[Cites 11, Cited by 0]
Bombay High Court
Hansgrohe India Private Limited vs The Assessment Unit Income Tax Dept And ... on 25 March, 2026
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2026:BHC-AS:15187-DB
4-wp-3501-2026.doc
SMITA IN THE HIGH COURT OF JUDICATURE AT BOMBAY
RAJNIKANT
JOSHI CIVIL APPELLATE JURISDICTION
Digitally signed by
SMITA RAJNIKANT
JOSHI
Date: 2026.03.30
19:20:56 +0530
WRIT PETITION NO.3501 OF 2026
Hansgrohe India Pvt. Ltd. .. Petitioner.
Versus
The Assessment Unit Income Tax Dept.
& Others .. Respondents.
Adv. Nitesh Joshi i/b. Adv. Atul K. Jasani, for the Petitioner.
Adv. Arjun Gupta, for Respondent-Revenue.
CORAM: B. P. COLABAWALLA &
FIRDOSH P. POONIWALLA, JJ.
DATE: MARCH 25, 2026
P. C.
1 Rule. Respondents waive service. With the consent of the parties,
Rule made returnable forthwith and heard finally.
2 The above Writ Petition challenges the impugned final
assessment order dated 2nd February 2026 passed under Section 143(3), read
with Section 144B, of the Income Tax Act, 1961 (for short "IT Act"). The
Assessment Year in question is A. Y. 2023-24.
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3 The short grievance in the above Petition is that in the facts of
the present case, the Petitioner is an "eligible assessee" as contemplated
under Section 144C(15)(b)(i) and therefore, before any final assessment order
could have been passed which was prejudicial to the interest of the assessee,
the Assessing Officer ought to have passed a draft assessment order and
served it on the Petitioner so as to enable it to file its objections (to the draft
assessment order) before the Dispute Resolution Panel ("DRP") as
contemplated under the provisions of Section 144C. This is for the simple
reason that the transaction in question was an "international transaction". If
no draft assessment order is passed and served on the Petitioner, the final
assessment order cannot stand, is the contention of the Petitioner.
4 The learned Counsel appearing on behalf of the Revenue did not
dispute the fact that in the present case, it was necessary for a Draft
Assessment Order to have been passed and served upon the Petitioner so as
to give the Petitioner an option to approach the DRP to file its objections to
the Draft Assessment Order. The learned Counsel fairly submitted that, on
this count, the final Assessment Order would have to be set aside. He,
therefore, submitted that final Assessment Order be set aside and be treated
as Draft Assessment Order so that the Petitioner can, thereafter, proceed to
file his objections before the DRP. This, according to the learned Counsel,
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would cause no prejudice to the Petitioner. In the alternative, the learned
Counsel appearing for the Revenue sought to contend that in the case of an
Indian company, the provisions of Section 144B would apply instead of
Section 144C. In this regard, he brought to our attention sub-sections (xx)
and (xxi) of Section 144B(1). He, therefore, submitted that this is a fit case
where the matter be remanded back to the concerned officer for the purposes
of passing a fresh draft assessment order, after following the procedure under
Section 144B.
5 We have heard the learned Counsel for the parties at some
length.
6 We find that to the provisions of Section 144B(1), and more
particularly to Sections 144B(1)(xxi) to 144B(1)(xxix), the provisions of
Sections 144C have been made applicable. These provisions clearly stipulate
that in the case of an eligible assessee, a draft assessment order has to be
served on the Petitioner to enable the Petitioner to approach the DRP. This,
in fact, has not been done in the facts of the present case. In the facts of the
present case, a final assessment order has been directly passed by the
Faceless Assessing Officer without serving a draft assessment order on the
Petitioner to enable it to approach the DRP. This is in clear violation not only
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of the provisions of Section 144C but also of Section 144B(1)(xxi) to (xxix).
Once this is the case, the final assessment order in the above Petition cannot
stand and would have to be set aside.
7 In the view that we take, we are supported by the decision of this
Court in the case of Danfoss Fluid Power Private Limited Vs. Union of India
and Ors. (Writ Petition No. 10403 of 2025 decided on 29th September 2025) .
In the facts of Danfoss (supra), a final assessment order was passed without
serving the draft assessment order on the Petitioner. This Court held that the
same would clearly be in contravention of the provisions set out in Section
144C. In fact, while deciding the case of Danfoss (supra), this Court relied
upon another decision of this Court in the case of SHL(India) Pvt. Ltd. Vs.
Deputy Commissioner of Income-Tax and Others [(2021) 438 ITR 317
(Bom)]. The relevant portion of Danfoss (supra) reads thus:-
"4. We have heard the learned Counsel for the parties.
We have also perused the papers and proceedings in the present
Writ Petition. It is not in dispute that in the present case, the
shares of Danfoss Systems Limited were sought to be purchased
by the Petitioner inter alia from a Company in Mauritius, at the
price of Rs. 363.10 per share. When the Assessing Officer
referred the above matter to Transfer Pricing Officer, the
Transfer Pricing Officer made a variation to the Arm's Length
Price and valued the transaction at Rs. 517.82 per share. In other
words, he recommended a variation in the Arm's Length Price. In
these circumstances, the Petitioner would certainly be an eligible
Assessee as contemplated under Section 144C(15)(b)(i) of the IT
Act. Since this variation was prejudicial to the interest of the
eligible Assessee, it was mandatory for the Assessing Officer, in
the first instance, to forward to the Petitioner a draft of the
proposed order of assessment as contemplated under Section
144C(1). Only once this draft assessment order was served upon
the Petitioner could it then choose, either to file its objections [to
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the draft assessment order] before the Dispute Resolution Panel
(DRP), as contemplated under Section 144C(2), or choose to go
by the normal route, i.e. to ask the Assessing Officer to pass a
final assessment order and thereafter challenge the same before
the CIT [Appeals]. By directly passing a final assessment order
without serving a draft assessment order on the Petitioner clearly
flies in the teeth of Section 144C. Once this is the case, we find
that the assessment order dated 28th March 2025 cannot be
allowed to stand and has to be quashed and set aside.
