The Tribunal held that the issue of demand notice along with the draft assessment order, being a legal matter, went to the root cause of the assessment proceedings. As a result this issue deserved to be considered before going into the merits of the case. According to section 144C of the Income-tax Act, 1961, it is a mandatory for the Assessing Officer to pass the draft assessment order in an assessment involving international transactions, in terms of the procedure laid down therein. As the Assessing Officer had passed the order under section 143(3) read with section 144C(1) of the Act, along with demand notice under section 156 and penalty notice under section 274 read with section 271, such order passed without following due process of law was liable to be set aside. As the assessment order stood quashed, all other issues became academic. (AY.  2011-12)