Delhi HC Quashes Final Assessment Order Passed Prematurely Despite Procedural Lapse in DRP Filing

In a significant ruling concerning the nuances of the faceless assessment regime, the Hon’ble Delhi High Court has intervened to protect the rights of an assessee who failed to strictly comply with procedural requirements under Section 144C of the Income-tax Act, 1961. The case, Express Freight Consortium Vs Assessment Unit, highlights the friction between statutory compliance and the practical confusion arising from the faceless assessment ecosystem.

The Court addressed a writ petition challenging a final assessment order passed by the Assessing Officer (AO) while objections were pending before the Dispute Resolution Panel (DRP). The judgment underscores that while procedural adherence is mandatory, minor lapses shouldn't result in disproportionate adverse consequences, such as the raising of demands without a hearing.

Factual Matrix of the Dispute

The controversy originated when the assessee received a draft assessment order from the National Faceless Assessment Center (NFAC) on 06 November 2025. exercising their statutory right, the assessee filed objections against this draft order before the DRP on 05 December 2025.

However, a critical procedural lapse occurred at this stage. The assessee, operating under the bona fide belief that the faceless assessment system automatically integrates data sharing between authorities, did not forward a copy of these objections to the AO.

Subsequently, the following events unfolded:

  1. The AO issued a notice to the assessee on 08 December 2025.
  2. The assessee did not respond to this notice, assuming that since the matter was before the DRP, the assessment proceedings were legally required to be kept in abeyance.
  3. Unaware of the objections filed with the DRP, the AO presumed that the assessee had accepted the draft order.
  4. Consequently, the AO passed a final assessment order and issued a demand notice on 18 December 2025, invoking Section 144C(4) of the Income-tax Act, 1961.

Aggrieved by this demand raised without an opportunity for a hearing, the assessee approached the High Court.