You are an eligible assessee with a transfer pricing adjustment and the faceless unit passed a final order instead of a draft. What relief will the court give?
The order goes, but not always as a clean quashing. The Madras High Court set aside a final order passed three days after the show cause notice cum draft assessment order and directed that the impugned order be treated as a draft assessment order, leaving the assessee to work out its remedies against it under s.144B.
Decided by the High Court (C. Saravanan J) on 2023-09-08, reported as W.P. No. 24679 of 2021 and W.M.P. Nos. 25976 and 25977 of 2021 (Madras High Court). It bears on section 144B, section 144C, section 143(3), section 92CA, section 153 of the Income Tax Act 1961, in Faceless Assessment & Appeals and Assessment & Scrutiny matters.
It is the case to read before assuming that a s.144B breach gets you a clean escape. The relief was moulded so that the assessment neither stood nor abated, and the Court expressly reasoned that since limitation had not expired the assessment could not abate. Practitioners hoping to run out the clock should understand this line.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2018-19 the petitioner filed its return on 30 November 2018. A notice under s.143(2) issued on 23 September 2019 and the case was taken up under the E-Assessment Scheme, 2019. The matter went to the Transfer Pricing Officer, who passed an order on 31 July 2021 proposing adjustments of about Rs. 46.80 crore. A show cause notice cum draft assessment order was issued on 26 September 2021 and the final assessment order followed on 29 September 2021, along with notices under s.274 read with s.270A and s.271G. The petitioner's case was that as an eligible assessee it was entitled to have the order treated as a draft assessment order, to be given a revised draft after its response, and to have the steps in s.144B(1) followed before any final order.
The impugned assessment order dated 29 September 2021 was set aside and the connected demand and penalty notices quashed. The case was remitted with a direction that the impugned order be treated as a draft assessment order so that the petitioner could work out its remedy against it in the manner known to law under s.144B (para 65). The period from the date of the impugned order until the disposal of the writ petition and its receipt was excluded in computing limitation under s.153 (para 66).
The assessment unit was required to take into account all relevant material including the Transfer Pricing Officer's order under s.92CA(3), to pass a draft assessment order and to send a copy to the National Faceless Assessment Centre under s.144B(1)(xiv), and that procedure ought to be followed strictly (para 36). The impugned order of 29 September 2021 was not in accordance with that procedure, but since the limitation for completing the assessment had not expired - the outer date having become 30 September 2022, that is the date under s.153(1) as extended by the Taxation and Other Laws (Relaxation) Ordinance and Act, 2020 and the notifications under them to 30 September 2021, and further extended by twelve months under s.153(4) because a reference had been made to the Transfer Pricing Officer (para 60) - the assessment could not abate (para 61). An assessment cannot be kept in a state of flux; it has to be completed or abate on limitation, and here it could not abate given the relaxation Ordinance and Act of 2020 and the notifications issued under them (para 62). The Court distinguished its own earlier decision in the petitioner's case in W.P. No. 1575 of 2020 dated 5 January 2021, because the procedure for completing assessments under s.144B had changed with effect from 1 April 2021 and that earlier decision arose from an order of 24 December 2019, before the pandemic relaxations (paras 63 and 64).
The procedure under Section 144B(1)(xiv) ought to be followed strictly.
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Handle my notice → Ask a CA on WhatsAppThe order goes, but not always as a clean quashing. The Madras High Court set aside a final order passed three days after the show cause notice cum draft assessment order and directed that the impugned order be treated as a draft assessment order, leaving the assessee to work out its remedies against it under s.144B. This was decided by the High Court (C. Saravanan J) and bears on section 144B, section 144C, section 143(3), section 92CA, section 153 of the Income Tax Act 1961. It is reported as W.P. No. 24679 of 2021 and W.M.P. Nos. 25976 and 25977 of 2021 (Madras High Court). It is the case to read before assuming that a s.144B breach gets you a clean escape. The relief was moulded so that the assessment neither stood nor abated, and the Court expressly reasoned that since limitation had not expired the assessment could not abate. Practitioners hoping to run out the clock should understand this line. If it applies to you, the first step is this: If you are an eligible assessee under s.144C, check whether the order you received is described as a draft or as a final order, and whether any objections window was ever offered.
For assessment year 2018-19 the petitioner filed its return on 30 November 2018. A notice under s.143(2) issued on 23 September 2019 and the case was taken up under the E-Assessment Scheme, 2019. The matter went to the Transfer Pricing Officer, who passed an order on 31 July 2021 proposing adjustments of about Rs. 46.80 crore. A show cause notice cum draft assessment order was issued on 26 September 2021 and the final assessment order followed on 29 September 2021, along with notices under s.274 read with s.270A and s.271G. The petitioner's case was that as an eligible assessee it was entitled to have the order treated as a draft assessment order, to be given a revised draft after its response, and to have the steps in s.144B(1) followed before any final order. The matter was decided on 2023-09-08 by the High Court (C. Saravanan J). On those facts the High Court held as follows. The impugned assessment order dated 29 September 2021 was set aside and the connected demand and penalty notices quashed. The case was remitted with a direction that the impugned order be treated as a draft assessment order so that the petitioner could work out its remedy against it in the manner known to law under s.144B (para 65). The period from the date of the impugned order until the disposal of the writ petition and its receipt was excluded in computing limitation under s.153 (para 66).
