Case Note & Summary
The dispute arose from a return of income filed by the petitioner for Assessment Year 2016-2017, which disclosed losses under normal provisions and Section 115JB of the Income Tax Act, 1961, along with a claim for refund of prepaid taxes of Rs. 1128.47 crores. The assessment was selected for scrutiny and referred to the Transfer Pricing Officer. The Assessing Officer passed a draft order on 29 December 2019 proposing additions, against which the petitioner filed objections before the Dispute Resolution Panel on 27 January 2020. The DRP issued directions on 25 March 2021, which were uploaded on the ITBA portal and emailed to the petitioner on 6 April 2021. The petitioner contended that the Assessing Officer failed to pass the final order within 30 days as required by Section 144C(13) of the Income Tax Act, 1961, thereby deeming the returned income accepted and entitling the petitioner to a refund. The Revenue argued that the Faceless Assessing Officer received the DRP directions only on 23 August 2023 and passed the final order on 31 August 2023, which was within one month of receipt. The High Court analyzed the Faceless Assessment Scheme 2019 and its amendment, noting that all communications must go through the National e-Assessment Centre and any order is deemed received by the FAO once available to the NeAC. The court observed the assessing officer's complete apathy and negligent approach, emphasized the adverse effect on the exchequer, and highlighted the email evidence showing timely communication of DRP directions. The excerpt ends before the final operative order is recorded; however, the court was clearly inclined to reject the Revenue's limitation argument and grant relief to the petitioner.
Headnote
A) Income Tax - Assessment Procedure - Section 144C(13) Income Tax Act, 1961 - Statutory Limitation - Assessing Officer must pass final assessment order within thirty days of receipt of Dispute Resolution Panel directions; failure results in deemed acceptance of returned income and entitlement to refund. Court noted directions issued on 25 March 2021 and final order passed on 31 August 2023, beyond limitation; held that limitation runs from date directions available to National e-Assessment Centre under Faceless Assessment Scheme, not from date noted in Case History Noting. (Paras 5-9, 12)
B) Faceless Assessment - Communication - Paragraph 4(2) e-Assessment Scheme 2019 - Deemed Receipt - All communications among assessment units and assessee must go through National e-Assessment Centre; any order deemed received by Faceless Assessing Officer once available to NeAC. Revenue's contention that FAO received DRP directions only on 23 August 2023 rejected because directions were uploaded on ITBA portal on 25 March 2021 and emailed to assessee on 6 April 2021. (Paras 10-12)
C) Judicial Review - Writ Jurisdiction - Income Tax Refund - Assessing Officer's dereliction of duty affects exchequer and economic stability; High Court expressed strong disapproval of negligent approach and emphasized strict compliance with statutory timelines. (Paras 3, 7)
Issue of Consideration
Whether the Assessing Officer was required to pass final assessment order within 30 days of DRP directions dated 25 March 2021 under Section 144C(13) of Income Tax Act, 1961, and whether the assessee is entitled to refund of excess tax paid when no such order was passed within the statutory period.
Law Points
- Section 144C(13) of Income Tax Act
- 1961 mandates final assessment within 30 days from receipt of DRP directions
- under Faceless Assessment Scheme
- communication to National e-Assessment Centre is deemed receipt by Faceless Assessing Officer
- failure to pass final order within statutory period results in deemed acceptance of returned income
- assessing officer cannot rely on internal delay in transmitting directions to justify non-compliance
- e-Assessment Scheme paragraph 4(2) centralizes communication through NeAC
Case Details
2023 LawText (BOM) (11) 60
Writ Petition (L) No. 15398 of 2023
K.R. Shriram, Dr. Neela Gokhale
Mr. J.D. Mistri, Senior Advocate with Mr. Madhur Agrawal instructed by Mr. Jitendra Singh for Petitioner; Mr. Devang Vyas, Additional Solicitor General with Mr. Devvrat Singh, Ms. Sangeeta Yadav, Mr. Jagdish Choudhary for Respondents-Revenue
Vodafone Idea Limited (as successor to Vodafone Mobile Services Ltd.)
