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TMI Blog1981 (1) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee also. At that stage on 26-2-1977 the assessee addressed a letter to the ITO objecting to certain additions proposed to be made by the ITO in the draft assessment order. While concluding this letter of objection, the assessee put in a fresh claim before the ITO for enhanced exports development expenditure under section 35B of the Act in the following terms: "XIV. Export development expenditure --- In the earlier year the AAC has allowed rebate on certain additional expenditure though incurred in India. We, accordingly, claim the rebate on the expenditure incurred on staff engaged directly on export of Rs. 35,760, shipment and sampling expenses Rs. 71,427, export credit guarantee premium of Rs. 24,132, and difference due to foreign exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24,132 - Difference in foreign exchange (paid outside India) 5,789 The IAC declined to entertain this claim under section 144B of the Act. On the ground that since this claim was not before the ITO, he could not allow the relief at that stage of proceedings under section 144B. The ITO consequently completed the assessment without referring to the assessee's claim in respect of the aforesaid four items. 5. On an appeal by the assessee before the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken up this ground before the Commissioner (Appeals) at all as explained by the learned Judges of the Supreme Court in the case of Addl. CIT V. Gurjargravures (P.) Ltd. [1978] 111 ITR 1. Therefore, the learned departmental representative has proceeded to argue that the Commissioner (Appeals) was not competent to entertain the assessee's appeal on this ground and his direction on this issue being without authority should be vacated. 7. On behalf of the assessee, the learned counsel has proceeded to argue that any objection could be raised by the assessee before the ITO at any time before the assessment was made. The provisions of section 144B were placed on the statute book as an additional safeguard to the assessee in respect of the items ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 15-1-1975 declaring a total income of Rs. 16,46,690. The ITO did not accept this return. He proposed to add certain items of income and disallowed certain claims of the assessee, thus, enhancing the assessee's income over and above the amount declared by the assessee as its income. There was a variation between the income as declared by the assessee and the income as proposed to be assessed by the ITO. The proposed variation was exceeding the amount fixed by the CBDT under section 144B(6), namely, Rs. 1 lakh. The ITO, therefore, forwarded a draft of the proposed assessment order to the assessee. The assessee objected to some of the items on which there was a difference between the assessee and the ITO. The IAC considered the contents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpected to make the assessment and has in fact made the present assessment. Thereafter we have to examine how far the provisions of section 144B encroach upon the complete discretion granted to the ITO under section 143(3). To our mind this is the nature of the real dispute between the parties in the present appeal, namely, having submitted a draft assessment order to the IAC under section 144B(1), whether the ITO was prevented from entertaining any claims which the assessee had made before the ITO. 11. On a perusal of section 143(3), it would appear that on the date fixed for hearing under section 143(2) or as soon afterward as may be after hearing such evidence as the assessee may produce and such other evidence as the ITO may require on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, to our mind, the provisions of section 144B have a very limited operation. Section 144B is merely in the nature of an additional safeguard to the assessee against frivolous and fantastic assessments. It did not take away the right of an assessee to raise issues before the ITO in respect of any other item of claim or deduction which it would be entitled to, which it had omitted to claim in the first instance before the ITO through ignorance of law or otherwise. The assessee had always got such a right before section 144B was placed on the statute book. Under section 143(3), the ITO was under an obligation to take into consideration all relevant material on the subject of the assessee's income or loss and then to frame an assessment. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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