Assessment Orders u/s 144C(1) incurably Defective and Illegal if they don’t comply with Non-Obstante Provisions

Ashutosh Mohan Rastogi, Dhruv Seth & Parash Biswal – [2021] 130 taxmann.com 413 (Article)

The Income-tax Act, 1961 provides for a special and speedier assessment process for a class of assessees termed as ‘eligible assessee’. The section provides that in the first instance the Assessing Officer (‘AO’) shall issue a draft of the proposed order of assessment (colloquially referred to as ‘draft order’) to the eligible assessee. There has been a rise in the number of cases in the recent past wherein AOs have passed the final order without first issuing a draft order and more so in the new environment of faceless assessments.

The Bombay High Court in a recent ruling, allowed assessee’s writ petition and quashed the final e-assessment order, demand notice and penalty notice issued to the assessee as the same was passed without forwarding a draft order mandated by section 144C(1). This article deliberates on the merits of this decision and the potential implications under the newly introduced scheme of faceless assessment scheme.

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