Procedure envisaged by s. 144A,144 B of .Income Tax Act. 1961. - Income Tax - 1167/CBDT

INSTRUCTION NO. 1167/CBDT Dated : April 29, 1978 Section(s) Referred: 144A ,144B Statute: Income - Tax Act, 1961 Reference is invited to Board's Instruction No.907 dated 24th December, 1975 outlining the new procedure envisaged by sec. 144A and 144 B of the I.T.Act. 1961. 2. The various references received in this regard have been considered by the Board in consultation with the Ministry of Law. Section 153 lays down the time limit for completion of an assessment. But for the purposes of computing the period of limitation the period commencing from the date on which the ITO forwards the draft order under sub-section (1) of section 144B to the assessee and ending with the date on which the ITO received directions from the IAC u/s.144B(4) in a case where no objections to the draft order are received from the assessee a period of 30 days is to be excluded in view of clause (iv) of explanation I to sec.153. It means that whatever period is available to the ITO in completing the assessment on the date he has forwarded the draft order to the assessee the same will be available to him to finalise the assessment after the date of receipt of the directions from the IAC or after the expiry of 30 days as aforesaid. In other words the time normally available for completing the assessment say upto 31st March of a particular year will get extended by a period as provided in clause (iv) of the explanation I to sec.153. To illustrate in a case where the ITO has forwarded a draft assessment order for the year 1975-76 to the assessee on 10th March, 1978 and the assessee has objected to the variations, within the stipulated time he is required to forward these to the IAC u/s.144B(4). If the ITO receives the directions u/s.144B(4) from the IAC on 6th August 1978 he has to finalise the assessment on or before 27th August 1978 i.e. before the expiry of 22 days from the date of receipt of the directions from the IAC. If in the above illustration the objections are not received by the ITO within the stipulated time, the ITO has to complete the assessment on or before 30th April, 1977. The Board however desire that the ITOs should complete the assessments soon after the receipt of the directions from the IAC or as the case may be the expiry of the period for filing of the objections by the assessee and should not wait till the last day. The Board has been advised that the ITO can forward more than one draft order to the assessee u/s.144B(1) in respect of the same assessment year. However such orders can be forwarded till the date of expiry of time limit for completion of assessment fixed u/s.153 but without taking into account the period referred to in clause (iv) of explanation I to the said section. It means that a fresh draft order cannot be forwarded after the expiry of the normal time limit for completion of assessment. The time limit of 30/upto 180 days will count from the last of the draft assessment orders forwarded to the assessee by the ITO. The IAC can issue directions u/s.144A during the pendency of a reference before him u/s.144 B. Such directions however, could only be issued within the normal time limit for completion of the assessment provided in sec.153. It means that in cases where the time of completion of assessment is expiring on say 31st March such directions can only be given before that date even though the time for completion of assessment stands extended in view of clause (iv) of explanation I to the said section. Such directions can be issued in respect of the points which have not been looked into by the ITO or in respect of the matters not covered by the assessee's objections. The ITO in such cases has to examine the matter as directed and after examining it forward a fresh draft order if necessary to the assessee provided the normal time limit has not expired and thereafter refer the matter again to the IAC u/s.144B(4). The Board has been advised that if the IAC finds that the amount of income proposed to be added by the ITO and objected to by the assessee needs enhancement he cannot issue directions for such enhancement in a reference u/s.144B(4). He can however issue directions u/s.144A and the procedure stated in here above has to be followed. In cases where the IAC feels that any proposed addition needs enhancement or any other addition is called for and the normal time limit for issuing directions u/s.144 A and/or issuance of another draft order u/s.144B(1) has expired provisions of sec.262 or sec.147 if permissible within the terms thereof have to be invoked after the completion of the assessment. In such cases action u/s.263 is to be preferred. The IAC should allow the assessee to produce any evidence he may have in support of his objections against the draft order. The IAC should examine the fresh evidence and if necessary he can direct the ITO to examine and report on the fresh evidence. But fresh evidence and material cannot be entertained by the IAC on the issues not objected to by the assessee. While finalising the assessment all the facts materials and arguments on record including those on record of the IAC can be made use of by the ITO.