Facts of the Case

The petitioner, PepsiCo India Holdings Pvt. Ltd., challenged the final assessment order dated 21.11.2023 passed by the Assessment Unit under Section 143(3) read with Section 144C(4) for AY 2020–21.

  • Filed objections against the draft assessment order before the Dispute Resolution Panel (DRP) within the prescribed time.
  • However, inadvertently failed to intimate the Assessing Officer (AO) regarding such objections as required under Section 144C(2)(b)(ii).

Due to this lapse, the AO proceeded to pass the final assessment order without awaiting DRP directions.

Issues Involved

  1. Whether the Assessing Officer can pass a final assessment order without waiting for DRP directions when objections are filed before DRP but not intimated to the AO?
  2. Whether such an assessment order violates the mandatory procedure under Section 144C of the Act?

Petitioner’s Arguments

  • The petitioner had duly exercised its statutory right by filing objections before the DRP within limitation.
  • Once objections are filed, the AO is bound to await DRP directions before passing the final assessment order.
  • The failure to intimate the AO was merely procedural and inadvertent.
  • Reliance was placed on precedents including:
    • Open Silicon Research Pvt. Ltd. vs Assessment Unit
    • Sulzer Pumps India Pvt. Ltd. vs DCIT
    • SRF Ltd. vs NFAC
    • Anand NVH Products (P.) Ltd. vs NFAC
    • Fiberhome India (P.) Ltd. vs National E-Assessment Centre

Respondent’s Arguments

  • Under Section 144C(2)(b)(ii), the petitioner was required to file objections before both DRP and the AO.
  • Since no objections were received by the AO within the prescribed period:
    • The AO was statutorily obligated under Section 144C(3)(b) to complete the assessment.
  • Therefore, the assessment order was valid and passed in accordance with law.

Court’s Findings / Order

  • The issue is no longer res integra and is covered by prior judicial precedents.
  • Once objections are filed before the DRP within time:
    • The AO must follow the procedure under Section 144C.
    • The final assessment order must be passed only after DRP directions.
  • The final assessment order dated 21.11.2023, computation sheet, and all consequential notices were set aside.
  • The Department was granted liberty to pass a fresh assessment order after receiving DRP directions.

Important Clarification

  • Even if the assessee fails to intimate the AO about DRP objections:
    • Filing objections before DRP within limitation is sufficient to trigger the statutory protection.
  • The AO cannot bypass DRP procedure and finalize the assessment prematurely.
  • However, the Court clarified:
    • The AO cannot be faulted entirely, as the lapse was procedural.
    • The Department retains the right to reassess after DRP directions.

Link to download the order - 

https://delhihighcourt.nic.in/app/showFileJudgment/MMH01122023CW153222023_113306.pdf

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