1991 (11) TMI 97 - AT - Income Tax

Issues Involved:
1. Validity of the assessment order passed under section 143(3)(b) of the Income-tax Act, 1961.
2. Whether the original assessment order under section 143(1) survives after the issuance of notice under section 143(2)(b).
3. Applicability of section 155 for rectification after the cancellation of the assessment order under section 143(3)(b).

Detailed Analysis:

1. Validity of the Assessment Order under Section 143(3)(b):
The appellant-revenue contested the correctness of the order dated 16-2-1989, arguing that the assessment under section 143(3)(b) substituted the original assessment under section 143(1). The Tribunal noted that the assessment under section 143(3)(b) was completed on 7-3-1983, post issuance of notice under section 143(2)(b). The Tribunal emphasized that the reassessment under section 143(3)(b) should not have been made since the original assessment was subject to rectification under section 155. Consequently, the reassessment under section 143(3)(b) was invalidated, and the original assessment under section 143(1) was directed to be rectified under section 155.

2. Survival of the Original Assessment Order under Section 143(1):
The Tribunal examined whether the original assessment under section 143(1) survived after the issuance of notice under section 143(2)(b). The Tribunal concluded that once the notice under section 143(2)(b) was issued, the original assessment under section 143(1) ceased to exist. The Tribunal referenced the case of Kundan Lal Srikrishna Mathur, where it was held that the original assessment ceased to be enforced after the issuance of the notice, and the only valid assessment was the one subsequently passed. Therefore, the original assessment order under section 143(1) did not survive for rectification after the issuance of notice under section 143(2)(b).

3. Applicability of Section 155 for Rectification:
The Tribunal addressed whether section 155 could be applied for rectification after the cancellation of the assessment order under section 143(3)(b). The Tribunal noted that the learned ITO issued a notice under section 154/155 and rectified the initial order dated 12-1-1983 under section 155/143(1). However, the Tribunal found this action to be misconceived and not supported by any provision of law. The Tribunal stated that after the issuance of the notice under section 143(2)(b) and the subsequent assessment under section 143(3)(b), the earlier assessment under section 143(1) did not survive for rectification. This conclusion was supported by the ratios in the cases of Kundan Lal Srikrishna Mathur and Tass Printing Inks (P.) Ltd., which held that the original assessment became non-existent once the notice under section 143(2)(b) was issued.

Conclusion:
The Tribunal dismissed the appeal, upholding the decision that the original assessment under section 143(1) did not survive after the issuance of notice under section 143(2)(b) and the subsequent assessment under section 143(3)(b). Consequently, the rectification under section 155 was not permissible, and the appeal was dismissed.

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