Case Note & Summary
The petitioner, Zarah Rafique Malik, an individual investor, challenged the final assessment order dated 28 May 2024 passed under Section 143(3) read with Section 144C(3) of the Income Tax Act, 1961, along with consequential notices of demand. The assessment year was 2022-23. The petitioner's returns were selected for scrutiny, and a show cause notice was issued on 28 March 2024, to which the petitioner responded on 29 March 2024. On the same day, the Assessing Officer passed a draft order under Section 144C(1). The petitioner filed objections before the Dispute Resolution Panel (DRP) on 24 April 2024 but inadvertently failed to inform the Assessing Officer about the pendency of these objections. Consequently, the Assessing Officer proceeded to pass the final assessment order on 28 May 2024, along with notices under Sections 156, 270A, and 274. The petitioner sought remission of the matter to the DRP. The court considered the rival submissions. The petitioner's counsel relied on Sulzer Pumps India Private Limited v. Dy. Commissioner of Income Tax and OmniActive Health Technologies Limited v. Assessment Unit, arguing that the lapse should be condoned as objections were factually pending before the DRP. The respondent's counsel argued that the Assessing Officer was not at fault and that once the final assessment order was made, the DRP became functus officio, relying on Undercarriage and Tractor Parts (P) Ltd v. Dispute Resolution Panel-3. The court found the facts comparable to Sulzer Pumps, where a coordinate bench had granted relief despite the Assessing Officer not being at fault, because objections were pending before the DRP. The court distinguished Undercarriage and Tractor Parts, noting that in that case, the assessee had also appealed to the Commissioner of Income Tax (Appeals), rendering the DRP functus officio. Here, no such appeal was filed. The court held that in the peculiar facts, the petitioner should be indulged but must pay costs of Rs.10,000 to the High Court Employees Medical Welfare Fund within two weeks. Subject to payment, the impugned assessment order was set aside and the matter remitted to the DRP to proceed according to law. All contentions on merits were left open.
Headnote
A) Income Tax - Assessment - Final Assessment Order - Section 143(3) read with Section 144C(3) of the Income Tax Act, 1961 - Petitioner inadvertently failed to inform Assessing Officer about filing objections before DRP - Assessing Officer passed final assessment order - Court set aside order and remitted matter to DRP, following Sulzer Pumps India Private Limited v. Dy. Commissioner of Income Tax, holding that factual pendency of objections before DRP warrants indulgence despite assessee's lapse - Petitioner directed to pay costs of Rs.10,000 to High Court Employees Medical Welfare Fund (Paras 10-13). B) Income Tax - Dispute Resolution Panel - Functus Officio - Section 144C of the Income Tax Act, 1961 - DRP becomes functus officio only after final assessment order is made and appealed before CIT(A) - In present case, no appeal was filed, so DRP retained jurisdiction - Undercarriage and Tractor Parts (P) Ltd v. Dispute Resolution Panel-3 distinguished (Paras 11-12).
Issue of Consideration
Whether the final assessment order passed by the Assessing Officer despite pending objections before the Dispute Resolution Panel (DRP) should be set aside and the matter remitted to the DRP for fresh consideration.
Final Decision
The impugned final assessment order dated 28 May 2024 is set aside subject to payment of costs of Rs.10,000 to the High Court Employees Medical Welfare Fund within two weeks. The matter is remitted to the DRP to proceed according to law. Rule made absolute in terms of prayer clause (a). All contentions on merits left open.
Law Points
- Condonation of procedural lapse
- functus officio doctrine
- DRP jurisdiction
- Section 144C Income Tax Act
- 1961
