1995 (8) TMI 101 - AT - Wealth-tax

Summary

Issues:
1. Validity of notice of demand and assessment order.
2. Jurisdiction of CIT (A) to set aside assessment order and issue directions.
3. Appeal filed under section 154 of the Act being premature.

Detailed Analysis:

Issue 1: Validity of notice of demand and assessment order
The appeal in question pertains to the assessment year 1987-88 and arises from the order of CIT(A) dated 9-11-1990. The key contention revolved around the validity of the notice of demand and the assessment order. The assessee argued that since the assessment order did not bear a date and the notice of demand was served before the completion of the assessment, the demand notice was invalid. The CIT (A) set aside the assessment served with the demand notice, directing the AO to pass a fresh assessment order. The Tribunal analyzed the provisions of Section 156 of the Income-tax Act, emphasizing that a notice of demand arises in consequence of an order passed under the Act. While there is no statutory requirement to serve the assessment order along with the notice of demand, the failure to do so does not invalidate the assessment. The Tribunal held that a defective demand notice does not vitiate the assessment proceedings, citing relevant case law to support this position.

Issue 2: Jurisdiction of CIT (A) to set aside assessment order and issue directions
The assessee contended that the CIT (A) exceeded jurisdiction by setting aside the assessment order and issuing directions for a fresh assessment. The Tribunal noted that the CIT (A) did not adjudicate on the grounds raised by the assessee and did not consider whether the assessment was barred by limitation. As per Section 249 of the Act, an appeal can be filed within 30 days of the service of the notice of demand, but the CIT (A) had held the notice of demand to be invalid. Therefore, the Tribunal found that the directions issued by the CIT (A) were not warranted and set them aside. The matter was remanded to the CIT (A) for rehearing and disposal in accordance with law.

Issue 3: Appeal filed under section 154 of the Act being premature
In another appeal related to an application under section 154 of the Act, the assessee argued that the notice of demand served was not based on the assessment order, rendering the appeal premature. The CIT (A) rejected the application, stating that there was no mistake apparent from the record. Since the impugned directions in the previous appeal were set aside, the present appeal was deemed infructuous and dismissed.

In conclusion, the Tribunal addressed the validity of the notice of demand and assessment order, the jurisdiction of the CIT (A) to set aside the assessment order, and the issue of premature appeal under section 154 of the Act, providing detailed analysis and legal interpretations for each issue raised in the appeals.