TaxTMI 
TaxTMI 
2025 (12) TMI 1347
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....e. Furthermore, the Ld. CIT(A) erred in sustaining such an assessment order, which was made in the absence of any incriminating material found during the search, thereby violating the principles laid down by the Hon'ble Supreme Court in the case of Principal Commissioner ofIncome-tax, Central-3 vs Abhisar Buildwell (P.) Ltd. (Civil Appeal No. 6580 OF 2021 & OTHS, dated April 24, 2023). 2. Without prejudice to Ground No. 1, the Ld. CIT(A) erred in dismissing the appeal of the assessee by disregarding various grounds of appeal raised, which are contrary to the facts and circumstances of the case. 3. That the Ld. CIT(A) erred in sustaining the addition of Rs. 3,00,000/-made by the Ld. Assessing Officer on account of "Unexplained Household Expenses" without properly appreciating the facts of the case, specifically: a. That the appellant was present in India only for 117 days during the relevant previous year, as affirmed in the order passed under Section 10(3) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Given that she resided outside India for the majority of the previous year, the household expenses incurre....
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....ed, and no adverse inference was taken against the appellant in those proceedings. 6. That the Ld. CIT(A) erred in sustaining the assessment order, which was passed based on a mechanical approval granted by the Ld. Additional Commissioner of Income Taх, Range Central, under Section 153D of the Act, indicating a lack of due application of mind. 3. A search and seizure action u/s 132(1) was carried out on 03.10.2019 in the Chandigarh Group of Colleges group. The assessee, an individual and trustee in Chandigarh Educational Trust and Shri Guru Ram Dass Educational Society, was covered. Pursuant thereto, notices u/s 153A were issued and assessments were framed making additions on account of alleged household expenditure, difference in salary receipts, credits in foreign bank accounts and investment in overseas property. 4. The ld. CIT(A) partly confirmed the additions for all years. 5. Against the order of the Ld. CIT(A), the assessee is in appeal before us. 6. At the outset, the assessee has raised an additional legal ground challenging the validity of assessments on the ground that the Assessing Officer failed to follow the mandatory procedure laid down u/s....
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....and after calling information from the FRRO, recorded categorical findings that the assessee was a Non-Resident for F.Y. 2015-16 to 2019-20. 11. The said findings are contained in the order passed u/s 10(3) of the Black Money (Undisclosed Foreign Income & Assets) Act. The relevant table reproduced by the BMA authority at pages 6 & 7 of its order records year-wise non-resident status. The said the ld has accepted factual finding. CIT(A) in appellate proceedings. It is further noted that the assessee was present in India for only 43 days in F.Y. 2019-20 and for even less in other years. The assessment year and the number of days spent by the assessee in India are available at pages 8 & 9 of the Assessing Officer order, which reads as under: FY Departure from India Arrival in India Days in abroad Total Days in abroad Total Days In India Residency Status 2015-16 07-04-2015 17-04-2015 9 249 117 Non-Resident 19-07-2015 21-12-2015 154 05-01-2016 31.03.2016 86 2016-17 01.04.2016 01-06-2016 61 271 94 Non-Resident 10-08-2016 16-12-2016 127 07-01-2017 31.03.2017 83 2017-18 01.04.2017 ....
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....ted factual position that the assessee was a Non-Resident for all relevant assessment years, and this fact has been independently verified by FRRO and accepted by the JDIT (BMA) and by the ld. CIT(A). Beside that on page one of assessment order for Ay 2018-19, 2019-20 & 2020-21 Ao mention as under : However for AY2016-17 the Assessing Officer had mentioned status of assessee as resident: 16. Besides the above, the assessee was a Non-Resident within the meaning of Section 6 of the Income-tax Act, 1961 during the Assessment Years under consideration. Section 6 of the Act 1961 as on 01/04/2020 which reads as under:_ Residence in India. ^23 6. ^24 For the purposes of this Act,- (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or (b) ^25[***] (c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that y....
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.... (FY 2017-18), the assessee was present in India only for 0 days during the year, having stayed entirely outside India for the full 365 days. There was no period of stay in India during the said year, and therefore, as per law, her residential status unequivocally qualifies as Non- Resident. III. For AY 2019-20 (FY 2018-19), the assessee remained outside India for 323 days, having been present in India for only 43 days during the relevant financial year. The assessee's stay in India was thus minimal and far below the 182-day threshold prescribed under Section 6(1), firmly establishing her status as a Non-Resident for this year as well. IV. For AY 2020-21 (FY 2019-20), the assessee was physically present in India for only 182 days. It is submitted that, as per the FRRO determination as well as the Black Money proceedings, the assessee continued to be treated as a Non-Resident for this year, after a detailed review of her travel records. Further, the assessee's return of income itself was filed declaring the status as Non-Resident, and this position was accepted during Black Money proceedings and affirmed by the FRRO verification. 18. In view of the above, it is ....
