Court deems assessment order final, breaches natural justice. Petitioner granted 30 days to object. Notices withdrawn.

The court found that the assessment order, despite being titled as a draft order, functioned as a final assessment order, breaching natural justice principles and the Income Tax Act, 1961. The court directed the order to be treated as a draft assessment order, allowing the petitioner 30 days to raise objections with the Dispute Resolution Panel. The notices of demand and penalty proceedings were withdrawn, and the petitioner was granted the right to challenge any adverse decision by the DRP. The court disposed of the writ petition with these specific directions, resolving the matter.

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Issues:
Violation of provisions of the Income Tax Act, 1961 in passing a final assessment order instead of a draft assessment order under Section 144C (1) of the Act.

Analysis:
The petitioner contended that the impugned order dated 26.03.2021 was contrary to the provisions of the Income Tax Act, 1961 and had been passed in breach of natural justice principles. The order, titled as a "Draft Assessment Order u/s 143(3) r.w.s. 144C of the I.T. Act, 1961," was argued to be a final assessment order based on the Transfer Pricing Officer's input. The Assessing Officer's statement in paragraph 6 of the order indicated the finality of the assessment, including the initiation of penalty proceedings. The petitioner's counsel highlighted discrepancies between the order's title and its content, supported by references to the notice of demand and penalty notice. The court prima facie agreed with the petitioner's contention, noting a possible violation of the Act's provisions.

The Assessing Officer was expected to pass an order under Section 144 C (1) of the Act initially, enabling the petitioner to raise objections with the Dispute Resolution Panel if aggrieved. The respondent's counsel, Mr. Hossain, informed the court that the impugned assessment order would be treated as a draft assessment order, and the consequential notices of demand and penalty proceedings would be withdrawn. The petitioner's counsel agreed to this suggestion but requested the statutory 30-day period to file objections with the DRP as per the law.

The court disposed of the writ petition with specific directions: treating the assessment order as a draft assessment order, granting the petitioner 30 days to file objections with the DRP from the date of the court order, withdrawing the notice of demand and penalty proceedings, and allowing the petitioner to challenge any adverse decision by the DRP as per the law. Consequently, the pending application was also disposed of in light of the court's directions.

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