LX PANTOS INDIA PRIVATE LIMITED vs. ASSESSMENT UNIT NATIONAL FACELESS ASSESSMENT CENTRE DELHI CENTRAL CIRCLE 30 DELHI & ANR.

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W.P.(C)/2511/2026HC DelhiDLHC01006729202621 April 2026Bench: HON'BLE MR. JUSTICE DINESH MEHTA,HON'BLE MR. JUSTICE VINOD KUMAR4 pages
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What did the High Court hold?

The High Court held that the DRP's order dated 29.11.2025 contained a clear direction to the AO, which the AO failed to examine. The Court acknowledged that the addition of Rs. 160,43,40,589/- under Section 40(a)(i) of the Act of 1961 could not be sustained as it was made in direct contravention of the DRP's mandatory directions, as per Section 144A of the Act. Therefore, the assessment order was set aside to the extent of this addition, including interest. The Court noted that while the petitioner could have been relegated to the appellate remedy, the illegality of the Section 40(a)(i) addition, being in violation of the DRP's directions, persuaded the Court to set aside that part of the assessment order. The petitioner was relegated to prefer an appeal against the remaining addition, if desired. The Court also granted liberty to the petitioner to file an appeal against the entire assessment order within 15 days, which the Appellate Authority would decide on merits without objection regarding limitation.

What were the facts?

The petitioner, LX Pantos India Private Limited, challenged an assessment order dated 18.12.2025 issued by the Assessment Unit, National Faceless Assessment Centre, Delhi. The petitioner alleged the order was contrary to a direction from the Dispute Resolution Panel (DRP) dated 29.11.2025. The DRP had directed the Assessing Officer (AO) not to make any addition under Section 40(a)(i) of the Income Tax Act, 1961, if the Department had not filed an appeal against the orders of the Income Tax Appellate Tribunal (Tribunal) for Assessment Year 2017-18 and previous years. The petitioner asserted that no such appeal was pending, yet the AO proceeded to make an addition. The High Court had previously stayed the operation of the assessment order and directed the respondent to file an affidavit. The respondent's affidavit confirmed that no appeal had been preferred by the Department against the Tribunal's order for AY 2017-18 or previous years concerning the issue under Section 40(a)(i).

What were the issues?

1. Whether the Assessing Officer (AO) erred in making an addition under Section 40(a)(i) of the Income Tax Act, 1961, in violation of the Dispute Resolution Panel's (DRP) specific direction that no such addition should be made if the Department had not filed an appeal against the Tribunal's orders for AY 2017-18 and previous years? (Question of law and fact) Assessee's Contention: The petitioner argued that the AO failed to ascertain whether an appeal was filed by the Department against the Tribunal's orders for AY 2017-18 and previous years. The petitioner asserted that their own verification of the Delhi High Court's website revealed no pending appeals. Consequently, the AO wrongly made an addition, flouting the DRP's clear directions and raising a substantial demand of Rs. 75,75,24,930/-, thereby affecting their rights. Revenue's Contention: The respondent argued that the impugned assessment order included two additions: one under Section 40(a)(i) and another related to Transfer Pricing. They contended that since the DRP's direction was specific to the Section 40(a)(i) addition and not the Transfer Pricing addition, the AO's order could not be faulted. They further argued that the petitioner should be relegated to the appellate remedy.

Which sections of the Income-tax Act were involved?

Section 40(a)(i),Section 144A

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$~11 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 2511/2026 CM APPL. 12200/2026 CM APPL. 12201/2026

CM APPL. 23753/2026

LX PANTOS INDIA PRIVATE LIMITED .....Petitioner Through: Mr. Prashant Meharchandani, and Mr. Jainender Singh Kataria, Advs.

versus

ASSESSMENT UNIT NATIONAL FACELESS ASSESSMENT

CENTRE DELHI CENTRAL CIRCLE 30 DELHI & ANR. .....Respondent Through: Mr. Abhishek Maratha, SSC, Mr. Apoorv Agarwal, Mr. Viplav Acharya, JSCs with Ms. Nupur Sharma, Mr. Gaurav Singh, Mr. Himanshu Gaur and Ms. Muskaan Goel, Advs.

CORAM:

HON'BLE MR. JUSTICE DINESH MEHTA

HON'BLE MR. JUSTICE VINOD KUMAR

1.

