GAP International Sourcing India Pvt. Ltd vs. DCIT (ITAT Delhi)

DATE: (Date of pronouncement)
DATE: December 26, 2010 (Date of publication)

Click here to download the judgement (gap_international_DRP_laconic_order.pdf)

DRP must not pass “laconic” orders but must deal with assessee’s objections

The Disputes Resolution Panel (DRP) issued direction u/s 144C against which the assessee filed an appeal before the Tribunal. The principal ground was that the DRP had not considered the assessee’s submissions and issued a very “laconic and non-speaking direction”. HELD upholding the assessee’s plea and remanding the matter to the DRP:

S. 144C empowers the DRP to issue directions for the guidance of the AO to enable him to complete the assessment. It can confirm, reduce or enhance the variations proposed in the draft order. However, as against the provisions of s. 144C, the DRP has passed a very laconic order. Though voluminous submissions were made before the DRP against the draft assessment order, the DRP brushed aside everything without even a whisper of the assessee’s objections and submissions. The directions of the DRP are too laconic to be left uncommented. The directions given by the DRP almost tantamounts to supervising the AO’s draft order and in that sense it can be equated that appellate jurisdiction being exercised. It was held in Sahara India (Farms) vs. CIT 300 ITR 403 (SC) that even “an administrative order has to be consistent with the rules of natural justice”.

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