The AO skipped the draft order and passed a final one. Can a corrigendum cure that?
No. The procedure in s.144C is mandatory and the draft order is the gateway to the eligible assessee's right to go to the DRP. Once a final order is passed, with a demand notice and penalty proceedings, the AO is functus officio and a corrigendum cannot convert it into a draft; the defect is an absence of power, not a curable mistake.
Decided by the High Court (Madras High Court (B. Rajendran, J., sitting singly); Writ Petition Nos. 1526 and 1527 of 2014 with M.P. Nos. 1 and 1 of 2014. Affirmed on writ appeal by a Division Bench (Dr. S. Vimala and Mrs. S. Ramathilagam, JJ.) in W.A. Nos. 1327 to 1329 of 2014.) on 2014-04-29, reported as [2014] 46 taxmann.com 100 (Mad) / [2014] 225 Taxman 35 (Mad) / [2014] 369 ITR 113 (Mad) / [2014] 270 CTR 505 (Mad); W.P. Nos. 1526 and 1527 of 2014; assessment year 2009-10. Affirmed: Asstt. CIT, Media Circle-11, Chennai v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101 / [2018] 407 ITR 642 (Mad), W.A. Nos. 1327 to 1329 of 2014, 23 April 2018.. It bears on section 144C, section 144C(1), section 156, section 271(1)(c), section 292B of the Income Tax Act 1961, in Assessment & Scrutiny matters.
It answers the department's usual repair job when the draft stage is missed, and it identifies what proves the order was final: the simultaneous demand notice under s.156 and penalty notice, which can only follow a completed assessment. The point is jurisdictional, so it does not depend on showing prejudice on the merits.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2009-10 the assessee, an eligible assessee that had entered into international transactions reported in Form 3CEB, had its case referred to the Transfer Pricing Officer, who passed an order on 30 January 2013. A show cause notice followed on 27 February 2013 and the assessee replied on 11 March 2013. On 26 March 2013 - four days before the limitation for completing the assessment expired on 31 March 2013 - the Assessing Officer passed a final assessment order under s.143(3) instead of a draft order under s.144C(1), determined the tax and imposed penalty. A notice of demand under s.156 was served simultaneously with the order, and a notice dated 28 March 2013 called for payment of the tax and penalty under s.271. The assessee was heard on 12 April 2013, and on 15 April 2013 the Assessing Officer issued a corrigendum directing that the order of 26 March 2013 be read as a draft assessment order and giving thirty days to object. The assessee objected to the Dispute Resolution Panel on 26 April 2013, challenging the corrigendum; the Panel declined to give any direction, on the footing that it could act only on a draft order and this was a final one. The demand determined on 26 March 2013 was never withdrawn and still stood on the department's website. A third writ petition, W.P. No. 1528 of 2014 against the Panel's order, was withdrawn on 16 April 2014.
Both writ petitions were allowed and the assessment order of 26 March 2013 and the corrigendum of 15 April 2013 were set aside (para 34). Under s.144C(1) the Assessing Officer had no right to pass a final order on the TPO's recommendations, and by issuing the corrigendum he himself admitted that what he had passed was a final order (para 22). That order lacked jurisdiction, particularly because it was beyond the period of limitation prescribed by the statute, and a statutory violation in not following the prescribed procedure cannot be cured by issuing a corrigendum (para 24). The corrigendum was itself beyond the period of limitation, and by issuing it the Revenue could not be allowed to develop its own case (para 33).
That the order of 26 March 2013 was final and not a draft was shown by what accompanied it: the taxable amount was determined, penalty was imposed, and a notice of demand under s.156 was served simultaneously - a demand can be raised only after a final order determining liability - and the demand was never withdrawn even after the corrigendum (paras 21, 33). The Dispute Resolution Panel had itself treated it as a final order, which is why it refused to entertain the objections (para 21). The Court then drew the distinction the Supreme Court made in Deepak Agro Foods v. State of Rajasthan between an order that is a nullity because the authority lacked inherent jurisdiction, which is void ab initio and cannot be cured even by consent, and one that is merely irregular or illegal; an order passed beyond the statutory period is a nullity (paras 22-23). Here the assessment period expired on 31 March 2013 and the corrigendum came on 15 April 2013, so the order lacked jurisdiction and the corrigendum could not cure it (paras 24, 33). The Revenue's reliance on L. Hazari Mal Kuthiala was rejected because the consultation requirement there was directory whereas s.144C is mandatory (para 25). The Court drew on decisions holding that a jurisdictional defect is not curable under s.292B - the Allahabad High Court in Shital Prasad Kharag Prasad on a s.148 notice, and this Court's Division Bench in V. Ramaiah on an order passed under s.158BC instead of s.158BD - and on Smt. R.V. Sarojini Devi, that an omission to follow a mandatory procedure is not a mere procedural irregularity (paras 26-30). It followed the Andhra Pradesh High Court in Zuari Cement Ltd. v. Asstt. CIT, where a final order passed without a draft order was held contrary to s.144C and 'without jurisdiction, null and void', recording that the Supreme Court had dismissed the Revenue's special leave petition against it on 27 September 2013 (paras 31, 33).
