Non-issuance of draft assessment order under Section 144C: remand requires fresh draft and opportunity to object, vitiating assessment.

Non-issuance of a draft assessment under the disputed reference procedure deprived the assessee of the statutory right to object and to have objections considered by the Dispute Resolution Panel; because the prior proceedings were void for violation of principles of natural justice and were set aside on remand nothing remained on record, so a fresh draft assessment should have been issued, failure of which vitiated the subsequent final assessment as without jurisdiction.

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Issues Involved:
1. Non-issuance of draft assessment order.
2. Requirement of draft assessment order upon remand.
3. Jurisdiction of the Assessing Officer under Section 144C(13).

Detailed Analysis:

1. Non-issuance of Draft Assessment Order:
The Respondent-Assessee argued that the order passed by the Assessing Officer was without forwarding a draft of the proposed order of assessment, contrary to Section 144C of the Income Tax Act. The Tribunal confirmed this factual assertion, stating that the absence of a draft assessment order goes to the root of the assessment, making the assessment order void and unenforceable. The Tribunal relied on the Andhra Pradesh High Court decision in M/s. Zuari Cement Ltd., which held that an assessment order passed contrary to the mandatory provisions of Section 144C is without jurisdiction, null, and void.

2. Requirement of Draft Assessment Order upon Remand:
The Revenue contended that upon remand, a draft assessment order is not necessary. However, the Tribunal had set aside the previous proceedings due to the violation of natural justice principles, directing the matter to be considered afresh by the Assessing Officer. The Tribunal's decision implied that the entire exercise, including any previously issued draft assessment order, was void. Consequently, the issuance of a new draft assessment order was necessary. The Tribunal's decision was consistent with the established legal position that failure to issue a draft assessment order renders the final assessment order without jurisdiction.

3. Jurisdiction of the Assessing Officer under Section 144C(13):
The Revenue argued that the order passed by the Assessing Officer was under Section 144C(13), where no draft assessment order is required. However, the Tribunal clarified that the remand directed a fresh consideration starting from Section 144C(1), not Section 144C(13). The Tribunal noted that the new Transfer Pricing Officer should have issued a show cause notice and heard the Assessee before making adjustments, as the previous proceedings were set aside for violating natural justice principles. Thus, the subsequent proceedings were not under Section 144C(13), and a draft assessment order was necessary.

Conclusion:
The Tribunal's decision to annul the assessment order for not issuing a draft assessment order was upheld. The Tribunal's interpretation of Section 144C was found correct, and the requirement for a draft assessment order upon remand was affirmed. The appeal was dismissed as no substantial question of law arose.

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