Madras HC: Order Handed by Directing to IT Section 144(C)(1) to be Construed Primarily as a Draft Assessment

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

The petitioner’s case is that the petitioner filed an income return dated 09.03.2022 and subsequently filed revised returns dated 31.03.2022. Since variation in the returns filed to the tune of Rs.43,42,55,948 is there hence the Assessing Officer had referred to the Transfer Pricing Officer (TPO) to provide their comments on the suggested variation related to the price variation issue and the TPO had filed his report.

Under Section 144(C) of the Goods and Services Tax Act, the respondent is assumed to have passed a draft assessment order once the TPO report is filed. But without passing the draft assessment order the respondent had passed the final assessment order directly. Therefore the writ petition was filed.

The applicant’s counsel furnished that on 24.10.2023, the applicant gave their reply asking the respondent to pass a draft assessment order as per section 144 (C) of the GST Act.

But without complying with the mandatory process of passing a draft assessment order, under Section 144 (C), on 13.11.2023 the respondent passed a final assessment order.

Accordingly, the counsel argued that the impugned assessment order passed by the respondent is accountable to be set aside.

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Against the draft order passed dated 27.09.2023, the petitioner has approached the Transfer Pricing Officer regarding the order passed under Section 144 C (1) as draft assessment, Senior Standing Counsel argued.

But, in the ongoing case, though the draft assessment order has been passed in terms of Section 144C(1) of the Income Tax Act, the applicant has believed the same as the final assessment order as on the first page, the word “Draft Assessment Order under Section 144C(1) of the Income Tax Act” is not been cited.

A Single Bench of Justice Krishnan Ramaswamy noted that “this Court is not in a situation to accept the opinion of the applicant for the reason that the respondent has convinced this Court that the present order is only a draft assessment order.

However the word “draft assessment” is not there, the provision under Section 144 (C) of the Income Tax Act is very much available, and any order whatsoever in the form, in the matter of the provisions by referring to Section 144 (C) (1) of the Act, it must be interpreted only as a draft assessment order.

No deficiency or discrepancy can be discovered in the order for not citing the word “draft assessment order” and by virtue of which, it would not get reduced.