In this case, the order passed by the second respondent lacks jurisdiction especially when it is beyond the period of limitation prescribed by the statute. When there is a statutory violation in not following the procedures prescribed, such an order cannot be cured by merely issuing a corrigendum.
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Handle my notice → Ask a CA on WhatsAppNo. The procedure in s.144C is mandatory and the draft order is the gateway to the eligible assessee's right to go to the DRP. Once a final order is passed, with a demand notice and penalty proceedings, the AO is functus officio and a corrigendum cannot convert it into a draft; the defect is an absence of power, not a curable mistake. This was decided by the High Court (Madras High Court (B. Rajendran, J., sitting singly); Writ Petition Nos. 1526 and 1527 of 2014 with M.P. Nos. 1 and 1 of 2014. Affirmed on writ appeal by a Division Bench (Dr. S. Vimala and Mrs. S. Ramathilagam, JJ.) in W.A. Nos. 1327 to 1329 of 2014.) and bears on section 144C, section 144C(1), section 156, section 271(1)(c), section 292B of the Income Tax Act 1961. It is reported as [2014] 46 taxmann.com 100 (Mad) / [2014] 225 Taxman 35 (Mad) / [2014] 369 ITR 113 (Mad) / [2014] 270 CTR 505 (Mad); W.P. Nos. 1526 and 1527 of 2014; assessment year 2009-10. Affirmed: Asstt. CIT, Media Circle-11, Chennai v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101 / [2018] 407 ITR 642 (Mad), W.A. Nos. 1327 to 1329 of 2014, 23 April 2018.. It answers the department's usual repair job when the draft stage is missed, and it identifies what proves the order was final: the simultaneous demand notice under s.156 and penalty notice, which can only follow a completed assessment. The point is jurisdictional, so it does not depend on showing prejudice on the merits. If it applies to you, the first step is this: Check whether a demand notice and penalty notice issued with the order, and put both on record as proof that the order was final.
For assessment year 2009-10 the assessee, an eligible assessee that had entered into international transactions reported in Form 3CEB, had its case referred to the Transfer Pricing Officer, who passed an order on 30 January 2013. A show cause notice followed on 27 February 2013 and the assessee replied on 11 March 2013. On 26 March 2013 - four days before the limitation for completing the assessment expired on 31 March 2013 - the Assessing Officer passed a final assessment order under s.143(3) instead of a draft order under s.144C(1), determined the tax and imposed penalty. A notice of demand under s.156 was served simultaneously with the order, and a notice dated 28 March 2013 called for payment of the tax and penalty under s.271. The assessee was heard on 12 April 2013, and on 15 April 2013 the Assessing Officer issued a corrigendum directing that the order of 26 March 2013 be read as a draft assessment order and giving thirty days to object. The assessee objected to the Dispute Resolution Panel on 26 April 2013, challenging the corrigendum; the Panel declined to give any direction, on the footing that it could act only on a draft order and this was a final one. The demand determined on 26 March 2013 was never withdrawn and still stood on the department's website. A third writ petition, W.P. No. 1528 of 2014 against the Panel's order, was withdrawn on 16 April 2014. The matter was decided on 2014-04-29 by the High Court (Madras High Court (B. Rajendran, J., sitting singly); Writ Petition Nos. 1526 and 1527 of 2014 with M.P. Nos. 1 and 1 of 2014. Affirmed on writ appeal by a Division Bench (Dr. S. Vimala and Mrs. S. Ramathilagam, JJ.) in W.A. Nos. 1327 to 1329 of 2014.). On those facts the High Court held as follows. Both writ petitions were allowed and the assessment order of 26 March 2013 and the corrigendum of 15 April 2013 were set aside (para 34). Under s.144C(1) the Assessing Officer had no right to pass a final order on the TPO's recommendations, and by issuing the corrigendum he himself admitted that what he had passed was a final order (para 22). That order lacked jurisdiction, particularly because it was beyond the period of limitation prescribed by the statute, and a statutory violation in not following the prescribed procedure cannot be cured by issuing a corrigendum (para 24). The corrigendum was itself beyond the period of limitation, and by issuing it the Revenue could not be allowed to develop its own case (para 33).
