Final assessment order under Section 143C invalid due to delay; jurisdiction defects cannot be cured by corrigendum

The HC held that the final assessment order dated 26.03.2013 passed under Section 143C was invalid as it exceeded the statutory period, rendering it a nullity. The subsequent corrigendum dated 15.04.2013, attempting to treat the order as a draft assessment order and granting time to file objections, was also beyond limitation and did not cure the defect. The first respondent rightly declined to entertain objections, as it lacked jurisdiction over a final order. The HC emphasized that extending the assessment period by remanding the matter was impermissible, and defects going to jurisdiction cannot be cured. The department's failure to update the tax status or withdraw the demand further confirmed the order's finality and invalidity. The decision was against the assessee.

---

---

Issues Involved:
1. Validity of the final assessment order dated 26.03.2013.
2. Legality of the corrigendum issued on 15.04.2013.
3. Jurisdiction and procedural adherence under Section 144C of the Income Tax Act, 1961.
4. Applicability and limitations of Section 154 of the Income Tax Act, 1961.
5. Impact of procedural errors on the validity of tax assessment orders.

Detailed Analysis:

1. Validity of the Final Assessment Order Dated 26.03.2013:
The petitioners challenged the assessment order dated 26.03.2013, arguing it was unsustainable under law as it was issued as a final order instead of a draft assessment order, violating Section 144C of the Income Tax Act, 1961. The court noted that the order included a demand for tax and penalties, indicating it was indeed a final order. This was contrary to the mandatory procedure under Section 144C, which requires a draft assessment order to be issued first, allowing the assessee to file objections.

2. Legality of the Corrigendum Issued on 15.04.2013:
The corrigendum issued by the second respondent on 15.04.2013 aimed to rectify the final assessment order by treating it as a draft assessment order. The petitioners argued that the corrigendum was issued beyond the limitation period and could not cure the defect of the original final order. The court agreed, stating that the corrigendum could not retroactively convert a final order into a draft assessment order, especially after the statutory period had expired.

3. Jurisdiction and Procedural Adherence Under Section 144C:
Section 144C mandates that the Assessing Officer must issue a draft assessment order if there is a proposed variation to the income or loss returned by the assessee. The court emphasized that the failure to follow this mandatory procedure rendered the final assessment order dated 26.03.2013 null and void. The corrigendum could not rectify this fundamental procedural lapse.

4. Applicability and Limitations of Section 154:
The respondents argued that Section 154 of the Act, which allows for rectification of mistakes, could be invoked to issue the corrigendum. However, the court clarified that Section 154 could not be applied to cure the defect of issuing a final order instead of a draft assessment order. The corrigendum did not indicate it was issued under Section 154, and even if it had, it could not extend the period of limitation or substitute the mandatory procedure under Section 144C.

5. Impact of Procedural Errors on the Validity of Tax Assessment Orders:
The court referred to several precedents, including decisions of the Supreme Court and High Courts, to underline that procedural errors, especially those violating statutory mandates, cannot be cured by subsequent actions like issuing a corrigendum. The court highlighted the principle that an order passed without jurisdiction or beyond the statutory period is null and void, and such defects are not curable.

Conclusion:
The court concluded that the final assessment order dated 26.03.2013 was issued in violation of the mandatory procedures under Section 144C and was therefore null and void. The corrigendum issued on 15.04.2013 could not cure this defect, as it was beyond the statutory period and did not adhere to the mandatory procedural requirements. Consequently, the court set aside both the final assessment order and the corrigendum, allowing the writ petitions filed by the petitioners.

---