TMI Blog1980 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Section 144B reads as follows: " 144B. (1) Notwithstanding anything contained in this Act, where, in an assessment to be made under sub-section (3) of section 143, the Incometax Officer proposes to make any variation in the income or loss returned which is prejudicial to the assessee and the amount of such variation exceeds the amount fixed by the Board under sub-section (6), the Incometax Officer shall, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the 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 Income-tax Officer within seven days of the receipt by him of the dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent 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 an Inspecting Assistant Commissioner exercises the powers or performs the functions of an Income-tax Officer in pursuance of an order made under section 125 or section 125A. " The said, section was inserted by the T.L. (Amend.) Act, 1975, which took effect from January 1, 1976. The Notes on Clauses in the Amending Bill do not throw much light on the need for enacting s. 144B. However, in the counter-affidavit filed, the object is stated as follows : " The purposes of this section is to reduce the area of dispute between the Income-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o far as the petitioner was concerned there was no question of extending the period of limitation under s. 153, because the normal period for completing assessment proceedings in the petitioner's case was up to 31st March, 1982. The revenue then contends that no prejudice is caused to an assessee because every time a new draft order is served on him he is entitled to an opportunity of being heard. The revenue suggests that their interpretation is in keeping with the object of the amending provision. The T.L. (Amend.) Act, 1975, introduced two new sections-namely, ss. 144A and 144B. Through the said sections an IAC is given power to issue directions to an ITO. In the absence of legislative authority, the IAC could not have given any directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the petitioner's objections and not for any other sum. The ITO sent a second draft order to the assessee on September 10, 1979, for Rs. 4,10,030. It was thus an order for enhancement of the amount and naturally an order prejudicial to the assessee. Admittedly, this is an order on the directions of the IAC. Admittedly also, the IAC did not give an opportunity of being heard to the assessee before issuing the said directions. This was contrary to the proviso to sub-s. (4) of s. 144B. The opportunity of being heard is a condition precedent to the issuance of any prejudicial directions. The provision for being heard is mandatory as is indicated by the word " shall " used in the proviso. The procedure followed by the revenue in this case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f after hearing the objections of an assessee to the proposed assessment order, the IAC wants to enhance the assessment still further, he must give an additional opportunity of being heard to the assessee. The objection of the assessee could be that in any case the assessment does not exceed the draft order and the proposed increase by the IAC was not justified. If this objection is upheld by the IAC under subs. (4) there is no need for a second draft order. On the other hand, if the IAC sticks to his own objections, the ITO is bound to obey the direction. After this stage only a final order can be issued by the ITO. There is no question of a draft assessment again. If at the second stage an ITO again issues a draft assessment order that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that this would be clearly contrary to the statutory limitation imposed by Expln. 1 to s. 153. He further submits that considering the period of limitation laid down in the said proviso it can fairly be concluded that only one draft order is contemplated by subs. (1) of s. 144B. The statutory period not exceeding 180 days mentioning the Expln. 1(iv) is mandatory. This period cannot be extended by any device. Section 153, by itself, does not support the assessee's contention. If more than one draft order is permissible under s. 144B, s. 153 will not stand in the way if the two periods (normal and additional 180 days) are not extended. On the construction of s. 144B I have come to the conclusion that sub-s. (1) of s. 144B does not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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