TMI Blog1989 (9) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... onfers power upon the Inspecting Assistant Commissioner to give directions which are binding upon the Income-tax Officer in matters of assessment and in view of the further fact that no appeal lies against the said directions of the Inspecting Assistant Commissioner, the appeal provided under section 246 of the Act against the order of assessment is rendered infructuous and the petitioner has no statutory right of appeal against such directions and in these circumstances the said provision is violative of constitutional safeguards, it is stated that respondent No. 1 has no jurisdiction and/or authority to issue the impugned notice dated September 30, 1977, with a view to include the sum of Rs. 9.5 lakhs in the draft assessment and give direction in respect thereof in view of the fact that the sum of Rs. 9.5 lakhs has not been treated as the income of the petitioner in the draft assessment forwarded to the Inspecting Assistant Commissioner nor is the said sum covered by the objections filed by the petitioner. It is alleged in detail by the writ petitioner that on January 27, 1976, the petitioner duly filed the return for the assessment year 1975-76 showing an income of Rs. 53,036. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer considered the fact that, as a result of a search conducted on December 9, 1984, it appeared to him that total sales were not accounted for in the regular books of account amounting to Rs. 10,50,000. He also pointed out that, besides the said unaccounted sales, there were also cash credits of Rs. 9,66,000 credited on different dates. The Income-tax Officer called for an explanation regarding the aforesaid cash credits and the assessee gave an explanation that it had issued cheques on various dates to various parties whose names are there in the seized books and in view of the cheques, cash to the extent of Rs. 9,66,000 had been received and credited. The Inspecting Assistant Commissioner, however, issued a notice under section 144B of the said Act to the assessee and fixed a date of hearing on June 27, 1977. The said date was alleged to have been adjourned to September 30, 1977. On the said date, the Inspecting Assistant Commissioner allegedly issued the impugned notice by which he wanted to treat the sum of Rs. 9,50,000 as the concealed income of the assessee-firm and gave show cause notice to the assessee for this purpose. Dr. Pal has brought to the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suming that more than one draft order is permissible, the Inspecting Assistant Commissioner will have to hear the objections raised by the assessee in respect of the second draft order of assessment. The second draft order of assessment has been made in pursuance of the directions given by the Inspecting Assistant Commissioner under section 144A of the Act. In such a case, the said Inspecting Assistant Commissioner who has given a direction for treating the amount of Rs. 9,50,000 as income will now hear the objection of the assessee under section 144B(4) of the Act will be rendered into an idle formality (sic). If the same Officer has already made up his mind and has issued the direction under section 144A of the Act is now to hear the objection regarding the draft order of assessment which has been made in pursuance of his own direction under section 144A of the Act (sic). He has tried to explain the decision of the Kerala High Court in CIT v. N. Krishnan [1988] 172 ITR 604, pointing out, inter alia, that the said decision has not considered at all as to whether, when the draft order of assessment has been made by the Income-tax Officer under section 144B of the Act and the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gitated the competence of the Inspecting Assistant Commissioner in the proper forum. The attention of the court has been drawn to the decision of the Supreme Court in Hazari Mal Kuthiala (L.) v. ITO [1961] 41 ITR 12. In that case, the Supreme Court held that the exercise of a power would be referable to the jurisdiction which confers validity upon it and not to a jurisdiction under which it would be nugatory. It is traced that this principle has been followed from the decision in Pitamber Vajirshet v. Dhondu Navlapa [1887] ILR 12 Bom 486. Much emphasis has been made on the decision of the Kerala: High Court in N. Krishnan's case [1988] 172 ITR 604. It is pointed out that, in that case, the Income-tax Officer, in exercise of his power under section 144B proposing to make a variation in the income returned by the assessee for the previous year in regard to certain items, forwarded the draft order to the assessee calling for his objections. In regard to four of the items on which variation was proposed to be made, the Income-tax Officer accepted the suggestions of the assessee. In regard to other items, the Income-tax Officer forwarded the draft order and the objections of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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