Assessment order set aside for ignoring DRP objections under sections 143(3), 144B, 144C(3); AO must await DRP views

The HC set aside the final assessment order passed under sections 143(3), 144C(3), and 144B, as the AO did not consider the objections filed before the DRP. The petitioner failed to inform the AO of these objections. The court directed the AO to await the DRP's order on the objections and then proceed with the assessment, ensuring the AO benefits from the DRP's views. This decision aligns with precedent where similar facts led to the quashing of the assessment order and remand for reconsideration.

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ISSUES:

Whether failure of an eligible Assessee to communicate objections filed before the Dispute Resolution Panel (DRP) to the Assessing Officer, as required under Section 144C(2)(b)(ii) of the Income Tax Act, 1961, invalidates the final assessment order passed under Section 143(3) read with Sections 144C(3) and 144B'Whether the final assessment order passed without the Assessing Officer being aware of the objections filed before the DRP can be quashed to enable the DRP to consider the objections'Whether the timelines prescribed under Section 144C for passing the final assessment order are mandatory and preclude condonation of delay or procedural lapses by the Assessee?

RULINGS / HOLDINGS:

The Court held that the failure to communicate objections filed before the DRP to the Assessing Officer as required under Section 144C(2)(b)(ii) does not preclude setting aside the final assessment order; the order was quashed to enable the Assessing Officer to consider the DRP's views.The final assessment order passed without the Assessing Officer's knowledge of the objections filed before the DRP was set aside on the ground that "the Assessing Officer will also have the benefit of considering the views of the DRP while passing a fresh assessment order."The Court recognized the timelines under Section 144C as "sacrosanct" but found that in the circumstances of inadvertent non-communication by the Assessee, the assessment order could be set aside to avoid rendering the DRP proceedings infructuous.

RATIONALE:

The Court applied the statutory framework under Sections 143(3), 144B, and 144C of the Income Tax Act, 1961, particularly focusing on the procedural requirements for eligible Assessees under Section 144C(2)(b) and the final assessment under Section 144C(3).The decision followed the precedent set by the Court's earlier ruling in Sulzer Pumps India Private Limited, where a similar failure to communicate objections to the Assessing Officer was held to justify setting aside the final assessment order.The Court emphasized the importance of the Assessing Officer having the benefit of the DRP's views before passing the final assessment order, ensuring compliance with the procedural safeguards intended under Section 144C.No dissenting or concurring opinions were noted; the ruling reflects a consistent interpretation aimed at balancing strict adherence to timelines with procedural fairness to the Assessee.

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