The Bombay High Court held that bypassing the statutory requirement of issuing a draft assessment order under Section 144C violates the assessee's right and constitutes a jurisdictional error, not a mere procedural lapse.
Assessment Order Without Draft u/s 144C Is Jurisdictional Error: Bombay HC
The Bombay High Court has ruled that the issuance of a final assessment order without first issuing a draft order under Section 144C of the Income Tax Act, 1961, amounts to a jurisdictional error, not merely a procedural irregularity. The Court emphasized that Section 144C(1) mandates the issuance of a draft assessment order to afford the assessee an opportunity to be heard by the Dispute Resolution Panel (DRP), thereby making compliance essential to jurisdiction.
The Court observed that the DRP stage is a statutory safeguard designed to ensure independent scrutiny of proposed additions before finalization. Denial of this stage deprives the assessee of a statutory right conferred by Parliament.
"Failure to issue a draft order under Section 144C(1) renders the subsequent assessment order a nullity as it is passed without jurisdiction,"the Court held.
For practitioners, this decision reinforces the necessity of challenging final orders where the DRP mechanism has been skipped, even if the taxpayer was later heard during appellate proceedings. It underscores that jurisdictional flaws cannot be cured by subsequent actions and must be addressed at the threshold.
Citations
- Section 144C, Income Tax Act, 1961
