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2021 (4) TMI 1225 - HC - Income TaxViolation of the provisions of the Act - final assessment order passed erroneously, even while the title of the order reads as Draft Assessment Order u/s 143(3) r.w.s. 144C - HELD THAT - Prima facie, we are of the view that the petitioner appears to be correct in its contention, that there is a violation of the provisions of the Act. Assessing Officer was perhaps required to pass, in the first instance, an order under Section 144 C (1) of the Act, which would have enabled the petitioner to file, if so aggrieved, its objections with the Dispute Resolution Panel. Mr. Zoheb Hossain, who appears on advance notice, contends that for the moment, he does not have instructions in the matter. He, however, says that the timeline for passing the draft assessment order, as of now, expires on 30.06.2021.In the aforesaid circumstances, issue notice, both in the writ petition and the interlocutory application. Mr. Hossain accepts service on behalf of the respondent/revenue. In the interregnum, there shall be a stay on the operation of the impugned order.
Issues: Violation of provisions of the Income Tax Act, 1961; Breach of principles of natural justice in passing the assessment order; Incorrect labeling of the assessment order as a draft order; Failure to follow the procedure under Section 144C (1) of the Act; Stay on the operation of the impugned order, demand notice, and penalty proceedings.
In this case, the petitioner argued that the order dated 26.03.2021, based on the input of the Transfer Pricing Officer, was not only contrary to the provisions of the Income Tax Act, 1961 but also violated the principles of natural justice. The petitioner contended that despite being labeled as a "Draft Assessment Order u/s 143(3) r.w.s. 144C of the I.T. Act, 1961," it was, in fact, a final assessment order as evidenced by the contents of the order itself. The Assessing Officer initiated penalty proceedings, indicating that it was a final assessment order. The petitioner highlighted that the Assessing Officer should have first passed an order under Section 144C (1) of the Act to enable the petitioner to raise objections with the Dispute Resolution Panel. The court prima facie agreed with the petitioner's contention of a violation of the Act and issued notices for the writ petition and interlocutory application. During the hearing, Mr. Zoheb Hossain, representing the respondent/revenue, stated that he did not have instructions at that moment but mentioned the timeline for passing the draft assessment order would expire on 30.06.2021. In response to this, the court directed Mr. Hossain to revert with instructions and, if required, to file a counter-affidavit. In the meantime, the court ordered a stay on the operation of the impugned order dated 26.03.2021 for the assessment year 2017-2018, including the demand notice and penalty proceedings related to the same assessment year. The matter was listed for the next hearing on 17.05.2021 to further address the issues raised by the petitioner regarding the violation of the Act and the breach of natural justice in passing the assessment order incorrectly labeled as a draft order.
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