The assessing officer has a legal obligation to pass a draft order before he passes an assessment order to make Additions to the Returned Income or loss filed by the eligible assessee. Allowing the eligible assessee a chance of being heard is the primary objective of the section 144 (c) of the income tax act of 1961.
Nevertheless, such a draft order is a formality, but giving the assessee, a chance of being heard has been made mandatory with the inclusion of sec 144(c) in the income tax act of 1961 with an amendment passed in the year 2009. For any variations proposed after October 2009 the issuance of such a draft order is mandatory, or the assessment order may not have legal validity.
According to sec 144(c), the assesse can refer the assessment orders for variations in the returns to a dispute resolution panel, once he receives the notice of such an assessment through a draft order. The section was made into an amendment on April 1, 2009 and has come into effect from October 1st, 2009.
Sec 144 (c) Says, The assessing officer, if intends to make any changes to the return filed by the assessee, shall inform such a proposal to the eligible assessee, whose interest might be affected, by sending out an Intimation.
Right of Assessee of Being Heard where Assessing officer wants to make additions to the returned income
The eligible assessee after having received such a draft order can file, with 30 days of the receipt of the order, his objections with the Dispute Resolution panel, and the assessing officer, if he has any reservations about such an assessment. On the other hand, he can also accept the proposal to make variations to his earlier filed return.
In case the assesee accepts the assessment order and does not raise any objections the assessing officer shall conduct the assessment. In case the assesee raises any objections with the Dispute Resolution Panel, it may further direct the assessing officer on completing the assessment in the appropriate manner as may be directed.
The dispute resolution panel shall consider the draft notice, objections raised by the assesse, evidence furnished by assesse, reports submitted by the assessing officer, evidence submitted by the valuation officer, and any inquiries made which led to the proposal of variations to the returns.
Directions of the Dispute Resolution Panel
The dispute resolution panel may conduct an additional inquiry, if it considers as necessary to conduct such investigation so it can guide assessing officer further. The disputes resolution panel may reduce, enhance, or confirm the variations as proposed in the draft order, but it may not deny the proposed assessment. The assessing officer without fail or any deviation will follow the guidance of the panel from the given directions.
Differences of Opinion in the Dispute Resolution Panel
In case of differences of opinion among the members of the Dispute resolution panel, the opinion of the majority members will prevail.
Further Action by Assessing Officer
The assessing officer within a month of receipt of directions form the disputes resolution panel shall complete such proposed variations in accordance with the changes proposed by the Dispute Resolution Panel
Explanation of the Terms:
Assesse: Any individual assesse or company whose returns need proposed variations of income or loss.
Dispute Resolution Panel: A panel or collegium of three income tax commissioners appointed to resolve such disputes.