“draft assessment order”
The decision most relied on for draft assessment order is ACIT v. Serajuddin & Co. (454 ITR 312), cited in 580 judgments on BharatTax.
Leading authorities on draft assessment order
Approval under Section 153D of the Income Tax Act is mandatory for assessment orders in search cases. While elaborate reasons for approval are not required, the approving authority must provide some indication that it has examined the draft orders and found them to meet the requirements of law.
Approval of draft assessment orders under Section 153D must be granted with due application of mind, not mechanically. Approving multiple cases, such as 38 in a single day, without proper scrutiny amounts to mechanical approval, rendering the assessment invalid.
Passing a final assessment order under Section 143(3) directly, without first issuing a draft assessment order under Section 144C(1) for an eligible assessee, constitutes a fundamental jurisdictional defect. This defect cannot be cured by a subsequent corrigendum, especially if issued beyond the prescribed period of limitation.
Failure to issue a draft assessment order under Section 144C(1) makes the final assessment order illegal and beyond jurisdiction. Non-compliance with Dispute Resolution Panel (DRP) directions renders the final assessment order bad in law.
The requirement to pass a draft assessment order under Section 144C of the Act is mandatory. A final assessment order issued without such a draft order is a nullity, constituting an incurable jurisdictional error that cannot be saved by Section 292B, even in set-aside proceedings following an ITAT remand.
Denying a personal hearing when specifically requested, especially after a search and during a pandemic, violates the principles of natural justice. The assessment and appellate proceedings themselves were conducted during the COVID-19 pandemic.
Failure to grant a personal hearing to an assessee when income is likely to be varied based on submitted evidence violates the principles of natural justice and renders the assessment order invalid.
An adverse assessment order cannot be passed without granting an opportunity of personal hearing to the taxpayer. Where income is to be varied based on evidence, a personal hearing is mandatory.
