Order passed Referring to Section 144(C)(1) of Income Tax Act to be Construed only as Draft Assessment Order: Madras HC [Read Order]

In a significant ruling the Madras High Court observed that the order passed referring to Section 144(C)(1) of the Income Tax Act, 1961 is to be construed only as draft assessment order.

The case of the petitioner is that the petitioner filed return of income on 09.03.2022 and thereafter filed revised returns on 31.03.2022. As there was variation in the returns filed to the tune of Rs.43,42,55,948/-, the Assessing Officer had referred to the Transfer Pricing Officer ( TPO ) to give their comments on the proposed variation pertaining to the price variation issue and the TPO had filed his report.

Once the TPO report is filed, the respondent is supposed to have passed a draft assessment order under Section 144(C) of the GST Act. However, without passing the draft assessment order, the respondent had directly passed the final assessment order. Hence, the writ petition was filed.

The counsel for the petitioner submitted that the petitioner had filed their reply on 24.10.2023 requesting the respondent to pass a draft assessment order in terms of Section 144 (C) of the GST Act. However, without following the mandatory procedure of passing a draft assessment order, under Section 144 (C), the respondent passed a final assessment order on 13.11.2023. Hence, the counsel contended that the impugned assessment order passed by the respondent is liable to be set aside.

The Senior Standing Counsel contended that against the draft order passed on 27.09.2023, the petitioner has approached the Transfer Pricing Officer by considering the order passed under Section 144 C (1) as draft assessment. However, in the present case, though the draft assessment order has been passed in terms of Section 144C(1) of the Income Tax Act, the petitioner has considered the same as final assessment order since in the first page, the word “Draft Assessment Order under Section 144C(1) of the Income Tax Act” has not been mentioned.

A Single Bench of Justice Krishnan Ramaswamy observed that “However, this Court is not in a position to accept the contention of the petitioner for the reason that the respondent has convinced this Court that the present order is only a draft assessment order. Though the word “draft assessment” is missing, the provision under Section 144 (C) of the Income Tax Act is very much available and any order whatsoever in the form, in the event of the provisions by referring Section 144 (C) (1) of the Act, it should be construed only as a draft assessment order. No deficiency or discrepancy could be found in the order for not mentioning the word “draft assessment order” and by virtue of which, it would not get abated.”

To Read the full text of the Order CLICK HERE

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