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Issues involved: Interpretation of section 144B of the Income-tax Act, 1961 regarding assessment procedure and the authority of appellate bodies to set aside assessments.
Summary: The High Court of Punjab and Haryana addressed a case where the Income-tax Officer assessed an income different from the one declared by the assessee without following the procedure outlined in section 144B of the Income-tax Act, 1961. The assessee appealed to the Commissioner of Income-tax (Appeals) arguing non-compliance with section 144B, leading to the assessment being set aside for a de novo assessment. The Tribunal was then approached by the assessee, questioning the validity of the assessment made by the Income-tax Officer without following section 144B. The Tribunal referred the matter to the High Court to determine if the assessment was void due to non-compliance with section 144B. The main contention raised was whether an assessment made without following section 144B should be considered null and void, or if the appellate authority could only annul or set aside the assessment for a fresh assessment. The High Court clarified that the appellate authority has the power to annul, set aside, or remand the assessment for a fresh assessment in accordance with its directions, as per section 251(1) of the Act. The Court emphasized that the authority must decide based on the circumstances of each case whether to annul or set aside the assessment. In this case, the appellate authority's decision to set aside the assessment for a de novo assessment was deemed appropriate. Referring to a similar case, the High Court upheld the decisions of the Commissioner of Income-tax (Appeals) and the Tribunal, concluding that the assessment order could be set aside for a remand, and answered the question in favor of the Revenue. The parties were directed to bear their own costs.
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