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....he issuance of draft assessment order is mandatory and in failure to issue the draft assessment order would lead to quashing of the order passe by the Assessing Officer or not. In this regard it would be appropriate to produce the provision of section 144C which provides as under: [Reference to dispute resolution panel. ^83 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward84 a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation 84a[***] which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with,- (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (15) For the purposes of this section,- (a) "Dispute Resolution P....
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....ld as under: 6. We find that to the provisions of Section 144B(1) and more particularly Sections 144B(1)(xxi) to 144B(1)(xxix), the provisions of Sections 144C have been made applicable. These provisions clearly stipulate that in case of an eligible assessee, a draft assessment order has to be served on the Petitioner to enable the Petitioner to approach the DRP. This, in fact, has not been done in the facts of the present case. In the facts of the present case, a final assessment order has been directly passed by the Faceless Officer without serving a draft assessment order on the Petitioner to enable it to approach the DRP. This is in clear violation not only of the provisions of Section 144C but also of Section 144B(1)(xxi) to (xxix) thereof. Once this is the case, the final assessment order in the above Petition cannot stand and would have to be set aside. 7. In the view that we take, we are supported by the decision of this Court in the case of Danfoss Fluid Power (P.) Ltd. v. Union of India [2025] 179 taxmann.com 283 (Bombay)/Writ Petition No. 10403 of 2025 decided on 29th September 2025). In the facts of Danfoss (supra), a final assessment order was passed ....
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....] 438 ITR 317 (Bom). The relevant portion of this decision reads thus :- "27. Applying the aforesaid principles to the facts of this case, we are of the view that the failure on the part of the Assessing Officer to follow the procedure under Section 144C(1) is not a merely procedural or inadvertent error, but a breach of a mandatory provision. We are also not impressed with the arguments of the Revenue that the Assessing Officer was under pressure of two charges, as there were timelines to adhere to, since the said timelines from time to time have been extended, the most recent one being to September 30, 2021. The Revenue ought to have appreciated that the requirement under Section 144C(1) to first pass a draft Assessment Order and to provide a copy thereof to the assessee is a mandatory requirement which gave substantive right to the assessee to object to any variation, that is prejudicial to it. In this case, the order under Section 92CA(3) of the Income-tax Act, proposed to make an adjustment of Rs. 107,454,337/- to the arm's length price considered as Nil by Petitioner and to that extent the said adjustment was evidently prejudicial to the interest of the Petitione....
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.... by the Assessing Officer stands vitiated on account of lack of jurisdiction, which is incurable and deserves to be set aside as void ab initio. We, therefore, quash and set aside the impugned assessment order, demand notice and penalty notice, all dated April 6, 2021 for the assessment year 2017-18. The Writ Petition is allowed in the above terms. However, there shall be no order as to costs." 6. In view of the foregoing discussion, the impugned assessment order dated 28th March 2025 is hereby quashed and set aside." 8. As far as the prayer for remand is concerned, we see no reason to remand the matter back to the Assessing Officer. If the Assessing Officer, in law, is entitled to initiate this process again by passing a fresh draft assessment order and serving it upon the Petitioner, they are free to do so if they are entitled to do in law. We have not opined on this aspect of the matter one way or the other. 26. Similarly, Sumitomo Corporation India (P.) Ltd. [2024] 166 taxmann.com 55 (Delhi) Hon'ble Delhi High Corut has held as under: 11. It becomes pertinent to note that the issue of whether the AO could ignore the requirement of....
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....ct to an order passed by the appellate authority or the courts. 18. Consequently, section 144C envisages a change of forum and it leads to complete cessation of the jurisdiction of the Assessing Officer on passing of the draft order. Thereafter the Assessing Officer is to give effect to either the direction of the Dispute Resolution Panel or pass an order on acceptance by the assessee. The expression "in the first instance" has been used in section 144C to signify the first step to be taken by the Assessing Officer in a series of acts contemplated by the said section. To accept the appellant's argument would be to permit the Assessing Officer to decide the objections filed by the assessee- which power has been specifically denied by the statute." 14. It appears that the respondents in Headstrong India had contended that the expression "in the first instance" as appearing was suggestive of the requirement of framing a draft assessment order being obviated in a situation where the assessment proceedings are to be renewed consequent to a remit by the Tribunal. 15. This submission came to be rejected with the Court in Headstrong Services India (P.) Ltd. (....
