Draft assessment order requirement under Section 144C is mandatory; denial of DRP objection rights is a jurisdictional defect.

Failure to first issue a draft assessment order under Section 144C(1) before finalising assessment was treated as a mandatory breach that deprives the eligible assessee of the statutory right to object before the Dispute Resolution Panel. The defect was characterised as jurisdictional, not a mere procedural lapse, and therefore incapable of cure by remitting the matter to the Assessing Officer to treat the final order as a draft assessment order. The direction remitting the matter was quashed, while the setting aside of the assessment order itself was left undisturbed.

---

---

Issues: Whether failure to issue a draft assessment order under Section 144C(1) of the Income-tax Act, 1961 vitiates the assessment and whether the matter can be remitted to the Assessing Officer after setting aside the assessment order.

Analysis: The requirement to first pass a draft assessment order and furnish it to the eligible assessee is mandatory and confers a substantive right to object before the Dispute Resolution Panel. Denial of that opportunity is not a mere procedural lapse, but a jurisdictional defect and an incurable irregularity. In such a situation, remitting the matter to the Assessing Officer to treat the assessment order as a draft assessment order was held to be impermissible.

Conclusion: The portion of the order remitting the matter to the Assessing Officer was quashed, while the setting aside of the assessment order was left undisturbed.

---