Central Processing Centre, Bengaluru; Assistant Commissioner of Income-tax, Circle-5(2)(2), Mumbai; Principal Chief Commissioner of Income-tax, Mumbai; Union of India through Secretary, Department of Revenue
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Nature of Litigation
Writ petition challenging failure to refund excess tax paid for Assessment Year 2016-2017 due to non-passing of final assessment order within statutory period under Section 144C(13) of Income Tax Act, 1961.
Remedy Sought
Petitioner sought refund of excess tax paid with interest, acceptance of original return of income, and direction to quash delayed assessment order dated 31 August 2023.
Filing Reason
Assessing Officer failed to pass final order within 30 days of DRP directions dated 25 March 2021, thereby deemed to accept returned income; petitioner filed writ after no refund.
Previous Decisions
DRP issued directions on 25 March 2021; AO passed draft order 29 December 2019; Supreme Court in Civil Appeal No. 2377 of 2020 directed revenue to conclude assessment for AY 2016-2017 at earliest; after petition filing, assessment order passed on 31 August 2023.
Issues
Whether the Assessing Officer was required to pass final assessment order within 30 days of DRP directions dated 25 March 2021 under Section 144C(13) of Income Tax Act, 1961.
Whether limitation under Section 144C(13) runs from the date DRP directions are uploaded on ITBA portal and communicated to assessee, or from the date the Faceless Assessing Officer enters them in Case History Noting.
Whether the assessee is entitled to refund of excess tax paid with interest when no final order was passed within the statutory period.
Submissions/Arguments
Petitioner argued that DRP directions were issued on 25 March 2021 and served on petitioner via email dated 6 April 2021; AO failed to pass final order within 30 days; returned income deemed accepted and refund due.
Petitioner relied on Shell India Markets (P.) Ltd. v. Additional/Joint/Deputy/Assistant Commissioner of Income-tax/Income-tax Officer, National Faceless Assessment Centre, New Delhi to support duty of AO to complete assessment within prescribed time under Section 144C(13).
Revenue contended that DRP directions were received by Faceless Assessing Officer only on 23 August 2023; final order passed on 31 August 2023 was within one month from receipt; limitation runs from receipt by FAO, not upload date.
Revenue argued that only upon receipt of DRP directions by FAO was he duty bound to complete assessment.
Ratio Decidendi
Under Faceless Assessment Scheme, receipt by National e-Assessment Centre of DRP directions constitutes deemed receipt by Faceless Assessing Officer; limitation under Section 144C(13) of Income Tax Act runs from that date, not from when directions are entered in individual officer's Case History Noting. Failure to pass final order within 30 days means returned income deemed accepted and assessee entitled to refund.
Judgment Excerpts
The case of Petitioner is quite elementary and we are constrained to observe the complete apathy and negligent approach of the assessing officer concerned in discharging his duties, in accordance with the provisions of Income Tax Act, 1961.
Thus, any notice, summons, order is deemed to have been received by the FAO once it is available to the NeAC.
Therefore, admittedly, the DRP issued the directions on 25th March 2021 whereas the assessment was completed and an order came to be passed on 31st August 2023.
Procedural History
Return of Income filed for AY 2016-2017 disclosing losses and refund claim. Assessment selected for scrutiny; notice under Section 143(2) issued. Reference made to TPO under Section 92CA(1). TPO proposed adjustment; AO passed draft order dated 29 December 2019 under Section 144C(1). Petitioner filed objections before DRP on 27 January 2020 under Section 144C(2)(b). DRP issued directions on 25 March 2021 under Section 144C(5); directions uploaded on ITBA portal and emailed to petitioner on 6 April 2021. AO failed to pass final order within 30 days under Section 144C(13). Writ petition filed on 8 June 2023. After petition filing, AO passed assessment order dated 31 August 2023. High Court heard matter; judgment reserved on 3 November 2023 and pronounced on 8 November 2023.
Acts & Sections
- Income Tax Act, 1961: Section 115JB, Section 143(2), Section 92CA(1), Section 144C(1), Section 144C(2)(b), Section 144C(5), Section 144C(13)
