The Bombay High Court has imposed the cost of Rs. 10K on Assessee, who failed to inform the Assessing Officer (AO) about pendency of objections before the Dispute Resolution Panel (DRP).
The bench of Justice M.S. Sonak and Justice Jitendra Jain has observed that the assessing officer who made the assessment order in this case was not at fault because there was no intimation by the Petitioner about the pendency of objections before the DRP.
The Petitioner/assessee challenged the final assessment order dated 28 May 2024 under Section 143(3) read with Section 144C (3) of the Income Tax Act, 1961 (IT Act), along with consequential notices of demand dated 28 May 2024 and seeks remission of the matter to the Dispute Resolution Panel (DRP) for consideration following the law.
The Petitioner’s returns were selected for scrutiny assessment, and necessary notice under Section 143(2) was issued to the Petitioner. The Income Tax Officer (ITO) issued the Petitioner a show cause notice seeking justification of certain expenses and claims. The Petitioner responded on 29 March 2024. On 29 March 2024, the ITO passed a draft order in terms of Section 144C (1) of the Income Tax Act.
The Petitioner lodged her objections to the draft order on 24 April 2024. However, the Petitioner inadvertently failed to inform the assessing officer about the objections being filed before the DRP and the pendency of such objections before the DRP. As a result, the first Respondent made the impugned final assessment order dated 28 May 2024. Based on the assessment order, notices under Sections 156, 270A and 274 were also issued to the Petitioner.
The petitioner contended that there was an omission on the part of the Petitioner in forming the first Respondent about the pendency of objections before the DRP. The lapse may be condoned since, factually, the objections were pending before the DRP. Due to some communication gap between the Petitioner and her tax consultant, this fact remained to be intimated to the ITO.
The department contended that the assessing officer was not entirely at fault in this matter. She also submitted that once the final assessment order is made, even the DRP will be rendered functus officio.
The court directed that the Petitioner, for her lapse, pay costs of Rs.10,000 favouring the High Court employees medical welfare fund at Mumbai. Such costs must be paid within two weeks of uploading this order. Subject to payment of such costs, the assessment order shall stand set aside, and the matter shall stand remitted to the DRP to proceed following the law.
Case Details
Case Title: Zarah Rafique Malik Versus ITO
Case No.: Writ Petition No. 5272 Of 2024
Date: 03 March 2025
Counsel For Appellant: K Gopal
Counsel For Petitioner: Shilpa Goel
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