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Issues Involved:
1. Validity of the assessment under section 143(3) read with section 144B versus section 144. 2. Time-barred nature of the assessment. 3. The applicability of promissory estoppel. 4. Legality of the CIT(A)'s order setting aside the assessment and directing a fresh assessment. Issue-wise Detailed Analysis: 1. Validity of the Assessment under Section 143(3) Read with Section 144B versus Section 144: The core issue was whether the assessment should have been made under section 144 due to the assessee's non-compliance with statutory notices, or whether the assessment under section 143(3) read with section 144B was valid. - Assessee's Argument: The assessee argued that due to non-compliance with notices under sections 142(1) and 143(2), the ITO was bound to make an assessment under section 144. The Supreme Court decision in Segu Buchiah Setty was cited, emphasizing that failure to comply with statutory notices necessitates an ex parte assessment under section 144. - Revenue's Argument: The Revenue contended that the ITO had the discretion to choose between sections 143(3) and 144, and the assessment under section 143(3) read with section 144B was valid. The Bombay High Court decision in A. A. Ansari was cited, which allows the ITO to estimate income under section 143(3) even if there is some non-compliance. - Tribunal's Decision: The Tribunal was divided. The Accountant Member held that the assessment should have been under section 144 due to non-compliance, making the assessment under section 143(3) invalid. The Judicial Member disagreed, stating that the ITO had enough material to proceed under section 143(3), and non-compliance with some notices did not mandate an assessment under section 144. 2. Time-barred Nature of the Assessment: The issue was whether the assessment was time-barred, given that it was completed after the ordinary time limit, relying on the extended period under section 144B. - Assessee's Argument: The assessee argued that since the assessment should have been under section 144, the provisions of section 144B (which extend the time limit) were not applicable. Therefore, the assessment completed in November 1980 was time-barred. - Revenue's Argument: The Revenue argued that since the assessment was validly made under section 143(3) read with section 144B, the extended time limit was applicable, making the assessment timely. - Tribunal's Decision: The Accountant Member found the assessment time-barred as it should have been under section 144, while the Judicial Member found it within time under section 143(3) read with section 144B. 3. Applicability of Promissory Estoppel: The issue was whether the assessee, having participated in the proceedings under section 144B, could now claim that the assessment should have been under section 144. - Revenue's Argument: The Revenue argued that the assessee was estopped from challenging the assessment under section 143(3) read with section 144B, having participated in the proceedings without objection. - Tribunal's Decision: Both Members agreed that promissory estoppel did not apply. Consent cannot confer jurisdiction, and the correct legal provision must be followed irrespective of the assessee's participation. 4. Legality of the CIT(A)'s Order Setting Aside the Assessment and Directing a Fresh Assessment: The issue was whether the CIT(A) was justified in setting aside the assessment and directing the ITO to make a fresh assessment. - Assessee's Argument: The assessee argued that since the assessment was time-barred, the CIT(A) could not revive it by directing a fresh assessment. - Revenue's Argument: The Revenue contended that the CIT(A) should not have set aside the assessment as there was sufficient material on record. - Tribunal's Decision: The Accountant Member held that the CIT(A)'s direction to make a fresh assessment was invalid as the original assessment was time-barred. The Judicial Member held that the CIT(A) was correct in setting aside the assessment and directing a fresh assessment. Conclusion by Third Member: The Third Member agreed with the Judicial Member, holding that: 1. The assessment was validly made under section 143(3) read with section 144B and was not time-barred. 2. The CIT(A) was correct in setting aside the assessment and directing a fresh assessment. The matter was referred back to the original Bench for final disposal in accordance with the Third Member's opinion.
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