Mandatory draft assessment order in transfer pricing matters is jurisdictional; omission vitiates the assessment and cannot be cured later.

Failure to issue a draft assessment order to an eligible assessee under the mandatory transfer pricing procedure was treated as a jurisdictional defect. The omission was not cured by a later corrigendum, because the draft order requirement must be followed before finalising the assessment. The note follows Vijay Television and the Supreme Court's approval in Rinku R. Rai, and treats S.G. Asia Holdings as factually inapplicable. On that basis, the assessment order was held vitiated and the Revenue's appeal was rejected.

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Issues: Whether the assessment order was liable to be quashed for failure to issue a draft assessment order to an eligible assessee in terms of the mandatory transfer pricing assessment procedure.

Analysis: The assessment was made on the basis of the transfer pricing adjustment without first issuing a draft assessment order, though the assessee was an eligible assessee within the meaning of the statutory scheme. The requirement to follow the draft order procedure was treated as mandatory and jurisdictional, and the defect was held not curable by a subsequent corrigendum. The decision of the jurisdictional High Court in Vijay Television and the later approval of the same principle by the Supreme Court in Rinku R. Rai were followed, while the Revenue's reliance on S.G. Asia Holdings was found inapplicable on the facts.

Conclusion: The omission to issue the draft assessment order vitiated the assessment order, and the Revenue's appeal was rejected.

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