Draft assessment order not served before finalisation vitiates assessment and penalty notice for denial of statutory objection rights.

A final assessment order is liable to be set aside where a draft assessment order was passed but not supplied to the assessee before completion of assessment, because the assessee was denied the statutory opportunity to object before the Dispute Resolution Panel. The procedural defect lay in finalising the assessment without first serving the draft order, making the final order contrary to law. The Court distinguished cases where no draft order was passed at all and held that the period during which the assessee was deprived of the statutory opportunity was to be excluded. The final assessment order and consequential penalty notice were set aside, and the assessee was allowed to proceed under the draft assessment regime in accordance with law.

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Issues: Whether the final assessment order and consequential penalty notice were liable to be set aside because a draft assessment order was passed but not supplied to the assessee before completion of the assessment.

Analysis: The proceedings were distinguished from cases where no draft assessment order had been passed at all. Here, a draft assessment order had been made, but the assessee was not furnished a copy before the final assessment order was issued. The defect lay in the Assessing Officer's act of finalising the assessment without first serving the draft order and affording the assessee the statutory opportunity to object before the Dispute Resolution Panel. That procedural lapse rendered the final assessment order contrary to law. The Court also noted that the draft order had been passed with time still available within limitation, and directed exclusion of the period during which the assessee was deprived of the statutory opportunity.

Conclusion: The final assessment order and consequential penalty notice were set aside, and the assessee was granted the opportunity to proceed under the draft assessment regime in accordance with law.

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