Court invalidates Final Assessment Order & notice for jurisdictional defects under Income Tax Act.

The court quashed the Final Assessment Order and notice dated 31st March 2021 due to jurisdictional defects. The Final Assessment Order was invalidated for not issuing the mandatory draft Assessment Order as required by Section 144B(1)(xvi) of the Income Tax Act. The notice under Section 148 was deemed invalid as it exceeded the permissible period and lacked proper approval under Section 151. The court emphasized the importance of adhering to procedural requirements under the Income Tax Act and set aside both orders.

---

---

Issues:
1. Validity of Final Assessment Order passed without issuing draft Assessment Order as per Section 144B(1)(xvi) of the Income Tax Act.
2. Legality and validity of notice dated 31st March 2021 under Section 148 of the Act.

Analysis:

Issue 1: Validity of Final Assessment Order
The petitioner challenged the Final Assessment Order dated 25th March 2022, contending that it was passed in violation of Section 144B of the Income Tax Act as it was done without issuing the mandatory draft Assessment Order. The petitioner argued that the non-issuance of the draft Assessment Order was a jurisdictional defect. The respondent, through their counsel, admitted the absence of the draft Assessment Order in their reply. The court held that the failure to issue the draft Assessment Order indeed constituted a breach of Section 144B(1)(xvi) and thus, the Final Assessment Order was quashed and set aside.

Issue 2: Legality of Notice under Section 148
The petitioner also challenged the legality and validity of the notice dated 31st March 2021 issued under Section 148 of the Act. The petitioner argued that the notice was beyond the permissible period of four years and lacked the necessary satisfaction under Section 151 of the Act. The respondent's counsel admitted that the re-opening approval was obtained from an Additional Commissioner, not the authorized officials as required by Section 151. The court, after considering the arguments, concluded that the notice dated 31st March 2021 was without jurisdiction and therefore quashed and set aside.

In the final judgment, the court allowed the petition, quashing both the notice dated 31st March 2021 and the Final Assessment Order dated 25th March 2022. The court emphasized the jurisdictional defects in both instances, leading to the decision to set aside the orders. The judgment highlighted the importance of complying with procedural requirements under the Income Tax Act, particularly regarding the issuance of draft Assessment Orders and obtaining proper approvals for re-opening assessments.

---