Section 144C was inserted by the Finance Act, 2009 w.e.f. from 01 April 2009. Section 144C(1) provides that on or after 01 October 2009 the AO shall issue draft assessment order in case of eligible assessee. The taxpayer can file objections before the DRP against the proposed draft order within 30 days from receipt of draft assessment order.
Under Section144C(5), the DRP can issue such directions, as it thinks fit, for the guidance of the AO to enable him to complete the assessment. Under Section144C(8), DRP may confirm, reduce or enhance the variations proposed in the draft order.
Section 144C(10) provides that every direction issued by DRP shall be binding on the AO. Section 144C(13) provides that the AO shall pass the final assessment order in conformity with the directions given by the DRP without giving any further opportunity to the taxpayer.
The issue that came up before the Courts as to whether the AO can pass final assessment order without waiting for DRP directions.
In the case of M/s. Ford India Private Limited v National e-Assessment Centre W.P.No.12701 of 2021, the Madras High Court had to deal with a situation wherein the AO passed final assessment order despite the assessee filing objections before the DRP. Before HC, the Revenue submitted that it was clear that the Assessee went before the DRP and therefore, AO has to await the directions from DRP as the objections of the Assessee are pending before DRP. The HC observed that the Revenue’s submission draws the curtains on the writ petition and thus, sets aside the assessment order without giving any opinion or view on the merits of the case. The HC clarified that on DRP issuing directions, AO shall proceed with the assessment de novo on its own merits.
Comments
Section 144C was inserted with the objective of resolving disputes. The Assessing Officers not following the mandatory procedure is leading to more disputes and harassment to the taxpayers. It is clogging the wheels of justice with unnecessary litigation. Such actions lower the confidence in the tax administration. Corrective measures in the tax administration should be high priority.