1982 (9) TMI 91 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order dated 4-10-1979.
2. Jurisdiction of the Wealth-tax Officer (WTO) to re-do the assessment after the original assessment was annulled by the Tribunal.

Summary of the Judgment:

1. Validity of the Assessment Order Dated 4-10-1979:
The Tribunal initially annulled the original assessment order dated 26-11-1976 on the ground that there was no computation of tax made in the assessment order. The WTO, aiming to rectify this, issued a notice under section 16(2) and passed a fresh assessment order on 4-10-1979, computing the net wealth of the assessee at Rs. 9,38,040. The AAC annulled this fresh assessment, asserting that the WTO had no authority to re-do the assessment after the original annulment.

2. Jurisdiction of the WTO to Re-do the Assessment:
The Tribunal's annulment of the original assessment was based on a technicality-the absence of tax computation. The Tribunal clarified that this annulment did not imply a lack of jurisdiction by the WTO to re-do the assessment. The WTO had the authority to correct the proceedings from the stage where the illegality occurred. The Tribunal relied on several precedents, including the Supreme Court's decision in Guduthur Bros. v. ITO, which held that an order vacated due to a procedural defect does not preclude the authority from rectifying the error and continuing the proceedings.

The Tribunal emphasized that the annulment was solely due to the technical infirmity of not computing the tax payable, and not on the merits of the case. Therefore, the WTO was within his rights to issue a fresh notice and proceed with the assessment. The Tribunal cited various judgments supporting this view, such as Raza Buland Sugar Co. Ltd. v. ITO and Pratap Rai's case, which upheld the principle that procedural defects do not bar fresh proceedings to correct the error.

Conclusion:
The Tribunal concluded that the fresh assessment order dated 4-10-1979 was valid and in accordance with the law. The AAC's annulment of this order was incorrect. The Tribunal set aside the AAC's order and remitted the case back to the AAC to decide on other grounds raised in the appeal, which had not been considered.