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TMI Blog1992 (5) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... the receipt of the draft order. The above draft order was received in the office of the assessee on 27th Nov., 1982 in the afternoon at 3.00 p.m. The assessee sought extension of time for filing the objections vide its letter dt. 1st Dec., 1982. Extension of time as sought for by the assessee was granted by the ITO by his letter dt. 6th Dec., 1982 which was received by the assessee on 8th Dec., 1982. In pursuance to the above letter, the assessee filed the reply on 6th Jan., 1983 stating that "we beg to submit that we have nothing to state other than what is written in reply to 144B notice. This may be considered and order may be passed". 4. In the meanwhile, the IAC, Central Range, Ernakulam, initiated suo moto proceedings under s. 144A(1). Vide his office letter dt. 13th Jan., 1983, the IAC issued the following notice to the assessee: "To M/s. Kala Cartons Limited, Sakthikulangara, Quilon Whereas on examination of the record of the proceeding in which the assessment for the asst. yr. 1980-81 is pending in your case, it appears to me necessary to issue directions for the guidance of the ITO, Central Circle, Trivandrum, on the issues mentioned below* to enable her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d draft order. Hence, he set aside the assessment. The assessee is on second appeal. 6. We have heard rival submissions. Normally the time limit for framing the assessment order for the asst. yr. 1980-81 would expire on 31st March, 1983. The first draft assessment order was forwarded by the Assessing Officer to the assessee on 16th Nov., 1982. The contention of the learned counsel for the assessee, Sri C.K. Nair, is that by virtue of s. 144B, the ITO who proposes to make any variation to the prejudice of the assessee in the income or loss returned in excess of the limit fixed by the Board for that purpose (Rs. 1,00,000) can issue only one draft order of the assessment. He has no power under that section to issue more than one draft order. Sec. 144B as it was introduced by Taxation Laws (Amendment) Act, 1975 w.e.f. 1st April, 1976 read as follows: "144B. (1) Notwithstanding anything contained in this Act, where, in an assessment to be made under sub-s. (3) of s. 143, the ITO proposes to make any variation in the income or loss returned which is prejudicial to the assessee and the amount of such variation exceeds the amount fixed by the Board under sub-s. (6), the ITO shall, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in s. 144B(1). For this proposition he relied upon the order of the Hon'ble Delhi High Court as reported in the case of Sudhir Sareen vs. ITO (1981) 128 ITR 445 (Del). Opposing the contention of the learned counsel for the assessee, the learned Departmental Representative argued that the words "in the first instance" and "a draft" mean that at every instance when draft assessment order is made such draft order should be served upon the assessee calling objections, if any, against such proposition. 8. Before coming to the merits of the arguments by either party it would be very relevant to note the difference between s. 144A and s. 144B (as it stood then). Sub-s. (1) of s. 144A reads as follows: "144A. Power of IAC to issue directions in certain cases—(1) An IAC may, on his own motion or/on a reference being made to him by the ITO or on the application of an assessee, call for and examine the record of any proceeding in which an assessment is pending and, if he consider that, having regard to the nature of the case or the amount involved or for any other reason, it is necessary or expedient so to do, he may issue such directions as he thinks fit for the guidance of the ITO to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 CTR (SC) 138 : (1981) 128 ITR 292 (SC) though rendered in a different context can be adopted in this case also. In that case the issue before their Lordships was whether the goodwill generated in a newly commenced business on transfer of goodwill attract capital gains tax for the purpose of income-tax. Their Lordships have held that "when goodwill generated in a new business is sold and the consideration brought to tax, what is charged is the capital value of the asset and not any profit or gain. Further, the cost of acquisition of the asset is material factor in applying the computation provisions pertaining to a capital gains but in the case of goodwill generated in a new business it is not possible to determine the date when it comes into existence". As contemplated by s. 48(ii) it is not possible to fix the cost of acquisition of the goodwill in order to attract capital gains. If that principle is adopted, in order to get the benefit of s. 153, Expln. 1(iv), not only the date of forwarding the draft assessment order by the ITO to the assessee but also the date of receipt of IAC's directions is very material. If no direction is given under s. 144B the benefit of extension of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 153 cannot be accepted. The wording of the Expln. 1(iv) is very clear. It runs as follows: "The period (not exceeding one hundred and eighty days) commencing from the date on which the ITO forwards the draft order under sub-s. (1) of s. 144B to the assessee and ending with the date on which the ITO receives the directions from the IAC under sub-s. (4) of that section....." In other words, if no direction is given by the IAC to the draft order forwarded under s. 144B it is impossible to fix the date on which the Assessing Officer receives direction from the IAC under sub-s. (4) of s. 144B. 12. The reliance put by the assessee on the decision of the Hon'ble Delhi High Court in the case of Sudhir Sareen vs. ITO supports the case of the assessee on the facts and circumstances of the case as we have seen above. Their Lordships held that under s. 144B there cannot be more than one draft assessment order. 13. The learned Departmental Representative contended that even in the above case, relied upon by the assessee, the Hon'ble High Court after setting aside the order gives its direction to the Department to restart the proceedings at the stage of the IAC under the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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