Court Orders Fresh Adjudication by Dispute Resolution Panel Following Procedural Lapses
In a significant judgment, the Gujarat High Court has quashed a premature income tax assessment order against Milacron India Private Limited, remanding the matter for fresh adjudication by the Dispute Resolution Panel (DRP). The order, dated 02.05.2025, was passed by the Faceless Assessing Officer without awaiting the directions from the DRP, leading to a procedural impropriety.
The petitioner, Milacron India Private Limited, had filed its return of income for the Assessment Year 2022-23, which was selected for scrutiny. The Transfer Pricing Officer (TPO) proposed an upward adjustment, which was incorporated into a draft assessment order. The company filed objections before the DRP within the statutory period, but due to an error, also filed these objections before the Jurisdictional Assessing Officer (JAO), instead of the Faceless Assessing Officer as required.
Despite the pending objections, the Faceless Assessing Officer proceeded to issue a final assessment order. The DRP dismissed the objections citing lack of jurisdiction, as the final order had already been passed. Milacron India challenged this procedural lapse in the Gujarat High Court.
The court, comprising Justices A.S. Supehia and Pranav Trivedi, observed that the petitioner had indeed filed the objections within the statutory timeframe but at the wrong jurisdiction due to a bona fide error. The court held that the DRP should have adjudicated the objections and set aside the final assessment order along with the DRP's dismissal order.
The judgment mandates the DRP to conduct a fresh adjudication and provides Milacron India two weeks to file objections before the Faceless Assessing Officer. The court clarified that if the petitioner fails to comply within the stipulated time, the previous order shall be revived.
This ruling highlights the importance of adhering to procedural requirements in tax assessments and reinforces the rights of taxpayers to fair adjudication processes.
Bottom Line:
Income Tax Act - Filing objections under Section 144C - Mistake in filing objections before Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer - Assessment order passed prematurely without awaiting directions from Dispute Resolution Panel (DRP) - DRP's dismissal of objections due to lack of jurisdiction - Court quashed and set aside the assessment order and remanded the matter for fresh adjudication by DRP.
Statutory provision(s): Income Tax Act, 1961 Sections 143(3), 144C(3), 144C(5), 144B
