High court bars tax authorities from issuing final assessments bypassing draft procedures

The Bombay High Court ruled that the Income Tax Department lacks the legal authority to pass a final assessment order directly against an eligible assessee without first generating and issuing a mandatory draft assessment order. This procedural safeguard ensures taxpayers receive adequate opportunity to present objections before dispute resolution panels or appellate authorities.

Statutory frameworks mandate draft assessment phases for specific categories of assessees to promote fair administrative adjudication and prevent arbitrary tax demands. Bypassing this preliminary consultative step violates established principles of natural justice and invalidates the resulting final tax order. Tax practitioners and chartered accountants should inspect assessment records for procedural compliance, immediately challenging any direct final orders issued without prior draft notifications.

Professionals must file writ petitions when authorities violate mandatory procedural safeguards. Bottom line: skipping the mandatory draft assessment phase renders final tax orders legally unsustainable.