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.... void and unenforceable. The said view was reiterated by this court in Turner International India Pvt. Ltd. v. Dy. CIT [2017] 398 ITR 177 (Delhi) W. P. (C) Nos. 4260 and 4261 of 2015 as well Nokia India Pvt. Ltd. v. Addl. CIT WP (C) No. 3629 of 2017. The relevant portion of the judgment in Turner International India Pvt. Ltd. (supra) is reproduced hereinbelow (page 180 of 398 ITR) : "The question whether the final assessment order stands vitiated for failure to adhere to the mandatory requirements of first passing draft assessment order in terms of section 144C(1) of the Act is no longer res integra. There is a long series of decisions to which reference would be made presently. In Zuari Cement Ltd. v. Asst. CIT (decision dated February 21, 2013 in W. P. (C) No. 5557 of 2012), the Division Bench (DB) of the Andhra Pradesh High Court categorically held that the failure to pass a draft assessment order under section 144C(1) of the Act would result in rendering the final assessment order 'without jurisdiction, null and void and unenforceable'. In that case, the consequent demand notice was also set aside. The decision of the Andhra Pradesh High Court was affi....
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....the jurisdiction and passed the final assessment order without passing a draft assessment order and without giving the respondent-assessee an opportunity to raise objections before the Dispute Resolution Panel. 25. Keeping in view the aforesaid, this court is of the opinion that no question of law, let alone a substantial question of law, arises in the present appeal. 26. This court is of the view that till the Income-tax Department ensures that the Assessing Officers follow the mandate of law, in particular, the binding provisions like section 144C and eschew filing of unnecessary appeals rather than in nearly all matters where the Assessing Officer has taken a view against the assessee, the assessments will not achieve finality for a number of years like in the present case where the case of assessment year 2007-08 stands remanded and restored to the file of the Assessing Officer." 18. We note that the legal position as enunciated by this Court also finds resonance in the decisions rendered by the Madras, Gujarat and Bombay High Courts in the decisions rendered in Vijay Television (P.) Ltd. v. Dispute Resolution Panel [2014] 46 taxmann.com 100/225 Taxma....
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....Resident/Resident but not Ordinary resident/ Non-resident Non-Resident Date of Hearing 11/11/2020, 08/12/2020, 28/12/2020, 17/05/2021, 10/09/2021, 10/09/2021 Section/Sub-section under which assessment is made 153A Date of Order 29/09/2021 ASSESSMENT ORDER A search and seizure operation under section 132(1) of the Income tax Act, 1961 was carried out on 03.10.2019 in the cases of various persons of Chandigarh Group of Colleges (CGC group) and its business associates/ business partners.Consequent upon warrant of search issued u/s 132(1) of the Act, asearch and seizure operation under section 132(1) of the Income tax Act, 1961 was carried out at the following premises of the assessee :- 1. Chandigarh University (CU), VPO, Gharuan, NH-95, Chandigarh-Ludhiana Highway, SAS Nagar, Mohali. Note: If digitally signed, the date of digital signature may be taken as date of document. .C.R BUILDING, HIMALAYA MARG, SECTOR 17 - E, CHANDIGARH, CHANDIGARH, Chandigarh (UT), 160017 Note :- The website address of the e-filing portal has been changed from wowww.incometaxindianfiling.gov.in to www.incometax.gov.in . DIN- Document identification No. Damandeep kam, GOVERNMENT ....
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.... 03.10.2019 in the cases of various persons of Chandigarh Group of Colleges (CGC group) and its business associates/ business partners.Consequent upon warrant of search issued u/s 132[1) of the Act, asearch and seizure operation under section 132(1) of the Income tax Act, 1961 was carried out at the following premises of the assessee :- i. Chandigarh University (CU), VPO, Gharuan, NH-95, Chandigarh-Ludhiana Highway, SAS Nagar, Mohali. ii. Chandigarh Group of Colleges, VPO Landran, Kharar - Banur Highway, Sector-112, SAS Nagar, Mohali. iii. H.No. 2368, Phase - 10, Mohali, Punjab. iv. Locker No. 134JT, HDFC Bank, Phase-11, Mohali. v. Locker No. 128JT, HDFC Bank, Phase-11, Mohali. During the course of search, various incriminating documents pertaining to the assessee has also been found & seized. 1 | Page Document 2 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX DCIT/ACIT(CEN)-2 CHD To, 2368, PHASE X + MOHALI 160055,Punjab India PAN: ALCPK6320J AY: 2016-17 DIN & Order No: ITBA/AST/S/153A/2021- 22/1036030680(1) Dated: 29/09/2021 Name of the assessee DAMANDEEP KAUR Address of....