That the order of 26 March 2013 was final and not a draft was shown by what accompanied it: the taxable amount was determined, penalty was imposed, and a notice of demand under s.156 was served simultaneously - a demand can be raised only after a final order determining liability - and the demand was never withdrawn even after the corrigendum (paras 21, 33). The Dispute Resolution Panel had itself treated it as a final order, which is why it refused to entertain the objections (para 21). The Court then drew the distinction the Supreme Court made in Deepak Agro Foods v. State of Rajasthan between an order that is a nullity because the authority lacked inherent jurisdiction, which is void ab initio and cannot be cured even by consent, and one that is merely irregular or illegal; an order passed beyond the statutory period is a nullity (paras 22-23). Here the assessment period expired on 31 March 2013 and the corrigendum came on 15 April 2013, so the order lacked jurisdiction and the corrigendum could not cure it (paras 24, 33). The Revenue's reliance on L. Hazari Mal Kuthiala was rejected because the consultation requirement there was directory whereas s.144C is mandatory (para 25). The Court drew on decisions holding that a jurisdictional defect is not curable under s.292B - the Allahabad High Court in Shital Prasad Kharag Prasad on a s.148 notice, and this Court's Division Bench in V. Ramaiah on an order passed under s.158BC instead of s.158BD - and on Smt. R.V. Sarojini Devi, that an omission to follow a mandatory procedure is not a mere procedural irregularity (paras 26-30). It followed the Andhra Pradesh High Court in Zuari Cement Ltd. v. Asstt. CIT, where a final order passed without a draft order was held contrary to s.144C and 'without jurisdiction, null and void', recording that the Supreme Court had dismissed the Revenue's special leave petition against it on 27 September 2013 (paras 31, 33). In the words reproduced by the source cited on this page: "In this case, the order passed by the second respondent lacks jurisdiction especially when it is beyond the period of limitation prescribed by the statute. When there is a statutory violation in not following the procedures prescribed, such an order cannot be cured by merely issuing a corrigendum." The decision followed or applied Zuari Cement Ltd. v. Asstt. CIT [W.P. No. 5557 of 2012, dated 21 February 2013] (Andhra Pradesh) - followed (paras 31, 33); the Court records that the Revenue's special leave petition, Asstt. CIT v. Zuari Cement Ltd. [SLP CC No. 16694 of 2013], was dismissed on 27 September 2013; Deepak Agro Foods v. State of Rajasthan [2008] 16 VST 454 (SC) - followed and relied on (paras 22-23); V. Ramaiah v. CIT [2013] 356 ITR 646 / 37 taxmann.com 167 (Madras) - relied on: a jurisdictional defect is not curable under s.292B (para 27); CIT v. Shital Prasad Kharag Prasad [2006] 280 ITR 541 (Allahabad) and Smt. R.V. Sarojini Devi v. Inspecting Asstt. CIT [2000] 242 ITR 329 (Madras) - relied on (paras 26, 29); L. Hazari Mal Kuthiala v. ITO [1961] 41 ITR 12 (SC) - relied on by the Revenue and distinguished (para 25); Affirmed on writ appeal in Asstt. CIT, Media Circle-11, Chennai v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101 / 407 ITR 642 (Madras), W.A. Nos. 1327 to 1329 of 2014, 23 April 2018 (Dr. S. Vimala and Mrs. S. Ramathilagam, JJ.), whose case review records this judgment affirmed and which dismissed the Revenue's appeals as devoid of merit (para 50).
