TMI Blog1984 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ,006. 2. The appellant prays that the order of the Commissioner (Appeals) on the above ground be set aside and that of the ITO be restored. 3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. " An application has been made at the time of hearing, seeking permission to take up an additional ground of appeal reading as under : " Without prejudice to Ground No. 1, the Commissioner (Appeals) erred in annulling the assessment order passed by the ITO under section 143(3) without appreciating that section 144B is only a procedural section and that failure to follow the requirements of this section would only be a remedial procedural irregularity. The learned Commissioner (Appeals) ought to have set aside the assessment to be redone in accordance with the provisions of section 144B. " The admission of the additional ground has been objected to by Shri Ajoy Thakore, the learned counsel for the assessee. He has submitted that the appeal was filed by the ITO on 26-3-1981 and that before the additional ground may be admitted, the department must show that it was prevented by sufficient cause in not taking up the additional ground, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not applicable in this case. The Commissioner (Appeals) considered the ITO's objection but found that his contention was not correct. Accordingly, he held that the provisions of section 144B were applicable in this case and that the assessment having been made without complying with the mandatory provisions, as stated above, was void and required to be annulled. 6. We have examined the return filed by the assessee. The departmental representative has also furnished us with a copy of the return, which indicates that the assessee might have declared its income at Rs. 2,90,198. However, this is not correct as unabsorbed depreciation has been claimed separately in the return itself amounting to Rs. 1,16,529 and, thus, the returned income is Rs. 1,73,670 only. This is what the ITO himself has stated in the order of assessment. In the circumstances, we have no difficulty in holding that the variation between the income returned and that proposed by the ITO exceeded Rs. 1,00,000 and the provisions of section 144B were clearly applicable. 7. The second ground is consequential and the third ground is only a general ground. This takes us to the additional ground which has been admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Anjani Kumar, the departmental representative, on the other hand, pointed out that the order in the case of East Coast Marine Products (P.) Ltd. was passed on 16-3-1983, while in the case of Shivaji Park Gymkhana it was passed on 30-4-1983 and, therefore, the latter order required to be followed. On merits, he pointed out that the Special Bench has not at all held, in the case of East Coast Marine Products (P.) Ltd., that the jurisdiction to make the assessment as such even vested in the IAC under section 144B. What it has held is that the order passed by the ITO, to the extent it is in compliance with the directions of the IAC under section 144B(4), cannot be treated as an order of the ITO to give the Commissioner jurisdiction to revise the same under section 263. 9. We have considered the rival contentions carefully. It may be mentioned that the counsel filed written submissions after the hearing was over. The department, thus, did not get an opportunity to make its submissions on the points raised in the written submissions. We have glanced through the written submissions also. Since, in our view, the written submissions have, by and large, been considered and rejected b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IAC under section 144B(4), it cannot be held that it is the order of the ITO and in any event the order of the ITO to that extent cannot be said to be erroneous, as the ITO is bound to follow the directions of the IAC given under section 144B(4) of the Act and such compliance can, by no stretch of imagination, be held to be erroneous In fact, the question of jurisdiction in that case was not involved at all. In this context, it may be desirable to refer to the provisions of the Wealth-tax Act, 1957 ('the 1957 Act') in this regard. In appropriate cases, the WTO refers the question of valuation of any asset to Valuation Officer. Sub-section (6) of section 16A of the 1957 Act provides that so far as the valuation of the asset in question is concerned, the WTO shall proceed to complete the assessment in conformity with the estimate of the Valuation Officer. Can one say, by any stretch of imagination, that just because the WTO is bound to complete the assessment in conformity with the estimate of the Valuation Officer, his jurisdiction to make the assessment is ousted, though for the purpose of section 263 of the 1961 Act, corresponding to section 25 of the 1957 Act, it may be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not the calculation sheet in ITNS-150. 12. Besides objecting to the various additions and disallowances, the assessee had strongly contended before the Commissioner (Appeals) that the assessment order was bad and illegal inasmuch as : (i) the tax was not computed in the assessment order itself ; (ii) the assessment was completed beyond the statutory period ; and (iii) the assessee was not given an opportunity after receipt of the directions by the ITO and, in fact, the assessment was back-dated. The Commissioner (Appeals) has considered these three grounds in paragraphs 9, 10 and 11 of his order. Following the decision of the Jammu and Kashmir High Court in the case of S. Mubarik Shah Naqshbandi v. CIT [1977] 110 ITR 217, he has held that not computing the tax in the assessment order itself, makes the assessment invalid. Referring to the fact that the IAC had directed the ITO to verify certain claims but the ITO completed the assessment on the same date without giving an opportunity to the assessee, he held that the assessment so passed was illegal. He has also held that the IAC having taken more than one hundred and eighty days, the assessment is barred by limitation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s invited our attention to the fact that section 292B was inserted in the Act by the Taxation Laws (Amendment) Act, 1975, with effect from 1-10-1975 and that the Jammu and Kashmir High Court has decided the case of S. Mubarik Shah Naqshbandi on 20-10-1976. Fairly admitting that the provisions of section 292B have not been referred to in the said decision, the counsel submitted that that only indicated that the provisions contained in section 292B have no application to this aspect of the matter. It is reiterated that the assessment order, which is not accompanied by the calculation sheet and the tax is not computed in the order itself, is invalid in view of the above decision. The Special Bench order of the Tribunal in the case of Highway Construction Co. (P.) Ltd. also supports the assessee's contention that the assessment will be invalid if the calculation sheet is not enclosed therewith and the tax is not computed in the order itself. It is a different thing that the Special Bench held that this defect was curable but the existence of the defect has not been and cannot certainly be denied. As regards the non-compliance by the ITO with the directions of the IAC, Shri Ajay Thakore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the provisions of section 292B, which were brought into the statute book with effect from 1-10-1975, were not brought to the notice of the Hon'ble High Court and that the Hon'ble High Court was considering the provisions of section 144 and not those of section 143(3). This issue as stated earlier, has been considered at great length by the Special Bench of the Tribunal in the case of Highway Construction Co. (P.) Ltd., where it was held that the assessment made under section 143(3) should not only contain the computation of income or loss but also should contain the determination of the tax payable or the amount refundable by or to the assessee, without which the assessment order would be invalid. However, as no form of assessment order is prescribed, if the tax is determined on any paper within the period of limitation, it would fulfil the requirements of section 143(3)(a). As in that case, in the case of the assessee also, the tax has been determined by the ITO on Form ITNS-150. The demand notice and the assessment order are dated 24-9-1981 and have duly been served on the assessee on 27-9-1981. The only omission on the part of the ITO, if any, has been that the Form ITN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into account. Since, however, arguments have been advanced by the parties at great length, we have considered it desirable also to examine the purport and scope of the Explanation 1(iv) to section 153. As stated by us earlier, the Explanation provides that in computing the period of limitation for the purpose of section 153, the period as mentioned in sub-section (4) of section 144B shall be excluded. The ordinary time limit for completing the assessment in this case is two years from the end of the assessment year, in which the income is first assessable, i.e., two years from 31-3-1979. Let us examine which period is to be excluded. If we omit the expression 'not exceeding one hundred and eighty days, which is within the brackets, the period to be excluded is the period that commences from the date on which the ITO forwards the draft order to the assessee and ends with the date on which the ITO receives the directions from the IAC. In this case, the draft assessment order has been forwarded to the assessee on 11-2-1981 and the directions have been received from the IAC on 24-9-1981. Ordinarily, therefore, the period to be excluded is the period from 11-2-1981 to 24-9-1981, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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