1985 (3) TMI 83 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessment made on 25-9-1980 u/s 143(3) read with section 144B of the Income-tax Act, 1961 is barred by limitation.
2. Applicability of section 144B provisions.
3. Authority and jurisdiction of Inspecting Assistant Commissioner (IAC) under sections 125 and 125A.
4. Validity of the draft assessment order.
5. Consequences of the assessment being barred by limitation.

Summary:

Issue 1: Limitation of Assessment
The main issue was whether the assessment made on 25-9-1980 u/s 143(3) read with section 144B of the Income-tax Act, 1961 ('the Act') is barred by limitation. The assessment's validity depended on the applicability of section 144B provisions.

Issue 2: Applicability of Section 144B
The assessee argued that section 144B does not apply due to sub-section (7) of section 144B. The Commissioner (Appeals) rejected this argument. The Tribunal noted that section 144B provisions are excluded if an IAC exercises the powers or performs the functions of an ITO under sections 125 or 125A. It was concluded that the IAC, Allahabad, had exercised such powers, making section 144B inapplicable.

Issue 3: Authority and Jurisdiction of IAC
The Tribunal examined sections 123, 124, 125, and 125A to determine the scope and jurisdiction of IACs and ITOs. It held that the use of the article 'the' before 'Inspecting Assistant Commissioner' in sections 125 and 125A was significant, indicating that jurisdiction could be conferred on a particular IAC. The Tribunal confirmed that concurrent jurisdiction over the assessee was validly conferred on the IAC, Allahabad, along with the ITO, and the IAC, Gorakhpur, retained administrative jurisdiction over the ITO.

Issue 4: Validity of Draft Assessment Order
The draft assessment order prepared by the ITO on 27-3-1980 was not signed on the last page and was forwarded to the assessee as a draft. The Tribunal held that this draft order could not be treated as a valid assessment order u/s 143(3), even considering section 292B of the Act.

Issue 5: Consequences of Assessment Being Barred by Limitation
Since the assessment order was passed on 25-9-1980, beyond the ordinary time limit of 31-3-1980 prescribed u/s 153(1)(a)(iii) of the Act, it was barred by limitation. The Tribunal concluded that such an order must be annulled and not merely set aside.

Conclusion:
The Tribunal allowed the appeal, holding that the assessment order dated 25-9-1980 was barred by limitation and required annulment. The provisions of section 144B were deemed inapplicable due to the IAC, Allahabad, exercising powers under section 125A.