Facts of the Case

The petitioner, BT Global Communications India Pvt. Ltd., challenged an order dated 06.12.2019 passed by the Assessing Officer assessing its total income at ₹5,47,92,27,510 for Assessment Year 2016-17.

The petitioner contended that the impugned order was a draft assessment order under Section 144C of the Income Tax Act, 1961, and since the petitioner was not an “eligible assessee”, no such draft order could have been issued. The challenge was founded primarily on the heading of the order, which described it as “Draft Order u/s 144C of the Income-tax Act, 1961”, and on the Document Identification Number (DIN) referencing Section 144C.

The Revenue disputed this characterization and asserted that the order was in substance and in law a final assessment order passed under Section 143(3) of the Act.

Issues Involved

Whether the impugned assessment order was a draft assessment order under Section 144C or a final assessment order under Section 143(3) of the Income Tax Act, 1961, and whether an incorrect heading or DIN reference could alter the true nature of the order.

Petitioner’s Arguments

The petitioner argued that:

  • The heading of the order expressly stated that it was a draft order under Section 144C.
  • The DIN contained a reference to Section 144C, reinforcing the conclusion that the order was issued under that provision.
  • Since the petitioner was an Indian company and no transfer pricing adjustment was involved, the Assessing Officer lacked jurisdiction to issue a draft assessment order under Section 144C.

Respondent’s Arguments

The Revenue contended that:

  • The impugned order was clearly an assessment order passed under Section 143(3), as reflected in the opening sheet, computation of income, additions made, and initiation of penalty proceedings.
  • The reference to Section 144C in the heading and DIN was a systemic or clerical error, which could not determine the true character of the order.
  • Substance and contents of the order, not its label or DIN number, are determinative.

Court Order / Findings

The Delhi High Court examined the impugned order in detail and held that:

  • The opening sheet of the order unequivocally stated that the assessment was made under Section 143(3).
  • The order contained final conclusions, detailed reasons for disallowances, computation of total income, and initiation of penalty proceedings under Section 270A, all of which are inconsistent with a draft assessment order under Section 144C.
  • The mere use of the words “Draft Order u/s 144C” in the heading or reference to Section 144C in the DIN does not determine the statutory character of the order.
  • The Assessing Officer had subsequently clarified that the reference to Section 144C was due to an inadvertent systemic error.
  • An order number or DIN is not dispositive of the provision under which an order is passed; the substance of the order prevails over form.

The Court held that the petitioner’s challenge was founded on an incorrect assumption and was therefore unsustainable.

Important Clarification

The Court clarified that clerical or systemic errors in headings, DIN references, or portal reflections cannot override the clear and unambiguous contents of an assessment order. Where the language and substance of the order demonstrate that it is a final assessment under Section 143(3), it cannot be treated as a draft order under Section 144C.

Final Outcome

The writ petition was dismissed with costs. The Delhi High Court upheld the validity of the assessment order dated 06.12.2019, holding that it was a valid assessment order passed under Section 143(3) of the Income Tax Act, 1961. Costs of ₹1,00,000 were imposed on the petitioner, to be deposited with the Delhi High Court Legal Services Committee within four weeks.

link to download the order- https://www.mytaxexpert.co.in/uploads/1770112907_BTGLOBLECOMMUNICATIONSINIDAPVT.LTD.VsDEPUTYCOMMISSIONEROFINCOMETAX.pdf 

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