Mandatory draft assessment procedure under section 144C applies after remand, and non-compliance can void the assessment.

Section 144C's draft assessment procedure remained mandatory even after Tribunal remand, because the requirement to forward a draft proposed order applies whenever the Assessing Officer proposes a prejudicial variation to an eligible assessee. The phrase "in the first instance" did not limit that safeguard to the original assessment stage, and omission to issue the draft order was not a curable irregularity. Non-compliance with the mandatory procedure was treated as a violation of natural justice, rendering the assessment void ab initio and leaving no valid foundation for revision under section 263.

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Issues: (i) Whether, after remand by the Tribunal, the Assessing Officer was still required to forward a draft assessment order under section 144C before passing the final assessment order. (ii) Whether failure to follow the section 144C procedure rendered the assessment order void and the consequential revision under section 263 unsustainable.

Issue (i): Whether, after remand by the Tribunal, the Assessing Officer was still required to forward a draft assessment order under section 144C before passing the final assessment order.

Analysis: The statutory language of section 144C makes the forwarding of a draft proposed assessment order mandatory where the Assessing Officer proposes a variation prejudicial to the eligible assessee. The expression "in the first instance" was held not to confine the requirement only to the original assessment stage. The procedural safeguard applies even in remand proceedings, and the absence of a draft order cannot be treated as a mere curable irregularity.

Conclusion: The requirement to issue a draft assessment order remained mandatory even after remand, and the omission was held to be unlawful.

Issue (ii): Whether failure to follow the section 144C procedure rendered the assessment order void and the consequential revision under section 263 unsustainable.

Analysis: Non-compliance with the mandatory procedure under section 144C was treated as a violation of natural justice, making the assessment order void ab initio. Once the assessment itself was invalid, the foundation for revision under section 263 could not survive.

Conclusion: The assessment order was treated as invalid and the revision under section 263 was consequently unsustainable.

Final Conclusion: The Revenue's challenge failed because the final assessment was passed without the mandatory draft order, and the appeal was dismissed.

Ratio Decidendi: The draft assessment procedure under section 144C is mandatory in remand proceedings as well, and non-compliance renders the assessment order void and incapable of supporting consequential revision.

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