ITAT Quashes Reassessment Over Missing Section 143(2) Notice and Draft Order Defect:

The ITAT Mumbai quashed the reassessment orders against Global Cricket Corporation Pte. Ltd. after holding that the Assessing Officer failed to follow the mandatory procedure prescribed under Section 144C of the Income-tax Act. The Tribunal ruled that the so-called draft assessment orders were, in substance, final assessment orders and therefore were passed without jurisdiction. Consequently, all subsequent proceedings, including the final assessment orders, were held to be invalid.

The Tribunal observed that the assessee, a foreign company eligible for the dispute resolution mechanism under Section 144C, had challenged the validity of the reassessment proceedings by raising additional legal grounds. These grounds contended that the Assessing Officer had issued a purported draft assessment order under Sections 147 read with 144C(1) without first issuing a notice under Section 143(2) and had effectively passed a final assessment in the guise of a draft order.

After examining the record and judicial precedents, the Tribunal accepted the assessee's preliminary legal challenge. It held that the Assessing Officer had exceeded his jurisdiction by failing to adhere to the mandatory procedure under Section 144C. The Tribunal noted that a valid draft assessment order must not conclusively determine the tax liability or leave nothing further for adjudication. In the present case, the orders were final in substance despite being labelled as draft assessment orders.

Relying on settled judicial precedents, the Bench concluded that the jurisdictional defect went to the root of the assessment and could not be cured subsequently. Since the initial draft assessment orders themselves were invalid, every consequential proceeding, including the final assessment orders passed pursuant to the Dispute Resolution Panel's directions, also became unsustainable.

Therefore, the Tribunal quashed the impugned assessment orders for both Assessment Years 2005-06 and 2006-07. Having allowed the appeals on the preliminary jurisdictional issue, it left all other grounds on the merits open without adjudication, as they had become academic.