1980 (10) TMI 135 - AT - Income Tax

Summary

Issues:
1. Validity of assessment order annulled by AAC under s. 144B of IT Act, 1961 for asst. yr. 1975-76.
2. Timeliness of filing objections by the assessee and subsequent assessment completion.
3. Failure of ITO to forward objections to IAC as required under s. 144B(4) of the IT Act.
4. Legality of assessment order passed without referring objections to IAC.

Analysis:

1. The appeal by the Department challenged the annulment of the assessment order by the AAC under s. 144B of the IT Act for the assessment year 1975-76. The ITO had served a draft assessment order on the assessee, who filed objections beyond the stipulated time limit. The ITO proceeded to complete the assessment based on the draft order, leading to the annulment by the AAC.

2. The assessee contended that the assessment should have been completed within 30 days from the draft order issuance date. The AAC found the assessment order time-barred as it was passed after the due date. The Department filed an appeal seeking condonation of a one-day delay in filing the appeal, which was granted, allowing the appeal to be heard on merits.

3. The failure of the ITO to forward the objections of the assessee to the IAC as required under s. 144B(4) of the IT Act was highlighted. The Tribunal referenced a previous order where it was held that such failure constitutes illegality. The Supreme Court precedent was cited to support the restoration of the order to the stage where the illegality occurred, necessitating the ITO to refer the objections to the IAC.

4. The Tribunal, based on the above analysis, set aside the AAC's order annulling the assessment and restored the order of the ITO to refer the objections of the assessee to the IAC as mandated by s. 144B of the IT Act. Consequently, the appeal by the Department was allowed, and the assessment order was reinstated for further processing in compliance with the statutory provisions.