TMI Blog1985 (7) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, 1961." 2. Before considering the above ground, it would be necessary to state in brief the facts of the case. The ITO while making the assessment was of the view that the assessee had debited bogus purchases in the trading account of the order of Rs. 22,849. The IAC, however, in exercise of the powers conferred on him under s. 144 A of the IT Act, disapproved the addition of Rs. 22,849 contemplated by the ITO. The ITO, therefore, while passing the order did not make addition of Rs. 22,849. Subsequently, the CIT considered the order passed by the ITO as erroneous and prejudicial to the interest of the Revenue in not making the addition of Rs. 22,849. He, therefore, invoking the jurisdiction under s. 263 held the order passed by the ITO as erroneous and prejudicial to the interest of the Revenue and set aside the same for fresh assessment. It is in this background that we have to consider whether the CIT could assume jurisdiction under s. 263 when the order was passed by the ITO after receipt of directions from the IAC under s. 144A. 3. The ld. counsel for the assessee contended that once the order was passed by the ITO in accordance with the direction issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (c) for the asst. yr. 1962-63 had been dropped. Sub-sequentially, the CIT invoked the jurisdiction under s. 263(1) of the IT Act considering the order passed by the ITO dropping the penalty proceedings under s. 271(1) (c) to be erroneous and prejudicial to the interest of revenue and directing fresh orders to be passed in accordance with law. the Hon'ble High Court held that the order passed by the IAC in the order-sheet to the effect "no penalty" was the order passed by him and the further entries by the ITO in the order-sheet and communication to the assessee could not be considered as an order made by him. In fact, the ITO had no power to pass any order of penalty in that case. We, therefore, hold that the ration of the decision of the Allahabad High Court is not applicable to the facts of the case before us in as much as in the case before the Hon'ble High Court the order of penalty was required to be passed by the IAC alone and not by the ITO. 5. The ITAT, Madras Bench 'C' in the case of V. V. A. Shanmugam has held that the CIT had no jurisdiction to pass an order under s. 263 where the order was passed by the ITO in the light of the directions issued by the IAC under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T for obtaining the approval of the IAC before passing the assessment order to be illegal and unwarranted. The draft assessment order submitted by the ITO to the IAC, therefore, became final order of assessment. From this judgment of the Hon'ble High Court it is clear that any directions issued by a superior authority without authority of law, vitiated the order passed by the authority competent to pass such order it no longer remains his order. Sec. 144A of the IT Act which was brought on the statute book w. e. f. 1st Jan., 1976 provides that an IAC may, on his own motion or on a reference being made to him by the ITO or on the application of an assessee, call, for and examine the records of any proceedings in which an assessment is pending and if he considers that having regard to the nature of the case or the amount involved or for any other reasons, it is necessary or expedient so to do, he may issue such directions as he thinks fit for the guidance of the ITO to enable him to complete the assessment and such directions shall be binding on the ITO. In our opinion, the situation in the case of S. Sewa Singh Gill has been over-come by the provision contained in s. 144A. But the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted therewith whereas under s. 144B, the IAC has to decide the matters covered by the specific objections. Then in a passing way, the Special Bench observed that the order of the ITO on the directions issued under s. 144A may still be his order but hastened to add that the Bench was not really concerned in that appeal with the difference between s. 144A and s. 144B. The attempt was only to show that the IAC has been given wide power in the matter of assessment so that the assessment is put to judicial serunity by a superior officer and that would naturally create a feeling of trust amongst the tax-payers. The scope of s. 144A vis-a-via s. 263 was, therefore, not the subject matter of consideration before the Special Bench in the case relied upon by the ld. Departmental Representative. on the contrary, this decision helps the assessee. Directions under both the ss. 144A and 144B are for purpose of guiding the ITO to enable him to complete the assessment and in both the cases such direction shall be binding on the ITO In this view of he matter, we do not think that the ratio of the decision of the Special Bench would not be applicable to an order passed by the ITO in consequence of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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