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Issues involved: Assessment order under section 143(3) of the Income-tax Act, 1961; Validity of assessment order; Compliance with section 144B procedures; Power of Commissioner of Income-tax (Appeals) in setting aside orders; Time limit for assessment completion.
Assessment Order and Compliance with Section 144B Procedures: The assessee filed a return for the assessment year 1973-74, declaring an income of Rs. 2,77,264. The Income-tax Officer computed the income at Rs. 3,96,168 under section 143(3) of the Act, with share allocation amongst partners. The assessment order dated March 29, 1976, included a penalty notice under sections 271(1)(c) and 273. The Income-tax Officer later issued a communication under section 144B(3) treating the earlier order as final, despite it being a complete order under section 143(3). The Commissioner of Income-tax (Appeals) concluded that the initial order was final and the Income-tax Officer's failure to follow section 144B procedures rendered the subsequent order illegal, leading to a remand for a fresh order. Power of Commissioner of Income-tax (Appeals) and Validity of Orders: The Commissioner of Income-tax (Appeals) has the authority to annul or set aside an assessment order and refer the case back for a fresh assessment in accordance with the law. In this case, the Commissioner rightly remanded the matter to the Income-tax Officer for a fresh determination after setting aside the illegal order. The argument that a null and void order cannot be appealed against was refuted, emphasizing that all illegal and erroneous orders are not null and void, and the appellate authority can rectify such orders. Time Limit for Assessment Completion and Remand Orders: The time limit for assessment completion under sections 143 or 144 of the Act can be extended in cases of remand. Section 153(2A) allows for a fresh assessment within two years from certain events. The order of remand enlarges the time limit for assessment completion, as specified by the Act. The Tribunal upheld the remand order, ensuring that the assessment is completed within the prescribed time limit. Conclusion: The Tribunal's decisions regarding the assessment order, compliance with section 144B procedures, and the power of the Commissioner of Income-tax (Appeals) were upheld. The provisions of section 144B are mandatory, and the Income-tax Officer must adhere to them for additions exceeding the prescribed amount. The time limit for assessment completion is extended in cases of remand, ensuring that the assessment is conducted within the legal framework.
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