Final assessment orders cannot be masked as draft orders when they compute tax, raise demand, and start penalty proceedings.

Orders that record computation of income and tax, issue a demand notice, and initiate penalty proceedings are treated in substance as final assessment orders, not draft assessment orders under Section 144C of the Income-tax Act, 1961. A mere reference to Section 144C will not save the order where its operative effect is to conclude the assessment and trigger demand and penalty action; a typographical error explanation was rejected. On that basis, the impugned orders were quashed and the petitions were allowed.

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Issues: Whether the impugned orders, though referring to Section 144C of the Income-tax Act, 1961, were in substance final assessment orders and not draft assessment orders, warranting quashment.

Analysis: The orders recorded a computation of income and tax, issued a demand notice under Section 156 of the Income-tax Act, 1961, and initiated penalty proceedings under Section 274 read with Section 271(1)(c) of the Income-tax Act, 1961. In view of these features, and applying the principle that an order which simultaneously concludes assessment and triggers demand and penalty proceedings cannot be treated as a draft assessment order, the respondent's stand that the reference to Section 144C was a mere typographical error was not accepted.

Conclusion: The impugned orders were held to be final assessment orders and were quashed. The petitions were allowed.

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