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Informist, Monday, Dec. 16, 2024

 

NEW DELHI – The Delhi High Court has set aside a final assessment order by the income tax assessing officer to recompute the income of Jackson Square Aviation Ireland Ltd. and add INR 5 billion for the assessment year 2022-23 (Apr-Mar). Jackson Square Aviation had said the order was passed without jurisdiction because the assessing officer failed to wait for the decision of a dispute resolution panel.

 

"....it is an admitted position that, notwithstanding the lack of information with the AO (assessing officer), if an objection has been filed and is pending before the DRP (dispute resolution panel), the assessment order passed in ignorance of the said objections is required to be set aside," the high court said.

 

In October 2022, Jackson Square Aviation had filed its income tax return for the assessment year 2022-23. The return was selected for scrutiny. Thereafter, the assessing officer issued a show-cause notice to the aircraft finance and leasing services company under Section 148A(b) of the Income Tax Act, 1961, asking why its receipts should not be taxed as interest income for the year under consideration.

 

Subsequently, the assessing officer passed a draft assessment order in March proposing an addition of INR 5 billion to the income by treating rentals received by the company from leasing of aircraft as interest income and including a penalty. Jackson Square Aviation filed its objections with the dispute resolution panel in April.

 

Despite the objections pending with the panel, the assessing officer went ahead and passed the final assessment order in May confirming recomputation of the company's income. Jackson Square contended that the officer could not have extinguished its right to get its objections disposed of by the panel by passing a final order. It argued that lack of information about the pendency of the objections before the panel was not a sustainable argument by the assessing officer in view of the previous court verdicts.

 

Courts have held in the past that the tax department has to act in accordance with the procedure stipulated in Section 144(C) of the Income Tax Act and await the panel's decision before passing a final assessment order, even in cases where the assessing officer has not been notified by the assessee, as long as the objections were submitted to the panel in time.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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