Draft assessment protection for non-resident taxpayers invalidates direct final orders and unsupported best-judgment assessments entirely.

A final assessment prejudicial to a non-resident eligible assessee requires prior service of a draft order under Section 144C, preserving access to the Dispute Resolution Panel; direct finalisation is described as a jurisdictional defect. Best judgment assessment requires the statutory failures to file a return or comply with relevant notices, and cannot rest on non-compliance where the return and substantially responsive submissions were filed. Accepted non-resident status places assessment jurisdiction with International Taxation rather than an officer lacking that jurisdiction in a faceless process. An addition for property investment is unsustainable where records establish duplicate reporting of one transaction and bank and remittance records explain its source.

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Issues: (i) Whether a final assessment could be made against a non-resident eligible assessee without first issuing a draft assessment order under Section 144C; (ii) whether best judgment assessment under Section 144 was valid despite the return and responses having been filed; (iii) whether the Assessing Officer at Gurgaon had jurisdiction to complete the faceless assessment of the non-resident assessee; and (iv) whether the addition for the alleged property purchase could be sustained where duplicate reporting and source of the actual investment had been explained.

Issue (i): Whether a final assessment could be made against a non-resident eligible assessee without first issuing a draft assessment order under Section 144C.

Analysis: The assessee disclosed and substantiated non-resident status through the return, stay calculation and passport records. That status was reflected in the assessment order and computation and was not disputed through any further enquiry. A non-resident other than a company is an eligible assessee. A variation prejudicial to such assessee required prior service of a draft order, preserving the statutory right to approach the Dispute Resolution Panel. The direct final assessment defeated that right and constituted a jurisdictional defect, not a curable procedural irregularity.

Conclusion: The final assessment without a draft order under Section 144C was without jurisdiction and invalid, in favour of the assessee.

Issue (ii): Whether best judgment assessment under Section 144 was valid despite the return and responses having been filed.

Analysis: The return filed in response to reassessment notice was e-verified and was acted upon by issuance of notice under Section 143(2). Although the first notice under Section 142(1) was not answered, the subsequent notice substantially sought the same particulars and was answered with supporting material; subsequent communications were also answered. The statutory preconditions for best judgment assessment, namely failure to file a return or failure to comply with the relevant notices, were therefore absent.

Conclusion: Invocation of Section 144 was invalid, in favour of the assessee.

Issue (iii): Whether the Assessing Officer at Gurgaon had jurisdiction to complete the faceless assessment of the non-resident assessee.

Analysis: The Revenue accepted that an assessee found to be non-resident would fall under the jurisdiction of the International Taxation officer. Since non-resident status stood accepted, the Gurgaon officer lacked jurisdiction. The objection under Section 124(3) was unavailable in the peculiar faceless-assessment setting, where the officer assumed control only at the final stage and allowed less than twenty-four hours to respond.

Conclusion: The Gurgaon Assessing Officer lacked jurisdiction to complete the assessment, in favour of the assessee.

Issue (iv): Whether the addition for the alleged property purchase could be sustained where duplicate reporting and source of the actual investment had been explained.

Analysis: The material showed one agricultural-property purchase for Rs. 50,00,000, while the figure of Rs. 2,04,60,800 resulted from the same stamp-value transaction being reported four times. The purchase document, bank records and remittances into the NRE account explained both the transaction and its source. The assessment disregarded this material and proceeded solely because the limitation period was expiring. No basis existed to remand the matter where the record already established duplicate reporting and explained source.

Conclusion: The addition based on the alleged purchase value was unsustainable, in favour of the assessee.

Final Conclusion: The assessment suffered from mandatory-procedure violations, absence of jurisdictional conditions, lack of proper assessing-officer jurisdiction and arbitrariness in disregarding material establishing the actual transaction and its explained source.

Ratio Decidendi: A prejudicial assessment of a non-resident eligible assessee without a prior draft order under Section 144C, or a best judgment assessment absent its statutory preconditions, is jurisdictionally invalid.

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