TMI Blog1998 (7) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... intervened and, therefore, the order which is passed while ignoring the said provision, could not be regarded as a nullity. Thus, his Lordship answered the question in the affirmative. However, Mahinder Narain J. held that the assessment order being contrary to the provisions of section 144B of the Act was a nullity as having been passed without jurisdiction; the Commissioner of Income-tax (Appeals) could not extend the period of limitation which had already expired and direct the passing of a fresh draft assessment order and in view of the fact that section 144B did not confer power in the Commissioner of Income-tax (Appeals) to set aside the assessment, he could not reconfer the jurisdiction on the Income-tax Officer to make a fresh assessment. His Lordship, therefore, answered the question in the negative. The two learned judges having answered the question differently, the papers of the reference were laid before the Chief Justice for referring the matter to a third judge in accordance with clause 26 of the Letters Patent of the Lahore High Court, as applicable to this court. Hence, the matter has come up before me as the third judge. Briefly stated, the material facts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment; and that two separate situations are contemplated; one, when no objections are filed and the other when these are filed. His contention is when these are not filed, there is no question of waiver of the right to object. But when filed, neither the assessee nor the Income-tax Officer can waive the mandatory procedure prescribed by law. According to him : (i) the said provisions are substantive and not procedural, as section 144B envisages change of forum which cannot be a question of procedure, as having passed and forwarded the draft assessment order with objections to the Deputy Commissioner of Income-tax, the Assessing Officer ceases to have jurisdiction in the matter, and (ii) even if section 144B is treated to be procedural, the procedure laid down therein being mandatory, its non-compliance makes the order without or in excess of jurisdiction, which is a nullity. In support reliance is mainly placed on three decisions : (i) by the Supreme Court in CIT v. Dhadi Sahu [1993] 199 ITR 610, (ii) of the Punjab and Haryana High Court in CIT v. Mohinder Lal [1987] 168 ITR 101 [FB] and (iii) of this court in Sudhir Sareen v. ITO [1981] 128 ITR 445. Mr. Gupta, on the contrary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draft order) to the assessee. (2) On receipt of the draft order, the assessee may forward his objections, if any, to such variation to the Assessing Officer within seven days of the receipt by him of the draft order or within such further period not exceeding fifteen days as the Assessing Officer may allow on an application made to him in this behalf. (3) If no objections are received within the period or the extended period aforesaid, or the assessee intimates to the Assessing Officer the acceptance of the variation, the Assessing Officer shall complete the assessment on the basis of the draft order. (4) If any objections are received, the Assessing Officer shall forward the draft order together with the objections to the Deputy Commissioner and the Deputy Commissioner shall, after considering the draft order and the objections and after going through (wherever necessary) the records relating to the draft order, issue, in respect of the matters covered by the objections, such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment : Provided that no directions which are prejudicial to the assessee shall be issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edural in nature (see Smt. Mohinder Jaspal Singh v. CIT [1992] 194 ITR 186 (Delhi) and R. Dalmia v. CIT [1992] 194 ITR 700 (Delhi). Section 144B has to be construed and understood in the context of the entire enactment. It must derive its colour from the setting it is placed. It merely sets out the procedure to be followed in certain situations. The rationale behind section 144B(1) inserted in the Act on the recommendations of the Wanchoo Committee was that where the income returned by an assessee is sought to be varied by more than Rs. 1 lakh, then greater precaution ought to be taken and the senior officer's guidance should be sought to prevent arbitrariness or unreasonableness on the part of the assessing authority and multiplicity of proceedings and unnecessary appeals avoided. Thus, there can be no quarrel with the proposition urged by learned counsel for the assessee that the Assessing Officer was bound to follow the procedure laid down in section 144B where variation in the income/loss declared and to be assessed exceeded Rs. 1 lakh. However, the Deputy Commissioner could by way of guidance, only issue directions to the Assessing Officer to pass the assessment order in a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the procedural law is merely a procedural irregularity, which can be cured unlike the defect of inherent lack of jurisdiction in an authority to pass an order which of course will be a nullity. Support for this view is lent by a catena of decisions of various High Courts. It would, however, suffice to refer to Banarsidas Bhanot and Sons v. CIT [1981] 129 ITR 488 (MP), G. R. Steel and Alloys P. Ltd. v. CIT [1985] 152 ITR 220 (Kar), Ashok Kumar (K.) v. CIT [1986] 162 ITR 543 (Kar), Joseph Kuruvila v. CIT [1989] 179 ITR 139 (Ker), Des Raj Kul Bhushan v. CIT [1989] 180 ITR 297 (P H) and Vishwanath Prasad v. Bhagwati Prasad v. CIT [1993] 202 ITR 469 (All). As for the decisions relied on by learned counsel for the assessee, the decision of the Supreme Court in the case of Dhadi Sahu [1993] 199 ITR 610 is clearly distinguishable in that it deals with altogether a different situation and does not advance the case of the assessee. The observations of the court that no litigant has any vested right in the matter of procedural law in fact support the stand of the Revenue. In that case the issue involved was whether on account of amendment in section 274(2) of the Act, with effect from A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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