It was decided by the High Court on 2014-04-29 and is reported as [2014] 46 taxmann.com 100 (Mad) / [2014] 225 Taxman 35 (Mad) / [2014] 369 ITR 113 (Mad) / [2014] 270 CTR 505 (Mad); W.P. Nos. 1526 and 1527 of 2014; assessment year 2009-10. Affirmed: Asstt. CIT, Media Circle-11, Chennai v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101 / [2018] 407 ITR 642 (Mad), W.A. Nos. 1327 to 1329 of 2014, 23 April 2018.. 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 144C, section 144C(1), section 156, section 271(1)(c), section 292B, 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 helps the taxpayer. Both writ petitions were allowed and the assessment order of 26 March 2013 and the corrigendum of 15 April 2013 were set aside (para 34). Under s.144C(1) the Assessing Officer had no right to pass a final order on the TPO's recommendations, and by issuing the corrigendum he himself admitted that what he had passed was a final order (para 22). That order lacked jurisdiction, particularly because it was beyond the period of limitation prescribed by the statute, and a statutory violation in not following the prescribed procedure cannot be cured by issuing a corrigendum (para 24). The corrigendum was itself beyond the period of limitation, and by issuing it the Revenue could not be allowed to develop its own case (para 33). It arises in Assessment & Scrutiny matters, on section 144C, section 144C(1), section 156, section 271(1)(c), section 292B of the Income Tax Act 1961, and was decided by Madras High Court (B. Rajendran, J., sitting singly); Writ Petition Nos. 1526 and 1527 of 2014 with M.P. Nos. 1 and 1 of 2014. Affirmed on writ appeal by a Division Bench (Dr. S. Vimala and Mrs. S. Ramathilagam, JJ.) in W.A. Nos. 1327 to 1329 of 2014.. 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. Object to any corrigendum in writing instead of filing DRP objections against the recast document. Confirm the assessee is an eligible assessee for the year in question, since the mandatory procedure applies only then. Do not let the curative provision go unanswered; the argument is want of power, not an irregularity in the order.
Still good law. Affirmed on appeal. The Revenue's writ appeals were dismissed by a Madras Division Bench in Asstt. CIT, Media Circle-11, Chennai v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101 / [2018] 407 ITR 642 (Madras), W.A. Nos. 1327 to 1329 of 2014, decided 23 April 2018, which held the Assessing Officer duty bound to comply with s.144C(1) by first passing a draft order, said no interference was called for with the single Judge's order, and dismissed the appeals as devoid of merit (para 50); its case review records this judgment as affirmed. Neither report carries a citator banner recording any further appeal. The principle has since hardened elsewhere: the Bombay High Court in Hansgrohe India (P.) Ltd. v. Assessment Unit, Income-tax Dept. [2026] 185 taxmann.com 86 / [2026] 310 Taxman 446 (Bombay), Writ Petition No. 3501 of 2026, 25 March 2026, held a final order passed without first serving a draft order on an eligible assessee vitiated and incapable of being validated by treating it as a draft or by remand for a fresh draft - but that decision follows Danfoss Fluid Power (P.) Ltd. v. Union of India [2025] 179 taxmann.com 283 (Bombay) and SHL (India) (P.) Ltd. v. Dy. CIT [2021] 128 taxmann.com 426 / 438 ITR 317 (Bombay), not this judgment. 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.
This is a single-judge decision, affirmed on writ appeal by a Division Bench in Asstt. CIT, Media Circle-11, Chennai v. Vijay Television (P.) Ltd. [2018] 95 taxmann.com 101 / 407 ITR 642 (Madras), 23 April 2018 - cite the two together. Two features of the reasoning are easy to lose. First, what showed the order was final rather than draft was the simultaneous s.156 demand notice, the penalty under s.271 and the fact that the demand was never withdrawn even after the corrigendum. Second, the want of jurisdiction was tied to limitation: the assessment period expired on 31 March 2013 and the corrigendum was issued on 15 April 2013, which is why Deepak Agro Foods on nullity applied. Where limitation has not run, that limb of the reasoning is not available. The Bombay High Court's decision in Hansgrohe India (P.) Ltd. [2026] 185 taxmann.com 86 / 310 Taxman 446 (Bombay), 25 March 2026, is to the same effect but rests on Danfoss Fluid Power and SHL (India) rather than on this judgment. Neither report carries a citator banner, so whether the Revenue took the Division Bench decision to the Supreme Court is not established. The judgment does not set out the transfer pricing adjustment or the amounts. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Both writ petitions were allowed and the assessment order of 26 March 2013 and the corrigendum of 15 April 2013 were set aside (para 34). Under s.144C(1) the Assessing Officer had no right to pass a final order on the TPO's recommendations, and by issuing the corrigendum he himself admitted that what he had passed was a final order (para 22). That order lacked jurisdiction, particularly because it was beyond the period of limitation prescribed by the statute, and a statutory violation in not following the prescribed procedure cannot be cured by issuing a corrigendum (para 24). The corrigendum was itself beyond the period of limitation, and by issuing it the Revenue could not be allowed to develop its own case (para 33).
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