INVENTIVE GLOBAL SOLUTIONS PVT LTD vs. ASSESSMENT UNIT INCOME TAX DEPT NATIONAL FACILITIES ASSESSMENT CENTRE AND ORS

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WP/6122/2024HC BombayHCBM01016414202429 April 2024Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order dated February 28, 2024, passed by the AO was liable to be set aside. The Court reasoned that since the petitioner had filed a reference raising objections with the DRP within the 30-day period, and Section 144C(4) of the Act mandates the AO to pass a final order considering the DRP's views, the AO should not have proceeded without such consideration. The Court found support for this view in the case of Sulzer Pumps India Pvt. Ltd. v Deputy Commissioner of Income Tax, Circle 15(3)(2) & Ors. While acknowledging that the AO could not be faulted for passing the order based on the information available, the Court directed that the AO would have the benefit of considering the DRP's views while passing a fresh assessment order. The Court made the rule absolute in terms of prayer clause (a), quashing the impugned assessment order, demand notice, and penalty notice. The AO was directed to take further steps after the DRP passes its order.

What were the facts?

The petitioner, Inventive Global Solutions Pvt. Ltd., filed a writ petition challenging an assessment order dated February 28, 2024, passed by the Assessment Unit Income Tax Department under Section 143(3) read with Section 144C(3) and 144B of the Income Tax Act, 1961. The petition also challenged a consequential notice of demand under Section 156 and a penalty notice under Section 270A. The petitioner had filed an objection with the Dispute Resolution Panel (DRP) on January 23, 2024, within the prescribed 30-day period. However, the petitioner inadvertently failed to inform the Assessing Officer (AO) about this reference within the same 30-day period. The AO proceeded to pass the final assessment order on February 28, 2024, without considering the petitioner's objections filed with the DRP, as the communication to the AO was made on February 9, 2024, after the stipulated time.

What were the issues?

1. Whether the assessment order passed by the Assessing Officer (AO) under Section 143(3) read with Section 144C(3) and 144B of the Income Tax Act, 1961, is liable to be quashed when the assessee had filed objections with the Dispute Resolution Panel (DRP) but inadvertently failed to inform the AO within the prescribed 30-day period under Section 144C(2) of the Act. Assessee's Contention: The assessee argued that while they failed to inform the AO about the DRP reference within 30 days due to oversight, they had indeed filed the objection with the DRP within the stipulated time. They relied on the principle that the AO should consider the DRP's views before passing a final order, as mandated by Section 144C(4) of the Act. The assessee cited Sulzer Pumps India Pvt. Ltd. v Deputy Commissioner of Income Tax, Circle 15(3)(2) & Ors. Revenue's Contention: The judgment records no specific arguments for the revenue on this issue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(2),Section 144C(3),Section 144C(4),Section 144B,Section 156,Section 270A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
1/3 423-aswp-6122-2024.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 6122 OF 2024 Inventive Global Solutions Pvt. Ltd. …Petitioner Versus Assessment Unit Income Tax Department National Faceless Assessment Centre & Ors. …Respondents Mr. Mihir C. Naniwadekar, with Ms. Rucha Vaidya & Mr. Rururaj H. Gurjar, for Petitioner. Mr. Arjun Gupta, for Respondents/Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 29th April 2024 PC:- 1. Rule. Rule made returnable forthwith. By consent of parties, taken up for final hearing. 2. Petitioner is impugning the assessment order dated 28th February 2024 passed by Respondent No.1 under Section 143(3) read with Section 144C(3) read with 144B of the Income Tax act, 1961 (“the Act”) along with consequential notice of demand under Section 156 of the Act and penalty notice under Section 270A of the Act. 3. Petitioner’s case is that Section 144C(2) of the Act, inter alia, requires Assessee, should he to choose to file reference before the Dispute Resolution Panel (DRP) to file such objection within 30 days from the receipt of Draft Assessment Order. The section also requires Gaikwad RD 2024:BHC-AS:19759-DB 2/3 423-aswp-6122-2024.doc Assessee to file a copy of the reference with the Assessing Officer (“AO”) within the time limit prescribed. Section 144C(4) of the Act requires AO to pass a final order within one month from the end of the month in which the period of filing of objections before DRP and AO expires. 4. According to Petitioner, though Section 144C of the Act requires Petitioner to communicate the objection filed before the DRP to the AO, due to oversight/inadvertence Petitioner did not inform the AO within 30 days period prescribed under Sub-section (2) of Section 144C of the Act that it had filed objection dated 23rd January 2024 with the DRP. The 30 days period expired on 23rd January 2024, whereas Petitioner communicated about filing of the objection with DRP only on 9th February 2024. Since the objection was not intimated to the AO within the 30 days period prescribed, the AO proceeded to pass the assessment order dated 28th February 2024 notwithstanding the objection filed by Petitioner with the DRP. 5. In our view, since Petitioner had already filed a reference raising its objections to the DRP within the 30 days period and Section 144C(4) of the Act requires the AO to pass a final order including the view expressed by the DRP, we set aside the order dated 28th February 2024 of the AO impugned in this petition. We find support for this view in Sulzer Pumps India Pvt. Ltd. v Deputy Gaikwad RD 3/3 423-aswp-6122-2024.doc Commissioner of Income Tax, Circle 15(3)(2) & Ors.1 We shall also observe that the AO cannot be faulted for passing the impugned order. At the same time, the AO will also have the benefits of considering the views of the DRP while passing a fresh assessment

order.

6.

Accordingly, Rule made absolute in terms of prayer clause (a), which reads as under: “(a) Issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate writ, order or direction under Articles 226 and 227 of the Constitution of India quashing the Impugned Order u/s 143(3) r.w.s. 144C dated 28 February 2024 (Exhibit G), Impugned Demand Notice u/s 156 dated 28 February 2024 (Exhibit H) and Impugned Penalty notice u/s 270A dated 28 February 2024 (Exhibit I) passed by Respondent No.1;”

7.

The AO shall take further steps in the matter after the DRP passes its order on the objection filed by Petitioner, in accordance with law.

8.

Petition disposed. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) 1 Writ Petition(L) No.15811 of 2021, dtd. 27th October 2021 (unreported). Gaikwad RD Signed by: Raju D. Gaikwad Designation: PS To Honourable Judge Date: 30/04/2024 16:56:36

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