1984 (4) TMI 69 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment without issuance of notice under section 143(2).
2. Use of information from the Director of Industries without confronting the assessee.
3. Jurisdiction and procedural irregularities affecting the assessment order.
4. Period of limitation for making the assessment.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Without Issuance of Notice Under Section 143(2):
The assessee argued that the assessment was a nullity due to the absence of a notice under section 143(2) of the Income-tax Act, 1961. The learned AAC held that the omission did not render the assessment void ab initio but was a procedural irregularity. The Tribunal upheld this view, citing the decision in *Guduthur Bros. v. ITO* which clarified that procedural defects could be rectified and did not affect the jurisdiction of the ITO.

2. Use of Information from the Director of Industries Without Confronting the Assessee:
The ITO relied on information from the Director of Industries regarding the consumption of wax, which was not made available to the assessee. The AAC directed that fresh enquiries be made or the assessee be confronted with the data collected. The Tribunal agreed with this direction to ensure compliance with principles of natural justice, emphasizing that the assessee should have an opportunity to present its own data.

3. Jurisdiction and Procedural Irregularities Affecting the Assessment Order:
The Tribunal examined whether the issuance of notice under section 143(2) was a condition precedent for the ITO to assume jurisdiction. It concluded that the omission to issue the notice did not affect the ITO's jurisdiction but was a procedural requirement necessary before completing the assessment. The Tribunal cited *Electro House* and *Sant Baba Mohan Singh* to support that procedural defects could be corrected without nullifying the proceedings.

4. Period of Limitation for Making the Assessment:
The assessee contended that the setting aside of the assessment by the AAC enlarged the period of limitation. The Tribunal referred to section 153(2A) of the Act, which allows fresh assessment within two years from the end of the financial year in which the order under section 250 was received by the Commissioner. The Tribunal held that the AAC's order did not confer new jurisdiction but operated within the statutory limitation period.

Conclusion:
The Tribunal dismissed the appeal, affirming that the assessment order was not a nullity despite procedural irregularities. It upheld the AAC's direction for a fresh assessment after ensuring compliance with natural justice principles and within the prescribed limitation period.