings:The Dispute Resolution Panel had rejected the petitioner's application due to the procedural lapse. The court found this rejection unjustified in light of the quashed Assessment Order.Application of law to facts:The court applied the principle of fairness, determining that the directions of the Dispute Resolution Panel should not stand when based on an invalid Assessment Order.Treatment of competing arguments:The court did not find any compelling arguments to uphold the directions of the Dispute Resolution Panel given the procedural context.Conclusions:The court set aside the directions of the Dispute Resolution Panel dated 13.06.2022 and remitted the matter back for a fresh order on merits.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:'The issuance of the impugned Assessment Order while the objections of the petitioner are pending before the Dispute Resolution Panel causes great prejudice to the petitioner.'Core principles established:Procedural fairness requires that objections filed with the Dispute Resolution Panel be considered before finalizing an Assessment Order.Technical glitches that prevent compliance with procedural requirements can justify quashing of an Assessment Order.Final determinations on each issue:The Assessment Order dated 25.11.2021 is quashed.The directions of the Dispute Resolution Panel dated 13.06.2022 are set aside.The matter is remitted back to the Dispute Resolution Panel and the Assessing Officer for fresh consideration on merits.