Assessment Couldn’t Be Abated if NFAC Forwarded an Assessment Order Instead of Draft Order Due to Technical Glitch

Case Details: GE Power Conversation India (P.) Ltd. vs. NFAC - [2024] 163 taxmann.com 718 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• S. Sivaraman for the Petitioner.
• Prabhu Mukunth Arunkumar, Jr. Standing Counsel & B. Ramana Kumar, Sr. Standing Counsel for the Respondent.

Facts of the Case

The petitioner was issued an order under section 143(3) read with 144C(1) proposing to make the transfer pricing adjustment to the total income. The petitioner challenged the Impugned Order before the Madras High Court, contending that although the order stated that such an order was a Draft Assessment, the order was indeed an Assessment Order as it was passed under Section 143(3) read with Section 144B of the Act.

High Court Held

The High Court held that the order under section 92CA(3) and the Assessing Officer (AO) should have ordinarily passed a draft assessment order in terms of Section 144B(1). Instead, in the present case, the order was formatted as an order under Section 143 r.w.s 144B.

The order also stated that it was a draft assessment order. The National Faceless Assessment Centre (NFAC), New Delhi, forwarded the order to the petitioner. A mistake crept in, as the order was formatted electronically by the National Faceless Assessment Centre under the mechanism evolved in Section 144B.

The mistake in formatting the preamble to the order based on a template meant for passing orders under Section 143(3) and Section 144B was not fatal. It will not render the order an assessment order.

The attempt by the Parliament to make an assessment faceless under the Income Tax Act, 1961, up to the appellate stage before the Appellate Commissioner, cannot be scuttled merely because the order formatting was improper. Mistakes that are not fundamental are not fatal to the assessment proceedings initiated. Assessment proceedings cannot be allowed to abate on account of technical glitches in the system-generated orders.

The impugned order was only a “Draft Assessment Order”, as was evident from a reading of the impugned order. It should have been correctly formatted as an Assessment Order in the system. Since the formatting and dissemination of all notices and orders are system-driven, the Assessment cannot be abated.

List of Cases Referred to

• • Vijay Television (P.) Ltd. v. Dispute Resolution Panel, Chennai [2014] 46 taxmann.com 100/225 Taxman 35/369 ITR 113 (Madras) (para 12)
  • Asstt. CIT v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101/407 ITR 642 (Madras) (para 13)
  • SHL (India) (P.) Ltd. v. Dy. CIT [2021] 128 taxmann.com 426/282 Taxman 334/438 ITR 317 (Bombay) (para 18)
  • Bekaert Mukand Wire Industries Pvt.Ltd., v. Additional (para 18).