TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether, for the assessment year in question, a draft assessment order could be issued under section 144C(1) of the Income-tax Act, 1961 when no variation in returned income or loss was proposed; (ii) whether issuance of such an unwarranted draft assessment order could extend the time limit for completing the assessment under section 143(3) of the Income-tax Act, 1961.
Issue (i): Whether, for the assessment year in question, a draft assessment order could be issued under section 144C(1) of the Income-tax Act, 1961 when no variation in returned income or loss was proposed.
Analysis: Section 144C(1) applied only where the Assessing Officer proposed to make a variation in the income or loss returned that was prejudicial to the assessee. The assessee was an eligible assessee, but the returned income itself was not varied; only the rate of tax and treaty protection were in dispute. The later amendment enlarging the scope of section 144C was prospective from 1 April 2020 and did not govern the period in question.
Conclusion: No draft assessment order could validly be issued on the facts of the case, and the assessee succeeded on this issue.
Issue (ii): Whether issuance of such an unwarranted draft assessment order could extend the time limit for completing the assessment under section 143(3) of the Income-tax Act, 1961.
Analysis: Once section 144C(1) was held inapplicable, the normal limitation for completing the assessment remained unaffected. An invalid draft order could not enlarge the statutory time available for making the final assessment. On that basis, the assessment made after the original limitation date was beyond time.
Conclusion: The assessment order was time barred, and this issue was also decided in favour of the assessee.
Final Conclusion: The assessment was quashed as time barred, the draft order mechanism was held inapplicable on these facts, and the appeal succeeded while the remaining grounds became academic.
Ratio Decidendi: Before the prospective amendment to section 144C, a draft assessment order could be issued only where the proposed variation affected the returned income or loss prejudicially, and an invalidly issued draft order could not extend the limitation period for completing assessment.
TaxTMI 