5 In the view that we take, we are supported by a decision of
a Division Bench of this court in the case of SHL (INDIA) PVT.
LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX AND
OTHERS, [2021] 438 ITR 317 (Bom). The relevant portion of this
decision reads thus :-
"27. Applying the aforesaid principles to the facts of this case,
we are of the view that the failure on the part of the Assessing
Officer to follow the procedure under Section 144C(1) is not a
merely procedural or inadvertent error, but a breach of a
mandatory provision. We are also not impressed with the
arguments of the Revenue that the Assessing Officer was under
pressure of two charges, as there were timelines to adhere to,
since the said timelines from time to time have been extended,
the most recent one being to September 30, 2021. The Revenue
ought to have appreciated that the requirement under Section
144C(1) to first pass a draft Assessment Order and to provide a
copy thereof to the assessee is a mandatory requirement which
gave substantive right to the assessee to object to any variation,
that is prejudicial to it. In this case, the order under Section
92CA(3) of the Income-tax Act, proposed to make an adjustment
of Rs.107,454,337/- to the arm's length price considered as Nil by
Petitioner and to that extent the said adjustment was evidently
prejudicial to the interest of the Petitioner. Depriving Petitioner
of this valuable right to raise objection before Dispute Resolution
Panel would be denial of substantive rights to the assessee, for
which, in our view, the Assessing Officer has no power under the
statute, as the provision clearly mandates the Assessing Officer to
pass and furnish a draft Assessment Order in the first instance in
such a case. The Legislature, in our view, has intended to give an
important opportunity to the Petitioner, who is an eligible
assessee, which in our view, has been taken away. In our view,
failure to follow the procedure under Section 144C(1) would be a
jurisdictional error and not merely procedural error or a mere
irregularity. The Assessment Order has not been passed in
accordance with the provisions of Section 144C of the Income-tax
Act. This is not an issue, which involves a mistake in the said
order, but it involves the power of the Assessing Officer to pass
the order. By not following the procedure laid down in Section
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144C(1) to pass and furnish a draft Assessment Order to the
Petitioner and directly passing a final Assessment Order and
without giving the Petitioner an opportunity to raise objections
before the Dispute Resolution Panel, there is a complete
contravention of Section 144C, the Assessing Officer having
wrongly assumed jurisdiction to straight away pass the final
order. This is not a mere irregularity but an incurable illegality.
Even the provisions of Section 292B of the Income-tax Act would
not protect such an order as Section 292B of the Income-tax Act
cannot be read to confer jurisdiction on the Assessing Officer,
where none exists. The Supreme Court decision in the case of ITO
Vs. M. Pirai Choodi; [2011] 334 ITR 262 (SC) referred to in the
Revenue's reply is also not applicable to the issue at hand as that
was a case where the assessee was not given an opportunity to
cross-examine the concerned witness and which assessee also
had a statutory appellate remedy which the assessee had failed to
avail of, whereas there is no such right available to the Petitioner
in this case. In fact, the Petitioner has lost a substantive right due
to the failure of the Respondents to pass and forward a draft
assessment order in the first instance on a variance, prejudicial to
the interest of the Petitioner. In our view, this is clearly a case of
jurisdictional error. The final assessment order passed by the
Assessing Officer stands vitiated on account of lack of
jurisdiction, which is incurable and deserves to be set aside as
void ab initio.
We, therefore, quash and set aside the impugned assessment
order, demand notice and penalty notice, all dated April 6, 2021
for the assessment year 2017-18.
The Writ Petition is allowed in the above terms. However, there
shall be no order as to costs."
6. In view of the foregoing discussion, the impugned
assessment order dated 28th March 2025 is hereby quashed and
set aside."
8 As far the contentions of the Revenue regarding treating the final
Assessment Order as a Draft Assessment Order is concerned, or even to
remand the matter back to the Assessing Officer, we are unable to agree with
the aforesaid submissions. Once the final Assessment Order is passed in
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breach of the mandatory provisions of Section 144 C (1), read with Section
144B(1)(xxi) to (xxix), the final Assessment Order has to be quashed and set
aside. If the Assessing Officer, in law, is entitled to commence this process
again by passing a fresh Draft Assessment Order and serving the same upon
the Petitioner, he/she is free to do so. We have not opined on this aspect of
the matter one way or the other.
9 In view of the aforesaid, the Writ Petition is allowed in terms of
prayer clause (a) which reads thus:-
"(a):- this Hon'ble Court be pleased to issue a writ of
certiorari or a writ in the nature of certiorari or any other
appropriate writ, order or direction calling for the records of
the present case and after examining the legality and
validity of the impugned order dated 02.02.2026 passed by
the Respondent No.1 for assessment year 2023-24 (being
Exhibit D hereto), quash and set aside the same."
10 Rule is made absolute in the aforesaid terms, and the Writ
Petition is also disposed of in terms thereof. However, there shall be no order
as to costs.
11 This order will be digitally signed by the Private Secretary/
Personal Assistant of this Court. All concerned will act on production by fax
or email of a digitally signed copy of this order.
[FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]
MARCH 25, 2026
S.R.JOSHI
