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Facts
The assessee, an NRI, failed to file a Return of Income for AY 2015-16. A notice under Section 148 was issued, followed by a draft assessment order under Section 144C. The assessee filed objections before the DRP beyond the prescribed time limit, which were dismissed without adjudication on merits.
Held
The Tribunal held that since the DRP dismissed the assessee's objections as time-barred without adjudicating on merits, it did not issue any 'direction' under Section 144C(5). Therefore, the assessment order was not passed in pursuance of a DRP direction, and the appeal against it should lie before the CIT(A). The CIT(A)'s dismissal of the appeal on jurisdictional grounds was erroneous.
Key Issues
Whether the CIT(A) erred in dismissing the appeal on the ground of lack of jurisdiction when the DRP had dismissed the assessee's objections as time-barred without merits.
Sections Cited
148, 144C, 144C(1), 144C(2), 144C(5), 144C(15)(b)(ii), 144, 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI RAVISH SOOD & SHRI MADHUSUDAN SAWDIA
Shri Prakash Lal Potluri, Income Tax Officer, Vs. Hyderabad. International Taxation-2, PAN:GNKPP1085B Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri A.V. Raghuram, Advocate रधजस् व द्वधरध/Revenue by:: Shri B.Balakrishna, CIT-DR सुिवधई की तधरीख/Date of hearing: 19/03/2025 घोर्णध की तधरीख/Pronouncement: 15/04/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.:
These appeals are filed by Shri Prakash Lal Potluri (“the assessee”), feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-10, Hyderabad (“Ld. CIT(A)”), dated 09.08.2024 and Learned Assessing Officer (“Ld. AO”) on 21.09.2023 for the same A.Y. 2015-16. Since these appeals are inter related, they are heard together and one consolidated order is being passed for the sake of convenience and brevity.
2. At the outset, it is seen that, there is a delay of 12 days in filing of this appeal for which the assessee has filed a condonation petition along with affidavit explaining the reasons for such delay. After considering the contents of the condonation petition and after hearing the learned DR, the delay of 18 days in filing of this appeal is condoned and the appeal is admitted for adjudication. 3. The assessee has raised the following grounds :
The brief facts of the case are that the assessee is an NRI, who has not filed any Return of Income (“ROI”) for A.Y. 2015-16. The Ld. AO found from the available information that the assessee had sold an immovable property during the year under consideration. Accordingly, a notice u/s.148 of the Income Tax Act, 1961 ('the Act') was issued to the assessee on 27.03.2021. However, again no ROI was filed by the assessee in accordance with the notice u/s.148 of the Act. Since the assessee was an eligible assessee within the meaning of section 144C(15)(b)(ii) of the Act, the Ld. AO forwarded a draft order to the assessee in accordance with section 144C(1) of the Act on 04.02.2023. Further, in accordance with the provisions of section 144C(2) of the Act, the assessee had to file his acceptance qua draft order with the Ld. AO or had to file his objection, if any, qua the draft order before the Learned Dispute Resolution Panel (“Ld. DRP”) and the Ld. AO within 30 days of receipt of draft order by him. The assessee filed his objection against the draft order on 31.03.2023 before the Ld. DRP, however, the last date for filing such objection was 06.03.2023. The Ld. DRP passed order on 20.09.2023 contending that as the assessee has filed the objection after the prescribed time limit, the objection filed by the assessee is not maintainable and accordingly dismissed the objection of the assessee. Finally, the Ld. DRP did not adjudicate the objections on merits. Consequently, after passing of order by Ld. DRP, the Ld. AO completed the assessment u/s.144 of the Act on 21.09.2023 computing the Long Term Capital Gains (“LTCG”) of Rs.1.20 Crores.
Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee contending that the order passed by Ld. AO is in accordance with the directions of Ld. DRP and the jurisdiction to file the appeal against the impugned order is lies with the Tribunal.
Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Learned Authorised Representative (“Ld. AR”) submitted that, the Ld. DRP rejected their objection on the ground that the assessee has filed the objection after the limitation period. As the objection of the assessee is dismissed in limine by the Ld. DRP, it cannot be said that the direction u/s. 144C(5) of the Act has been issued by the Ld. DRP although the Ld. DRP has passed an order on 20.09.2023. As no direction has been issued by Ld. DRP, therefore, the jurisdiction for filing of appeal lies with the Ld. CIT(A).
Accordingly, the Ld. AR prayed before the bench to set aside the issue to the file of Ld. CIT(A) with a direction to accept the appeal and adjudicate the same on merits.
Per contra, the Learned Department Representative (“Ld. DR”) submitted that, when an objection is filed by the assessee and an order is passed by Ld. DRP, it means that a direction u/s.144C(5) has been made by the Ld. DRP to the Ld. AO and the Ld. AO after the issue of direction of Ld. DRP has passed the assessment order on 21.09.2023 in accordance with the direction of Ld. DRP. Hence, when an order is passed by Ld. AO in accordance with direction of Ld. DRP, the jurisdiction to file appeal lies with ITAT and not with Ld. CIT(A). Accordingly, there is no irregularity in the order of Ld. CIT(A) in rejecting the appeal of the assessee on the ground of wrong jurisdiction.
We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. It is undisputed that the assessee’s objections before the Ld. DRP were filed beyond the prescribed time limit and the objection of the assessee has been dismissed in limine by the Ld. DRP. Since the Ld. DRP rejected the objections as time-barred without adjudicating them on merits, it cannot be said that the Ld. DRP has issued any “direction” as contemplated under Section 144C(5) of the Act. In the absence of any direction by the Ld. DRP, the order passed by the Ld. AO cannot be treated as one passed in pursuance of the direction of the Ld. DRP. Therefore, the jurisdiction for filing an appeal against such an order lies before the Ld. CIT(A) and not before the ITAT.
In view of the above findings, we hold that the Ld. CIT(A) erred in dismissing the appeal of the assessee on the ground of lack of jurisdiction.
Accordingly, we set aside the order of the Ld. CIT(A) and direct the Ld. CIT(A) to admit the appeal and decide the same on merits in accordance with the law.
11. This appeal has also been raised against the same impugned order of the Ld. AO, which has been raised in . The only issue raised before us to decide the jurisdiction to file appeal against the impugned order of the Ld. AO. In we have already held that, the jurisdiction to file an appeal against the impugned order of Ld. AO lies with the Ld. CIT(A).
In view of our findings and discussion in Ld. AO is maintainable before the Ld. CIT(A) and not before the Tribunal. Accordingly, as the present appeal has been filed before an incorrect forum, we hold that this Tribunal does not have jurisdiction to entertain the appeal. Consequently, the appeal of the assessee is dismissed.
In the result, the appeal of the assessee in is dismissed.
Order pronounced in the open Court on 15th April, 2025.