Final Assessment orders quashed by Mumbai ITAT as it was passed without issue of the draft assessment orders under Section 144C
The Mumbai Tribunal in the case of Hasmukh Dipchand Gardi v. ACIT (ITA No 1309/Mum/2014) was concerned with the issues of Non-Passing of Draft Assessment Order under Section 144C.
The appellant challenged the final assessment orders passed without issuing a draft assessment order as required under Section 144C of the Income Tax Act, 1961.
No Incriminating Material:
The appellant argued that the assessment orders were passed without any incriminating material, which is a prerequisite for issuing a notice under Section 153A.
Re-computation of Long Term Capital Gain: The appellant contested the re-computation of long-term capital gain on the sale of property.
Disallowance of Deduction under Section 35AC: The appellant challenged the disallowance of a deduction claimed under Section 35AC.
Ad-hoc Addition of Cash in Hand: The appellant disputed the ad-hoc addition of cash in hand.
Assessment of Rental Income: The appellant contested the assessment of rental income under the head “Income from Other Sources” instead of “Income from House Property”.
Tribunal’s Findings:
Non-Passing of Draft Assessment Order under Section 144C:
The Tribunal found that the Assessing Officer (AO) failed to issue a draft assessment order as required under Section 144C, which is mandatory for eligible assessees, which includes non-residents.
The Tribunal referred to several judicial decisions, including those of the Bombay High Court and the Delhi High Court, which held that failure to issue a draft assessment order is a jurisdictional error and not merely a procedural irregularity.
The Tribunal quashed the final assessment orders for all assessment years (2013-14 to 2020-21) on this ground, rendering the other grounds of appeal academic.
The Tribunal allowed the appeals for all assessment years (2013-14 to 2020-21) by quashing the final assessment orders due to the failure of the AO to issue draft assessment orders as required under Section 144C.
The copy of the order is as under:
