Damandeep Kaur Vs ACIT (ITAT Chandigarh)
ITAT Chandigarh held that passing of final assessment order under section 153A of the Income Tax Act without issuing draft assessment orders under section 144C of the Income Tax Act is untenable. Accordingly, final assessment order u/s. 153A is quashed.
Facts- A search and seizure action u/s 132(1) was carried out on 03.10.2019 in the Chandigarh Group of Colleges group. The assessee, an individual and trustee in Chandigarh Educational Trust and Shri Guru Ram Dass Educational Society, was covered. Pursuant thereto, notices u/s 153A were issued and assessments were framed making additions on account of alleged household expenditure, difference in salary receipts, credits in foreign bank accounts and investment in overseas property. CIT(A) partly confirmed the additions. Being aggrieved, the present appeal is filed.
Vide the present appeal, the assessee has raised additional ground challenging validity of assessments on the ground that AO failed to follow mandatory procedure laid down u/s. 144C by not issuing draft assessment order.
Conclusion- Hon’ble Madras High Court in the case of Ahmed Buhari Vs. ACIT, Central Circle 2025(7) TMI 451 have held that issuance of the draft assessment order under section 144C(1) is mandatory and non issuance is not just a procedural lapse and therefore it is not curable. The consistent view of various High Courts is that failure to follow Section 144C procedure is not a procedural irregularity but a jurisdictional illegality, not curable u/s 292B. The Hon’ble High Courts have consistently held that where a draft order is not issued, the final assessment is void and liable to be quashed. Participation in assessment proceedings cannot confer validity on a void order; there is no estoppel against statute.