By way of the present writ petition, the petitioner has challenged the assessment order dated 18.12.2025 alleging it to be contrary to the direction given by the Dispute Resolution Panel (hereinafter referred to as ‘DRP’) vide its order dated 29.11.2025. O R D E R %

21.04.2026 2. Learned counsel for the petitioner invited Court’s attention towards the DRP’s order dated 29.11.2025 and pointed out that while deciding the issue of addition under Section 40(a)(i) of the Income Tax Act, 1961, This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/04/2026 at 12:56:51

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(hereinafter referred to as ‘the Act of 1961’) the DRP had issued clear directions that in case the Department has not preferred any appeal against the orders of the Tribunal, the Assessing Officer (AO) shall not make any addition. 3. Learned counsel argued that in spite of the clear direction, the AO did not take any trouble to examine as to whether the appeal against the orders of the Tribunal for Assessment Year 2017-18 and previous assessment years have been filed or not and proceeded to make addition. 4. The petitioner has approached this Court with the assertion that upon examination of the website of the Delhi High Court, it could not find any evidence of any pendency of the appeal against the earlier orders of the Tribunal. In light of such assertion, on the previous date of hearing i.e. 25.02.2026, we observed thus :- “1. While pointing out the averments made in para nos. 8 and 9 of the writ petition, Mr. Prashant Meharchandani, learned counsel for the petitioner asserted that no appeal against the orders of the Income Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’) dated 17.05.2024 (Annexure P-5) passed for the Assessment Years (AYs) 2017-18 and 2018-19 is pending, yet the Assessing Officer (AO) in his impugned order dated 18.12.2025 has recorded that the appeal is pending before this Court. 2. He asserted that even he has ascertained such fact from the Delhi High Court’s website and contended that having wrongly recorded such finding, the AO has flouted the order of the Dispute Resolution Panel’s (hereinafter referred to as ‘the DRP’) dated 29.11.2025. 3. Learned counsel, thereafter took the Court through the DRP’s order and submitted that in spite of the fact that the DRP has issued express direction for not creating any demand, unless an appeal against the above-referred order dated 17.05.2024 passed by the Tribunal is filed in the High Court, yet the AO has wrongly mentioned in assessment order that the appeal against the above-referred order of the Tribunal is pending in the Delhi High Court. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/04/2026 at 12:56:51

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4.

He raised a grievance that due to incorrect assertion of fact, the AO has proceeded to raise a huge demand of tax against the petitioner to the tune of Rs.75,75,24,930/- and submitted that if this Court does not exercise its jurisdiction under Article 226 of the Constitution of India, the petitioner’s right would be severely affected. 5. Mr. Abhishek Maratha, learned Senior Standing Counsel is directed to file an affidavit of the author of the impugned order, maybe a Faceless Assessing Officer, within four weeks. 6. List this case on 13.04.2026. 7. Meanwhile, effect and operation of the impugned order dated 18.12.2025 shall remain stayed and no coercive action shall be adopted for enforcement of the demand arising out of said order.”

5.

An affidavit has been filed by the respondent-Assessing Officer, inter alia stating the fact that as of today, no appeal has been preferred by the Department against the order of the Tribunal for the Assessment Year 2017- 18 or any previous year, involving the issue of 40(a)(i) of the Act of 1961. 6. Mr. Abhishek Maratha, learned Senior Standing Counsel for the respondent submitted that the impugned assessment order in the present writ petition encompasses two additions, first being addition under Section 40(a)(i) of the Act of 1961 and the other being the Transfer Pricing addition. He submitted that since there is no direction in relation to transfer pricing addition, the order of the AO cannot be faulted with. In this background, he argued that rather than interfering in the present case, the petitioner be relegated to avail the remedy of appeal in accordance with law. 7. Heard learned counsel for the parties and perused the record. 8. So far as the order of the DRP dated 29.11.2025 is concerned, there is no quarrel that a clear-cut direction was issued to the AO, which he failed to examine. We do not wish to make any adverse observations against the AO, as he might have bonafidely proceeded because as a Faceless Assessing This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/04/2026 at 12:56:51

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Officer (FAO), he might not have the entire record, which a Jurisdictional Assessing Officer (JAO) is supposed to have. 9. But in any case, the addition of Rs.160,43,40,589/- under Section 40(a)(i) of the Act of 1961 cannot be sustained, as the same is in teeth of the direction of DRP which are mandatory as per Section 144A of the Act of 1961. Accordingly, we set aside the assessment order dated 18.12.2025 to the extent of demand including interest amounting to Rs.160,43,40,589/-. The petitioner is relegated to prefer an appeal against the remaining addition (if so desired) in accordance with law. 10. Though we could have relegated the petitioner to avail the appellate remedy but, considering that a huge demand has been raised against the petitioner under Section 40(a)(i) of the Act of 1961, which is illegal on the face of it being in violation to the directions issued by the DRP, we are persuaded to set aside the assessment order. 11. The writ petition stands partly allowed as indicated above. 12. In case the petitioner prefers an appeal against the assessment order dated 18.12.2025 within a period of 15 days from today, the concerned Appellate Authority shall consider and decide such appeal on merit without raising any objection about limitation. 13. The writ petition along with the pending applications is disposed of.

DINESH MEHTA, J

VINOD KUMAR, J APRIL 21, 2026/dd

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/04/2026 at 12:56:51

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