1983 (11) TMI 83 - AT - Income Tax

Summary

Issues Involved:
1. Validity of initiation of assessment proceedings under section 147(a) of the Income-tax Act, 1961.
2. Maintainability of appeals against orders under sections 146 and 144 of the Income-tax Act, 1961.

Detailed Analysis:

1. Validity of Initiation of Assessment Proceedings under Section 147(a):
The assessee challenged the initiation of assessment proceedings for the assessment year 1972-73 by issuing notice under section 148, claiming it was not valid. Both the Income Tax Officer (ITO) and the Commissioner (Appeals) considered this objection irrelevant while dealing with the provisions of section 146. The Commissioner (Appeals) agreed with the ITO that the validity of proceedings initiated under section 147(a) could not be looked into while dealing with the assessee's application under section 146. The appeal was confined to whether the assessee was prevented by sufficient cause from complying with the notice under section 142(1) dated 17-3-1982, which led to the ex parte assessment under section 144. The Tribunal upheld this view, stating that the issue of improper initiation of proceedings under section 147(a) and the invalidity of the notice under section 148 cannot be agitated in an appeal against an order under section 146.

2. Maintainability of Appeals Against Orders Under Sections 146 and 144:
The preliminary point raised was the maintainability of the two appeals when the assessee had obtained full relief under section 146 from the Commissioner (Appeals), who vacated the assessment with a direction to frame it afresh. The Tribunal clarified that the appeal against an order under section 146 should take precedence over the quantum assessment appeal under section 144. Once an assessee succeeds in an application under section 146, the ex parte assessment becomes a nullity, and fresh assessment is ordered. The Tribunal emphasized that the scope of an appeal under section 146 is restricted to the grounds specified in the section itself, such as being prevented by sufficient cause from making the return required under section 139(2) or not receiving the notice issued under section 142(1) or 143(2).

The Tribunal noted that the relief under section 146 involves canceling the assessment and making a fresh assessment in accordance with sections 143 or 144. Since the Commissioner (Appeals) had already granted the full relief provided under section 146, there was no grievance for the assessee to appeal to the Tribunal. The Tribunal held that the appeal against the order of the Commissioner (Appeals) in respect of an order under section 146 was not maintainable.

Similarly, regarding the quantum assessment appeal, the Tribunal stated that once the ex parte assessment is canceled under section 146, the assessment no longer survives, and hence, the quantum appeal becomes infructuous. The Tribunal dismissed both appeals as incompetent, noting that the Commissioner (Appeals) had acted correctly in accordance with the law and provided the necessary relief to the assessee.

Conclusion:
Both appeals filed by the assessee were dismissed as incompetent. The Tribunal upheld the view that the validity of the initiation of assessment proceedings under section 147(a) could not be challenged in an appeal against an order under section 146. The Tribunal also clarified that once the ex parte assessment is canceled under section 146, the quantum assessment appeal becomes infructuous, and no further appeal lies to the Tribunal.