ITO Vs Sneh Sharma (ITAT Delhi)
Tribunal Confirms Relief: Skipping 144C Procedure Renders Assessment Void- Draft Order Mandatory for NRIs – ITAT Delhi Protects Assessee from Invalid Assessments
Revenue filed six appeals against orders of CIT(A) relating to reassessments framed u/s 147 r.w.s. 144. At the outset, Tribunal noted that four appeals (AYs 2012-13, 2013-14, 2014-15 & 2016-17) involved tax effect below the CBDT monetary limit of Rs.60 lakhs. Revenue attempted to invoke Exception 3.1(a) of Circular 5/2024 dated 15.03.2024, but Tribunal held that no constitutional or legal issue arose & dismissed these appeals as low tax effect matters.
For AYs 2015-16 & 2017-18, Assessee pointed out that she was a non-resident residing in the UK. AO was aware of this, since TDS was deducted u/s 195 in her case. Being an “eligible assessee” u/s 144C(15), AO was mandatorily required to issue a draft assessment order u/s 144C(1) before passing final order. However, AO skipped this procedure & directly issued final assessment order. CIT(A) quashed assessments on this ground.
Revenue argued that non-issuance of draft order was only procedural & relied on Delhi HC rulings in Abhishek Jain (2018) & Shyam Sunder Infrastructure Pvt. Ltd. (2015). Tribunal distinguished those cases, noting they dealt with territorial jurisdiction u/s 124(3), not with mandatory special procedure of s.144C. It emphasized that s.144C is a complete code for non-residents/foreign companies & provides a valuable right to challenge draft order before DRP. Skipping this safeguard renders assessment invalid.
