Validity of order passed under Section 144C in faceless assessments: objections ignored by DRP led to demand being raised

The note addresses validity of assessment orders under the scheme governing draft orders and objections, emphasizing that failure to deliver objections to the Faceless Assessment Officer and to comply with the procedure for filing objections before the Dispute Resolution Panel results in the DRP not considering those objections and a demand being raised. It explains that the scheme mandates consideration of objections by the DRP and automatic deferral of assessment proceedings pending DRP order to protect natural justice, and warns that e-filing and faceless processes can create confusion and harsh consequences if service requirements are not met.

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Issues: Whether the final assessment order and demand notice passed by the Assessing Officer without considering objections filed by the assessee before the Dispute Resolution Panel (and without the AO receiving a copy of those objections) is liable to be quashed for breach of the assessee's right to be heard under Section 144C of the Income-tax Act, 1961.

Analysis: The Court examined the faceless assessment scheme under Section 144C, the procedural requirement in Section 144C(2)(b) that the assessee must forward a copy of objections to the Assessing Officer, and the operation of Section 144C(4) enabling the AO to proceed where no objection is received by him. The Court recognised that under the faceless regime the AO may reasonably infer non-filing if he does not receive a copy of objections, but also noted that the statutory scheme envisages automatic deferral and consideration by the DRP when objections are filed. The Court observed that in the present case the objections were factually filed before the DRP but were not sent to the AO, resulting in the AO passing the final order and demand without hearing the assessee or awaiting DRP's view, thereby producing an adverse consequence to the assessee.

Conclusion: The impugned final assessment order and the demand notice dated 18.12.2025 are quashed and set aside; relief is granted in favour of the assessee.

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