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Issues Involved:
1. Interpretation of the word "forward" in the context of section 144B of the Income-tax Act, 1961. 2. Determination of the period of limitation for completing the assessment under section 153(2A) of the Income-tax Act, 1961. Detailed Analysis: 1. Interpretation of the word "forward" in the context of section 144B of the Income-tax Act, 1961: The primary issue revolves around the interpretation of the word "forward" as used in section 144B of the Income-tax Act. The applicant contended that the word "forward" should be equated with "issue" and "serve," meaning the draft assessment order is considered forwarded only when it is served to the assessee. The Tribunal and the Commissioner of Income-tax (Appeals) disagreed, holding that "forward" denotes a stage when a document is ready for dispatch, and thus the forwarding occurs when the Income-tax Officer signs the forwarding letter. The Tribunal relied on the dictionary meaning of "forward," which implies sending towards the place of destination or transmitting. The Tribunal concluded that the process of forwarding is distinct from the process of service, and the act of forwarding is completed when the Income-tax Officer signs the covering letter. The court agreed with the Tribunal's interpretation, stating that the word "forward" should be given its natural meaning, which is "to send forward" or "to transmit." The court referenced various legal dictionaries and case laws to support this interpretation. The court held that the word "forward" does not mean "serve," and it is used in the sense of putting the draft assessment order in the process of communication to the assessee. 2. Determination of the period of limitation for completing the assessment under section 153(2A) of the Income-tax Act, 1961: The second issue concerns the computation of the period of limitation for completing the assessment. According to section 153(2A) of the Act, the assessment should be completed within two years from the end of the financial year in which the order under section 146 cancelling the assessment is passed. In this case, the order was passed on March 31, 1975, so the assessment should have been completed by March 31, 1977. However, due to the proposed addition exceeding Rs. 1 lakh, the Income-tax Officer had to comply with section 144B, which involves forwarding a draft assessment order to the assessee. Clause (iv) of Explanation 1 to section 153 excludes the period commencing from the date on which the Assessing Officer forwards the draft order to the assessee and ending with the date on which the Assessing Officer receives directions from the Deputy Commissioner. The court determined that the draft assessment order was forwarded on March 10, 1977, when it was handed over to the postal authorities. The period from March 10, 1977, to July 29, 1977, (the date on which the Assessing Officer received directions) should be excluded for the purpose of computing the limitation period. Consequently, the limitation for passing the final assessment order extended only up to August 20, 1977. Since the final assessment order was passed on August 24, 1977, it was beyond the prescribed limitation period. The court rejected the Department's argument that the entire period from July 29, 1977, should be available to the Assessing Officer for completing the assessment. The court emphasized that the Legislature did not provide for extending the period of limitation beyond the specific exclusion period mentioned in clause (iv) of Explanation 1 to section 153. Conclusion: The court concluded that the word "forward" is not to be interpreted in the same manner as "issue" or "serve." The date of forwarding is when the draft assessment order is handed over to the postal authorities, which in this case was March 10, 1977. Therefore, the assessment order dated August 24, 1977, was beyond the limitation period, and the reference was answered in favor of the assessee and against the Department.
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