1982 (8) TMI 87 - AT - Income Tax

Summary

Issues:
1. Validity of assessment under section 144B of the IT Act.
2. Merits of addition of Rs. 1,04,500 as income from undisclosed sources.
3. Challenge to the value of the building and unexplained sum of Rs. 1,04,500.
4. Whether the CIT (A)'s observations on the original assessment have any consequence after it was set aside.
5. Whether the assessee can be considered aggrieved by the CIT (A)'s order after the assessment was set aside.

Detailed Analysis:
1. The assessment in this case included a sum of Rs. 1,04,500 as income from undisclosed sources. The assessee challenged the validity of the assessment, contending that the Income Tax Officer (ITO) did not follow the procedure under section 144B of the IT Act, rendering the assessment illegal. The CIT (A) found a procedural error by the ITO for not sending a draft order to the assessee under section 144B. The CIT (A) set aside the assessment order and directed the ITO to rectify the procedure and pass an order in accordance with the law. The Tribunal noted that the defect in the assessment procedure was fundamental, leading to the assessment being set aside entirely.

2. The assessee raised grounds challenging the value of the building and the unexplained sum of Rs. 1,04,500. The CIT (A) had set aside the assessment and directed the ITO to rectify the procedure without recourse to section 144B. The assessee did not challenge this action by the CIT (A) but contested the findings related to the unexplained credit of Rs. 1,04,500. The Tribunal held that since the assessment was set aside, the CIT (A)'s observations on the original assessment were irrelevant, as there was no assessment order in existence. The Tribunal dismissed the appeal on these grounds, considering the assessee was not aggrieved by the CIT (A)'s order after the assessment was set aside.

3. The Tribunal emphasized that the CIT (A)'s observations on the original assessment, which was subsequently set aside, held no consequence as there was no assessment order in existence. The Tribunal rejected the request to declare the CIT (A)'s observations as not binding on the ITO for a fresh assessment, as the observations were deemed hypothetical and irrelevant in the absence of an assessment.

4. The Tribunal concluded that since the assessment was set aside, the assessee could not be considered aggrieved by the CIT (A)'s order. The Tribunal noted that the CIT (A)'s decision to set aside the ITO's order had relieved the assessee from any tax payment until a fresh assessment was made. Consequently, the appeal was dismissed as infructuous, as the assessee had no grievance against either the ITO's non-existent order or the CIT (A)'s decision to set it aside.