Invalid Assessment Order Quashed for Non-Compliance

The Tribunal held that the assessment order passed without complying with the procedures under section 144B of the Income Tax Act was invalid. The draft assessment order was deemed non est in the eyes of the law due to the failure to issue a show cause notice cum draft order, rendering the assessment order null and void. Consequently, the Tribunal quashed the order, allowing the appeal filed by the assessee challenging the assessment for the Assessment Year 2017-18.

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Issues:
Challenge to assessment order passed by Assessing Officer under various sections of the Income Tax Act, 1961 for the Assessment Year 2017-18.

Analysis:
The appeal was filed by the assessee challenging the assessment order passed by the Assessing Officer under sections 143(3), 144C(13), and 144B of the Income Tax Act, 1961. The order was pursuant to the direction of the Dispute Resolution Panel-1 and the Transfer Pricing Officer, relating to the Assessment Year 2017-18. The assessee challenged the assessment order on various grounds, both non-corporate tax and corporate tax grounds. The assessee company, part of the UTC group, was involved in trading, manufacturing, and research and development services related to fire protection and security systems. The assessment order determined the total income at Rs. 16,80,09,929/-, making transfer pricing adjustments. The assessee contended that the assessment proceedings were null and void as the draft assessment order was passed without issuing a show cause notice cum draft order as mandated under section 144B of the Act.

The assessee challenged the assessment proceeding on the grounds of non-compliance with section 144B of the Act, which requires issuing a show cause notice cum draft order. The assessee argued that the assessment order was bad in law due to the failure to comply with the Faceless Assessment Scheme procedures. The Dispute Resolution Panel held that section 144C of the Act is a complete code applicable to eligible assesses, providing an opportunity to be heard before finalizing the order. The assessee contended that the draft assessment order was passed without following the Faceless Assessment Scheme, leading to the assessment order being contrary to the provisions of the Act.

The dispute centered on whether the draft assessment order was passed in compliance with the procedures laid down under section 144B of the Act. The assessee argued that the non-issuance of a show cause notice along with the draft order rendered the assessment order null and void. The assessee relied on relevant notifications and legal precedents to support their argument. The Tribunal referred to the provisions of section 144B(vii) and emphasized the importance of providing the assessee with an opportunity to be heard in case of proposed variations in the assessment order.

The Tribunal, in line with legal precedents and the provisions of section 144B, held that the assessment order passed without adhering to the procedures prescribed under section 144B would be considered non est. Citing relevant decisions of the Jurisdictional High Court, the Tribunal concluded that the impugned draft assessment order was non est in the eyes of the law and therefore quashed the order. As a result, the appeal filed by the assessee was allowed.

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