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Validity of assessment made on the second draft assessment order. Analysis: The judgment by the High Court of Kerala involved the consideration of the validity of an assessment made on the second draft assessment order for the assessment year 1980-81. The court examined the provisions of sections 144B and 144A of the Income-tax Act, 1961, to determine the legality of the second draft assessment order. The case revolved around the procedural aspects of the Income-tax Officer preparing a modified draft order after the change in incumbency and whether it was permissible under the law. The court analyzed the provisions of section 144B, which outline the procedure for the Income-tax Officer to forward a draft assessment order to the assessee when proposing any variation in income or loss. It was highlighted that section 144B(4) specifies the process for dealing with objections raised by the assessee and the role of the Inspecting Assistant Commissioner in issuing directions for the completion of assessment. The court emphasized that these provisions aim to safeguard the interests of the assessee by ensuring a fair opportunity for objections and a clear process for assessment. Additionally, the court considered the provisions of section 144A, which empower the Inspecting Assistant Commissioner to examine proceedings pending before the Income-tax Officer and issue necessary directions. The court noted that both sections 144A and 144B serve a similar purpose in guiding the actions of the Income-tax Officer and the Inspecting Assistant Commissioner, emphasizing the importance of affording a reasonable opportunity to the assessee in assessment proceedings. The judgment referenced previous legal interpretations, such as the Supreme Court's observation in Guduthur Bros. v. ITO regarding the continuation of proceedings from the stage of an alleged illegality. The court also cited the decision in Sudhir Sareen v. ITO, where the Delhi High Court discussed the permissibility of issuing only one draft assessment order. However, the High Court of Kerala disagreed with the restrictive interpretation of the provisions and emphasized the need for flexibility in understanding the statutory framework to address situations requiring modifications or amendments to draft orders. Ultimately, the court upheld the Tribunal's decision regarding the validity of the assessment made on the modified draft order, confirming that there was no second draft assessment order as perceived by the parties. The judgment concluded by answering the referred question in favor of the Department and against the assessee, clarifying the interpretation of the statutory provisions related to draft assessments and modifications.
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