Assessment order declared invalid for non-compliance with Income Tax Act; impugned notices quashed.

The High Court declared the assessment order as non est due to non-compliance with the mandatory provisions of Section 144B of the Income Tax Act. Consequently, the impugned order, demand notice, and penalty notice were quashed and set aside. The court emphasized that no observations were made on the case's merits, leaving the Revenue to take further steps as per the law. The petition was disposed of, addressing the petitioner's concern regarding the absence of the mandatory draft assessment order.

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Issues:
Impugning assessment order due to non-issuance of mandatory draft assessment order under Section 144B(1)(xvi)(b) of the Income Tax Act, 1961.

Analysis:
The petitioner challenged the assessment order dated 13th May 2021 on the basis that the mandatory draft assessment order required under Section 144B(1)(xvi)(b) of the Income Tax Act, 1961 was not issued by the respondents. In response, the respondents argued that the Risk Unit did not indicate the necessity for a show cause notice or draft order, leading to the finalization of the assessment without issuing the draft order. However, the court emphasized that Section 144B provisions are mandatory. It was noted that according to Section 144B(1)(xvi)(b), if there is a variation prejudicial to the assessee, a draft assessment order must be issued, which was not done in this case. The court reiterated that non-compliance with the Section 144B procedure renders the assessment order non est under Section 144B(9) of the Act.

The court, considering the admitted non-compliance with the mandatory procedure of Section 144B, declared the assessment order dated 13th May 2021 as non est. Consequently, the impugned order, demand notice, and penalty notice issued on the same date were quashed and set aside. The court clarified that no observations were made on the merits of the case, leaving the Revenue to take further steps as advised by law. The petition was disposed of, resolving the issue raised by the petitioner regarding the absence of the mandatory draft assessment order.

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