GOLDMAN SACHS (INDIA) SECURITIES PVT.LTD,MUMBAI vs. ACIT CIR 7 (1) (1) , MUMBAI

Facts

The assessee challenged a final assessment order dated 30/06/2021 for AY 2016-17, framed u/s 144C(13) r.w.s. 143(3), contending that the Assessing Officer (AO) bypassed the mandatory procedure of issuing a draft assessment order under Section 144C(1). The AO had issued a demand notice and penalty notice on 28/12/2019, followed by a corrigendum on 29/12/2019 attempting to retrospectively treat the order as a draft. The assessee argued that the issuance of demand and penalty notices signified a final assessment, rendering the subsequent DRP directions and final assessment invalid.

Held

The Tribunal held that the AO's actions of issuing a demand notice and penalty notice on 28/12/2019 concluded the assessment proceedings, thereby constituting a final assessment and bypassing the mandatory procedure under Section 144C for an 'eligible assessee' requiring a draft order. Citing various judicial precedents, the Tribunal ruled that such a procedural lapse renders the assessment void ab initio and cannot be rectified by a subsequent corrigendum. Consequently, the Ground challenging the validity of the assessment was allowed, making all subsequent proceedings non-est. The transfer pricing grounds were withdrawn by the assessee due to an Advance Pricing Agreement (APA).

Key Issues

Whether the assessment order passed by the AO, accompanied by demand and penalty notices, constituted a final order bypassing the mandatory draft assessment procedure under Section 144C. Whether a subsequent corrigendum can rectify such a jurisdictional defect.