2003 (4) TMI 25 - HC - Income Tax

Whether the Income-tax Appellate Tribunal was justified in not confirming the order of the Commissioner of Income-tax (Appeals) who had set aside the order of assessment with the direction to give fresh opportunity to the assessee? - It is true that the proviso to sub-section (1) of section 144 requires that before framing the assessment under section 144, an opportunity should be given to the assessee - Commissioner of Income-tax (Appeals) was justified in remitting the matter back to the Assessing Officer to make a fresh assessment after affording opportunity to the assessee for assessment under section 144 Hence tribunal was not justified in not confirming the order of CIT (A)

Summary

Issues:
1. Justification of Income-tax Appellate Tribunal's decision regarding the order of assessment set aside by the Commissioner of Income-tax (Appeals).
2. Compliance with statutory requirements before estimating income under section 144 of the Income-tax Act.
3. Opportunity to be given to the assessee before framing assessment under section 144.
4. Validity of the decision to remit the matter back to the Assessing Officer for a fresh assessment.

Analysis:
1. The case involved a dispute regarding the Income-tax Appellate Tribunal's decision on the order of assessment set aside by the Commissioner of Income-tax (Appeals). The Commissioner had directed the Assessing Officer to give a fresh opportunity to the assessee before making a new assessment. The Tribunal annulled the assessment, citing a statutory requirement under section 144 to provide notice before estimating the income. The High Court agreed with the Commissioner's decision, stating that the Tribunal erred in annulling the assessment without affording the assessee an opportunity. The High Court upheld the Commissioner's directive for a fresh assessment with proper opportunity for the assessee.

2. The issue of compliance with statutory requirements before estimating income under section 144 was crucial in this case. The High Court noted that although the Assessing Officer had not issued a fresh notice for assessment under section 144 as required, the failure to do so did not absolve the assessee of tax liability. The Court emphasized that proper assessment of income in accordance with the law was essential, even if procedural errors occurred. The High Court upheld the importance of following statutory procedures and principles of natural justice in assessing income under section 144.

3. The High Court highlighted the significance of providing the assessee with an opportunity before framing an assessment under section 144. Despite the assessee not responding to multiple notices served under section 143(2), the Court emphasized that the statutory requirement for giving an opportunity to the assessee should be met. The Court agreed with the Commissioner's decision to remit the matter back to the Assessing Officer for a fresh assessment, ensuring that the assessee had the opportunity to participate in the assessment process.

4. The validity of remitting the matter back to the Assessing Officer for a fresh assessment was a key aspect of the judgment. The High Court concluded that the Commissioner's decision to direct a fresh assessment with proper opportunity for the assessee was justified. The Court set aside the Tribunal's order annulling the assessment and restored the Commissioner's view. The High Court directed the Assessing Officer to afford the assessee an opportunity before framing the fresh assessment under section 144, ultimately allowing the appeal in favor of the assessee.