Challenge to Income Tax Assessment Order Labeling: Section 144C(2) Issue

The court is considering a challenge to an assessment order and corrigendum under Section 144C(2) of the Income Tax Act, 1961, for the assessment year 2016-17. The main issue is whether labeling an assessment order as 'order' instead of 'draft order' constitutes an irregularity or illegality. The petitioner seeks to quash the order, arguing it should be deemed accepted if not labeled as a draft. However, the court notes the lack of specification on the provision for deeming acceptance due to labeling errors. The Assessing Officer corrected the label promptly, allowing the assessee to raise objections with the Dispute Resolution Panel. The matter is pending further consideration by the court.

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Issues:
Challenge to assessment order and corrigendum for assessment year 2016-17 under Section 144C(2) of the Income Tax Act, 1961.

Analysis:
The petition challenges the assessment order dated 6th December, 2019, and the corrigendum dated 29th December, 2019, for the assessment year 2016-17. The main issue for adjudication is whether an assessment order under Section 144C(2) of the Income Tax Act, 1961, titled as 'order' or 'final order' instead of 'draft order', constitutes an 'irregularity' or an 'illegality'. The petitioner argues it is an illegality, seeking to quash the order and have the income tax return accepted without further proceedings. The petitioner relies on previous judgments, including The Pr. Commissioner of Income Tax-4 Vs. Headstrong Services India Pvt. Ltd, to support this position. The contention is that once an order is not labeled as a draft, the return should be deemed accepted, precluding the department from raising objections. However, the court notes the petitioner's failure to specify the provision under which the return can be deemed accepted due to the labeling mistake. The Assessing Officer issued a corrigendum promptly, clarifying the order as a draft, allowing the assessee to raise objections with the Dispute Resolution Panel (DRP).

The court acknowledges the issuance of demand and penalty notices following the order. Additionally, the court has scheduled a hearing for this case and related petitions on 8th February, 2021, summoning advocates representing the department for further consideration of the issue. The matter remains unresolved, pending clarification on the legal basis for deeming the return accepted in cases of mislabeling assessment orders.

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