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Sri Damodarlal Badruka Versus The Income Tax Officer, Ward-I (4) , Hyderabad

2015 (5) TMI 935 - ANDHRA PRADESH HIGH COURT

Necessity of prior approval of Deputy Commissioner for issue of notice u/s 143(2) for re-making an assessment in pursuance to direction given by CIT u/s 263 - Held that:- It is well settled that once an assessment is re-opened by virtue of the order passed by CIT under Section 263, the initial order of assessment ceases to be operative. The effect of re-opening of assessment is to vacate or set aside the initial order for assessment and to substitute in its place the order made of re-assessment. .....

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s no assessment under Section 143 (1). In view thereof, it was open to the Assessing Officer to make assessment under sub-section (3) of Section 143 without seeking prior approval as contemplated by sub-section (2) thereof. In other words, this is not a case where the Assessing Officer chose to make reassessment under Section 143 (3) of the Act of his own. This being so, it was not necessary to seek previous approval of the Inspecting Assistant Commissioner before issuing notice under sub-sectio .....

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Income Tax Appellate Tribunal (for short, the Tribunal), Hyderabad Bench B in I.T.A.No.1398/Hyd/1995 for the assessment year 1985-86. By this order, the Tribunal dismissed the appeal filed by the assessee against the order dated 10.05.1995 passed by the Deputy Commissioner of Income Tax (Appeals) (DCIT). The substantial question that falls for consideration in the instant appeal reads thus: Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified .....

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roperty on 01.01.1964 exercising his option under Section 49 (1) (i) read with Section 55 of the Act. The assessment was accordingly completed under Section 143(1) of the Act accepting the returned income. Subsequently, an order under Section 263 of the Act was passed by the Commissioner on 28.09.1987 having found the order of Assessing Officer prejudicial to the Revenue. The Commissioner accordingly set aside the order dated 22.07.1985 of assessment made under Section 143 (1) of the Act, and di .....

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ection 143 (2) of the Act. During the fresh assessment under Section 143 (3), the property was referred to Valuation Cell of the Department under Section 55-A and thus the correct market value was arrived at on 01.01.1964 and it was accordingly adopted as cost of the land and capital gain was thus computed on the basis thereof. On appeal, the DCIT (A) upheld the order of assessment. The Tribunal dismissed the appeal preferred by the assessee by order dated 13.06.2001. In this backdrop, the afore .....

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e assessee. Further, it is not in dispute that while issuing the notice, previous approval of the Inspecting Assistant Commissioner was not sought. Therefore, the question raised is, whether the assessment under Section 143 (3) of the Act, would vitiate for want of previous approval of the Inspecting Assistant Commissioner. We are concerned with the provisions of Section 143 of the Act, as it stood at the relevant time. Section 143, to the extent it is relevant for our purpose, reads thus: S. 14 .....

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es of the adjustments referred to in sub-clause (iv) of clause (b), also with reference to the record of the assessments, if any, of past years, and determine the sum payable by the assessee or refundable to him on the basis of such assessment. (b).... (i)..... (ii)... (iii)... (iv)... (2) Where a return has been made under section 139, and- (a) an assessment having been made under sub- section (1), the assessee makes within one month from the date of service of the notice of demand issued in co .....

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nd at the Assessing Officers office or to produce, or to cause to be there produced, any evidence on which the assessee may rely in support of the return: Provided that, in a case where an assessment has been made under sub-section (1), the notice under this sub-section except where such notice is in pursuance of an application by the assessee under clause (a) shall not be issued by the Assessing Officer unless the previous approval of the Deputy Commissioner has been obtained to the issue of su .....

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either to attend at the Assessing Officers office or to produce or to cause to be there produced any evidence on which the assessee may rely in support of the return. The first proviso to sub-section (2) provides that, in a case where an assessment has been made under sub-section (1), the notice under this sub-section, except where such notice is in pursuance of an application of the assessee under clause (a), shall not be issued by the Assessing Officer unless the previous approval of the Depu .....

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e the Assessing Officer has made assessment under sub-section (1) and he chooses to make reassessment under sub-section (3), he has no powers to issue notice, unless the previous approval of the Inspecting Assistant Commissioner is obtained. The words Inspecting Assistant Commissioner in the first proviso were substituted by Deputy Commissioner by Act 4 of 1988, Section 2, w.e.f. 01.04.1988. The question is, where the assessment made under sub-section (1) of Section 143 of the Act is set aside b .....

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the record of any proceedings under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceling the assessment and directing .....

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rder passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceling the assessment and directing a fresh assessment. Thus, he has options, viz., to pass such order as the circumstances of the case justify or an order enhancing the assessment or modifying the assessment or canceling the assessment and i .....

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