An assessment order which does not comply with the mandatory procedure laid down in section 144C is non-est and an order u/s 263 revising such an order is a nullity as a non-est order cannot be a subject matter of revision u/s 263

FACTS
In the case of the assessee, the PCIT passed an order u/s 263 wherein he stated that since before completion of final assessment a draft assessment order should have been served on the assessee as per the mandatory provision of section 144C and which the A.O. had not complied with, therefore the assessment order passed by him on 25th September, 2017 was erroneous and prejudicial to the interest of the Revenue.

Aggrieved, the assessee preferred an appeal to the Tribunal where it challenged the assumption of revisionary jurisdiction assumed by the PCIT.

HELD
The Tribunal noted that the Coordinate Bench has in the case of Mohan Jute Bags Mfg. Co. vs. PCIT [ITA No. 416/Kol/2020; A.Y. 2014-15] held that ‘…the A.O.’s omission to frame draft assessment order breached the Rule of Law and consequently, his non-action to frame draft assessment order before passing the final assessment order was in contravention of the mandatory provision of law as stipulated in section 144C of the Act, consequently his action is arbitrary and whimsical exercise of power which offends Articles 14 and 21 of the Constitution of India and therefore an action made without jurisdiction and ergo the assessment order dated 25th September, 2017 is null in the eyes of law and therefore is non-est.’

The Tribunal held that since the mandatory provision of law stipulated in section 144C was not complied with, the assessment order itself becomes a nullity in the eyes of the law and therefore is non-est. When the foundation itself for the assumption of revisionary jurisdiction u/s 263 does not exist, that in this case the assessment order itself is non-est, in such a scenario the PCIT could not have exercised his revisionary jurisdiction in respect of a null and void assessment order. The Tribunal held that the impugned order of the PCIT is also a nullity. The appeal filed by the assessee was allowed.