TMI Blog1995 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the Inspecting Assistant Commissioner ? 3. Whether, the Tribunal was right in law in reviving the proceedings when admittedly the assessment order made on August 28, 1981, was beyond time prescribed under section 153 of the Act and was barred by time ? 4. Whether, the Tribunal was right in law in reviving the assessment on November 14, 1985, when the assessment became barred by time on March 31, 1981, and was made on August 28, 1981, in contravention of the provisions of section 144B of the Act and also in violation of the provisions of section 144A of the Income-tax Act, 1961 ? 5. Whether, the Tribunal was right in law in not annulling the assessment order dated August 28, 1981, when the assessment order became barred by time on March 31, 1981 ? " The facts relevant for the proper disposal of the above questions are that the assessee is a firm engaged in the manufacture of snuff from tobacco after mixing perfumery therewith. The returns of income were filed on August 28, 1978, declaring an income of Rs. 2,76,193. The Income-tax Officer, after scrutinising the account of the assessee, found that an addition of Rs. 10,000 is called for and, therefore, he sought the gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Officer and the only thing to be complied with was that an opportunity was to be given to the assessee. The directions which were given in this case were for making the assessment on the basis of gross profit rate as was in the assessment year 1976-77 with the further direction that the additions so made would result in making a proposed draft assessment order under section 144B, in which the assessee as well as the Revenue would get time to examine the issue. The case of the Department was that the Income-tax Officer has the power to seek directions under section 144A as well as section 144B and in the present case, the directions which were sought under section 144A, the only irregularity which has been committed by the Inspecting Assistant Commissioner was that the assessee was not heard and in view of the decision of the apex court in the case of Guduthur Brothers [1960] 40 ITR 298, if the Income-tax Officer has the jurisdiction then the stage from which the irregularity has occurred is required to be corrected. The Tribunal found that in the present case, the Inspecting Assistant Commissioner has denied the opportunity to the assessee while giving directions under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment year 1976-77 by proportionately increasing sales of the year. The discrepancies which were pointed out by the Income-tax Officer in the letter sent to the Inspecting Assistant Commissioner were also taken into consideration and it was said that the addition is likely to be more than one lakh of rupees and, therefore, the matter has to be considered when the objections under section 144B are received. This was done without giving the opportunity. Applying the gross profit rate as disclosed in the assessment year 1976-77 and proportionately increasing the sale of the year and also highlighting the difficulties amounted to a direction which could have been given by the Inspecting Assistant Commissioner only after providing an opportunity to the assessee. This procedural lapse was sought to be rectified by the Income-tax Appellate Tribunal by following the decision of Guduthur Bros. v. ITO [1960] 40 ITR 298 where penalty proceedings were initiated and no opportunity of hearing was given. The order imposing the penalty was set aside and directions were given to continue the proceedings from the stage of notice. It was observed by the apex court that where the illegalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment. The notice was served under section 148 on the assessee and the assessment was not completed within one year from the service of notice under section 148, it was held that the said assessment is barred by limitation and the draft assessment could not be treated as a valid assessment. The draft assessment order is not to be treated as an assessment order in this case and, therefore, this decision is not applicable. The Karnataka High Court in the case of CIT v. M. S. P. Exports Pvt. Ltd. [1992] 196 ITR 762 has considered that the Inspecting Assistant Commissioner can issue directions under section 144A provided the assessee is given an opportunity of being heard. The provisions of section 144A could be invoked while exercising the powers under section 144B. It was held that there can be no doubt that the provisions of sections 144A and 144B are procedural provisions and an assessment is not complete when only a proceeding under section 144B is pending. If the draft assessment order is prepared, the assessment is to be completed only after the Inspecting Assistant Commissioner issues appropriate directions under section 144B(4). It was further observed that under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may send the matter back to the Income-tax Officer for proceeding in accordance with the directions which such authority may give. An appeal is the continuation of the assessment proceedings and the Income-tax Appellate Tribunal has the power to pass such order as it thinks fit under section 254. The question of limitation does not arise in a case where the initial proceedings were initiated in time and the Income-tax Officer was seized of the jurisdiction in accordance with law and proceedings were taken thereunder. Any irregularity at a subsequent stage would only be corrected by appropriate directions. In these circumstances, we are of the view that since the opportunity was not given to the assessee, the Tribunal was right in setting aside the order of the Commissioner of Income-tax annulling the assessment order dated August 28, 1981, and restoring the matter back to the Inspecting Assistant Commissioner to proceed afresh with the examination of the case. The second question which has been raised is that the Inspecting Assistant Commissioner was purely buying time for carrying out investigation and also finalising the assessment order, the impugned order was not liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 144B within time, the assessment could be completed within a period of six months as provided under the said section. Due opportunity was given in the proceeding under section 144B and, therefore, the irregularity which was committed by the Inspecting Assistant Commissioner in the proceedings under section 144A was removed when opportunity was given in the proceeding under section 144B. The object of providing an opportunity to the assessee is that no order should be passed against him without hearing him and once the hearing is provided, the said object is achieved. Even the appellate authority could have provided an opportunity in a case where the assessing authority has not given the opportunity to the assessee on a particular point as the appeal proceedings are a continuation of the assessment proceedings. The Income-tax Officer could have himself made the additions of more than a lakh of rupees and in that case the procedure provided under section 144B was to be followed. Simply because the said procedure was followed on account of the directions being given under section 144A, it cannot be said that the jurisdiction of the Income-tax Officer to frame the assessment has c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
