Court holds that limitation under Section 144C(2) must be read with Section 10 of the General Clauses Act; final assessment passed without DRP adjudication declared without jurisdiction.
The Calcutta High Court has set aside a final income tax assessment order passed against GFK Mode Private Ltd., holding that its objection before the Dispute Resolution Panel (DRP) was filed within limitation because the last day for filing fell on a Sunday. The Court ruled that Section 10 of the General Clauses Act, 1897 applied, and therefore the objection filed on the next working day was valid.
Justice Smita Das De, in a judgment dated 24 September 2026, dealt with a writ petition challenging the final assessment order dated 23 May 2026 passed under Section 143(3) read with Sections 144C(3) and 144B of the Income Tax Act, 1961, for Assessment Year 2023-24, along with a consequential penalty notice.
The dispute arose after the Assessing Officer issued a draft assessment order on 13 February 2026. Under Section 144C(2), the assessee had 30 days to file objections before the DRP, making 15 March 2026 the last date. Since that date was a Sunday, the petitioner filed its objections on 16 March 2026, the next working day. However, the tax authorities rejected the objection as time-barred and proceeded to pass the final assessment order.
The petitioner argued that the filing was within time by virtue of Section 10 of the General Clauses Act, which provides that when the last day for doing an act falls on a day when the office is closed, the act may be done on the next day the office reopens. The petitioner also pointed out that the department itself had granted time till 16 March 2026 through a notice dated 14 March 2026.
The Court accepted this contention and held that the objection filed on 16 March 2026 was “well within the prescribed period of 30 days.” It observed that the rejection of the objection as time-barred was erroneous and unsustainable in law.
Relying on the Supreme Court’s decision in Vijay Bhai N Chandrani v. SIT, the Court reiterated that the DRP’s directions are binding on the Assessing Officer under Section 144C(10) and that the procedure under Section 144C is mandatory. The Court noted that once a draft assessment order is issued, the Assessing Officer cannot pass a final order without either waiting for the objection period to expire without any objection or awaiting the DRP’s directions.
Since the final assessment order had been passed without considering the petitioner’s valid objection and before the DRP could adjudicate the matter, the Court held that the order was without jurisdiction. It therefore quashed and set aside the assessment order.
The Court further directed the DRP to adjudicate the petitioner’s objection on merits after granting a personal hearing and within the statutory period. It also ordered that the consequential penalty proceedings should remain stayed until the DRP proceedings are concluded.
Bottom Line :
Income Tax - Objection filed before Dispute Resolution Panel on next working day when 30th day fell on Sunday is within limitation by virtue of Section 10 of the General Clauses Act - Final assessment order passed without awaiting adjudication by DRP is without jurisdiction and liable to be quashed.
Statutory provision(s): Section 143(3) of the Income Tax Act, 1961, Section 144B of the Income Tax Act, 1961, Section 144C(2) of the Income Tax Act, 1961, Section 144C(3) of the Income Tax Act, 1961, Section 144C(5) of the Income Tax Act, 1961, Section 144C(10) of the Income Tax Act, 1961, Section 154(2) of the Income Tax Act, 1961, Section 10 of the General Clauses Act, 1897
GFK Mode Private Ltd. v. Union of India, (Calcutta) : Law Finder Doc id # 2987690