The assessment unit was required to take into account all relevant material including the Transfer Pricing Officer's order under s.92CA(3), to pass a draft assessment order and to send a copy to the National Faceless Assessment Centre under s.144B(1)(xiv), and that procedure ought to be followed strictly (para 36). The impugned order of 29 September 2021 was not in accordance with that procedure, but since the limitation for completing the assessment had not expired - the outer date having become 30 September 2022, that is the date under s.153(1) as extended by the Taxation and Other Laws (Relaxation) Ordinance and Act, 2020 and the notifications under them to 30 September 2021, and further extended by twelve months under s.153(4) because a reference had been made to the Transfer Pricing Officer (para 60) - the assessment could not abate (para 61). An assessment cannot be kept in a state of flux; it has to be completed or abate on limitation, and here it could not abate given the relaxation Ordinance and Act of 2020 and the notifications issued under them (para 62). The Court distinguished its own earlier decision in the petitioner's case in W.P. No. 1575 of 2020 dated 5 January 2021, because the procedure for completing assessments under s.144B had changed with effect from 1 April 2021 and that earlier decision arose from an order of 24 December 2019, before the pandemic relaxations (paras 63 and 64). In the words reproduced by the source cited on this page: "The procedure under Section 144B(1)(xiv) ought to be followed strictly." The decision followed or applied GE Oil & Gas India Pvt Ltd, W.P. No. 1575 of 2020 dated 5 January 2021 (Madras) - distinguished, as it preceded the s.144B procedure and the Covid relaxations.
It was decided by the High Court on 2023-09-08 and is reported as W.P. No. 24679 of 2021 and W.M.P. Nos. 25976 and 25977 of 2021 (Madras High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 144B, section 144C, section 143(3), section 92CA, section 153, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The impugned assessment order dated 29 September 2021 was set aside and the connected demand and penalty notices quashed. The case was remitted with a direction that the impugned order be treated as a draft assessment order so that the petitioner could work out its remedy against it in the manner known to law under s.144B (para 65). The period from the date of the impugned order until the disposal of the writ petition and its receipt was excluded in computing limitation under s.153 (para 66). It arises in Faceless Assessment & Appeals and Assessment & Scrutiny matters, on section 144B, section 144C, section 143(3), section 92CA, section 153 of the Income Tax Act 1961, and was decided by C. Saravanan J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Work out your limitation position under s.153 including the Covid relaxations before choosing between a writ and an appeal, because a court may simply convert the order into a draft order. If the relief is a conversion, calendar the objection period immediately - the remedy is against the draft order, not against the original demand. Note that the Court excluded the period from the date of the impugned order to the disposal of the writ when computing limitation under s.153 (para 66).
Partly overruled — read this first. This judgment did not survive intact. A citator search on citedby:199306640 returns nothing, but a search for "GE Oil & Gas India" with "144C" discloses W.A. No. 1024 of 2024, decided by a Division Bench of the Madras High Court on 24 June 2025, which is the writ appeal against this very order of 8 September 2023 in W.P. No. 24679 of 2021. The Division Bench upheld the learned single judge's conclusion that failure to issue a draft assessment order under s.144C(1) is 'a jurisdictional error and not merely procedural error' and 'an incurable irregularity', but it set aside the relief: 'we, to the extent that the impugned order remits the matter to the Assessing Officer, set aside and quash the impugned order and to the extent the order dated 29.09.2021 sets aside the impugned order, it is not interfered with.' The direction to treat the impugned order as a draft assessment order and remit to the Assessing Officer is therefore gone. Cite the single judge only for the jurisdictional-error holding, not for the remedy. The Division Bench judgment (2025) is now the authority on consequence. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The impugned assessment order dated 29 September 2021 was set aside and the connected demand and penalty notices quashed. The case was remitted with a direction that the impugned order be treated as a draft assessment order so that the petitioner could work out its remedy against it in the manner known to law under s.144B (para 65). The period from the date of the impugned order until the disposal of the writ petition and its receipt was excluded in computing limitation under s.153 (para 66).
TaxSphere, “GE Oil & Gas India P Ltd v Addl/Jt/Dy/Asst CIT”, https://taxnotice.vittsphere.com/caselaw/case/ge-oil-gas-india-144b-144c-draft-order/ (validity last checked 2026-09-06)
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