1983 (1) TMI 139 - AT - Income Tax

Summary

Issues:
1. Jurisdiction of the assessing officer under section 144B of the Income-tax Act, 1961.
2. Compliance with procedural requirements in assessment proceedings.
3. Validity of assessment order and powers of the Appellate Authority.

Detailed Analysis:

1. Jurisdiction of the assessing officer under section 144B:
The case involved a dispute regarding the jurisdiction of the assessing officer (ITO) in making an assessment under section 144B of the Income-tax Act, 1961. The legal heir of the deceased assessee argued that the ITO lacked jurisdiction to make the assessment as he did not comply with the provisions of section 144B, which were mandatory. The legal representative contended that the IAC had the authority to give directions in cases where the ITO proposed variations exceeding a specified amount in the income or loss returned. However, the Tribunal held that the ITO had jurisdiction to make the assessment even though the provisions of section 144B were not strictly followed. The Tribunal referred to a previous decision by the Special Bench in Rex Cinema Co-owners v. Sixth ITO, emphasizing that the provisions of section 144B pertained to procedural law and did not divest the ITO of his jurisdiction.

2. Compliance with procedural requirements in assessment proceedings:
The Tribunal discussed the nature of nullity, illegality, and irregularity in legal proceedings. It differentiated between acts that are incurable nullities, illegal due to a breach of law, and irregularities that are amendable. The Tribunal highlighted that not every breach of a mandatory provision results in nullity, and there is no strict line between nullity and irregularity. Furthermore, the Tribunal referred to a Supreme Court decision in Kapurchand Shrimal, which emphasized the duty of the assessing authority to follow prescribed procedures and rectify errors in assessments. In this case, the AAC set aside the assessment due to non-compliance with the procedural requirements of section 144B, which the Tribunal deemed appropriate based on legal principles.

3. Validity of assessment order and powers of the Appellate Authority:
The Tribunal concluded that the order passed by the AAC, setting aside the assessment, was in accordance with the law. It held that the ITO had jurisdiction to make the assessment but failed to follow the procedures outlined in section 144B. The AAC, recognizing the violation of procedural requirements, had the authority to set aside the assessment rather than annul it. The Tribunal supported its decision by citing relevant legal precedents, including the Supreme Court's decision in Kapurchand Shrimal and the rulings in Guduthur Brothers and Ram Gopal Neotia. Ultimately, the appeal by the legal heir of the deceased assessee was dismissed based on the findings regarding jurisdiction and compliance with procedural laws.