TMI Blog1992 (12) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on 30th March, 1979. 3. The assessee came in appeal before the CIT(A) and contended that the assessment order was bad in law as approval of the Dy. CIT had not been obtained under s. 144B. The CIT(A) held that this was only a procedural irregularity which was a curable defect and not fatal to the validity of the assessment. He, accordingly, set aside the assessment and directed it to be made afresh in accordance with law. 4. The assessee filed a second appeal before the Tribunal and contended that the assessment made by the ITO was without any jurisdiction and, therefore, the CIT(A) should have annulled the same instead of setting it aside. The Tribunal, however, did not accept this contention and upheld the order of the CIT(A). It is, thereafter that the aforesaid question of law was referred, at the instance of the assessee. 5. The main contention urged by Mr. Syali, the learned counsel for the assessee, was that s. 144B contained a substantive provision, viz., that if the addition sought to be made was more than ₹ 1 lakh, then the ITO was obliged to send a draft assessment order to the assessee and on receipt of the objections he was required to refer the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment, by order, fix, from time to time, such amount as it deems fit : Provided that different amounts may be fixed for different areas : Provided further that the amount fixed under this sub-section shall, in no case, be less than twenty five thousand rupees. (7) Nothing in this section shall apply to a case where a Dy. Commissioner exercises the powers or performs the function of an Assessing Officer in pursuance of an order made under s. 125 or s. 125A. 6. During the relevant assessment year it is the ITO who could make the assessment either under sub-s. (1) or sub-s. (3) of s. 143. Before making an assessment under s. 143(3) the Assessing Officer was required to serve a notice on the assessee requiring him to produce or cause to be produced such evidence on which the assessee wished to rely upon. If during the course of the assessment proceedings the Assessing Officer proposed to make a variation in the income or loss to the extent that such variation exceeded the amount fixed by the Board under s. 144B (6), then the provisions of the said s. 144B came into play. It is not disputed that the variation which was specified by the Board under sub-s. (6) of s. 144B w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment was not made within the time prescribed by law. The direction issued under s. 144B(4) could not itself fasten any tax liability on the assessee. 9. This provision, viz., s. 144B was purely procedural and this has been so held by a number of High Courts. The first such decision is that of the Calcutta High Court in the case of J.P. Aggarwal vs. CIT (1991) 97 CTR (Cal) 138wherin a Division Bench of the Calcutta High Court held that an assessment made without reference to the IAC under s. 144B was not null and void because the provisions of s. 144B were procedural in nature and the assessee was not prejudicially affected by the non-compliance of such procedure. It was observed that if an assessee was aggrieved by non-compliance with s. 144B(4) then it was at liberty to agitate the grievance before the appellate authority. To the same effect, viz., that s. 144B is procedural are the following decisions : B.D. Bhanot Sons vs. CIT (1981) 21 CTR (MP) 161: (1981) 129 ITR 488(MP); H.H. Maharaja Raja Pawar Dewas vs. CIT (1982) 138 ITR 518(MP); Kimtee vs. CIT (1984) 40 CTR (MP) 105: (1985) 151 ITR 73(MP); G.R. Steel Alloys P. Ltd. vs. CIT (1984) 42 CTR (Kar) 107: (1985) 152 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated.' Thereafter, their Lordships pointed out that whether a provision fell under one category or the other was not easy of discernment, as in the ultimate analysis, it depended upon the nature, scope and object of the particular provision. Their Lordships in terms approved a workable test laid down by Justice Coleridge in Holmes vs. Russel (1841) 9 Dowl 487 as under : 'It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity.' Thereafter it was pointed out that a waiver is an intentional relinquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Ltd. vs. CIT (1989) 80 CTR (Guj) 255: (1990) 182 ITR 162(Gau). In that case the provisions of s. 144B were not complied with even though the ITO had added more than ₹ 1 lakh to the returned income. While the appellate authority had merely set aside the order of assessment, the Gauhati High Court came to the conclusion that the omission and transgression by the ITO was not a mere irregularity and that the assessment order was required to be annulled. The Court did observe that there are numerous cases where High Courts have held that deviation from s. 144B leads only to procedural irregularity, but no case has been cited to hold that deviation from the procedure under s. 144B warrants annulment of the order . Having observed as above the Gauhati High Court chose not to explain as to why it did not agree with the decision of various High Courts which had held a contrary view. In arriving at the conclusion which it did the Gauhati High Court referred to the powers of the CIT(A) under s. 251 and in considering them it proceeded on the basis that all orders under s. 144B are appealabe under cl. (d) of s. 246 . As I read s. 144B there is no order which is passed by the Dy. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court and an appeal was filed to the Supreme Court. It was held by the Supreme Court that as the AAC had pointed out only to an illegality of not hearing the assessee which had vitiated the proceedings after they were lawfully initiated, the notice which was initially issued under s. 28(1)(a) by the ITO, did not cease to be operative and it was open to him (the ITO) to take up the matter at the point at which the illegality supervened and to correct his proceedings. The ITO had jurisdiction to continue the proceedings from the stage at which the illegality had occurred. Similar is the position in the present case. The illegality occurred when draft assessment order under s. 144B was not issued to the assessee and once the assessment order was set aside because of the said illegality having been committed, the case must relate back to the stage prior to the commission of the illegality viz., to the stage when the ITO was already seized of the jurisdiction to assess the assessee. The ITO was required to issue a draft order and comply with the provisions of s. 144B. 17. The second case, which is similar in nature, is that of Sant Baba Mohan Singh vs. CIT (1973) 90 ITR 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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