Final assessment order under Section 144C(3) quashed for missing mandatory draft assessment order under Section 144C(1)

The ITAT Delhi dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash a final assessment order passed under Section 144C(3) without first issuing a mandatory draft assessment order under Section 144C(1). The tribunal held that CBDT circulars cannot override statutory provisions, and after October 1, 2009, the Assessing Officer must statutorily pass a draft assessment order before making any additions in the final assessment order. The tribunal relied on precedents including decisions from SC and Gujarat HC, emphasizing that non-compliance with Section 144C(1) renders the final assessment order null and void.

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Issues:
1. Condonation of delay in filing the appeal.
2. Validity of the assessment order passed without draft assessment order under Section 144C of the Income Tax Act, 1961.

Analysis:
1. The appeal was time-barred by 16 days, and the Assessing Officer filed for condonation of delay. The delay was condoned as it was not intentional, and the appeal was admitted for hearing on merits.

2. The Department challenged the order of the CIT(A) on the basis of CBDT Circulars and the applicability of Section 144C of the Act. The Department argued that the assessment order was valid, while the assessee contended that the order was passed in violation of the Act. The CIT(A) upheld the assessee's appeal, citing relevant case laws and circulars.

3. The Assessing Officer passed the final assessment order without a draft assessment order, contravening Section 144C of the Act. The CBDT Circulars clarified the mandatory requirement of passing a draft assessment order before the final assessment order. The High Court decisions and circulars supported the quashing of the final assessment order in such cases.

4. The Coordinate Bench in a similar case quashed the final assessment order for not following the mandatory provisions of passing a draft assessment order. The CIT(A) in this case also quashed the final assessment order, upholding the decisions of various High Courts. The appeal of the Revenue was dismissed for lacking merit.

In conclusion, the judgment highlighted the importance of adhering to the procedural requirements under the Income Tax Act, specifically regarding the passing of draft assessment orders before final assessment orders. The decision was based on legal precedents and circulars, ensuring the proper application of the law in assessment proceedings.

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