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TMI Blog1983 (1) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... he loss returned was shown at Rs. 41,239. The ITO vide the assessment order dated 30-10-1976, however, determined the total income at Rs. 62,901, without complying with the provisions of section 144B of the Income-tax Act, 1961 (' the Act '). 3. On appeal by the assessee, the AAC, instead of annulling the assessment as sought for by the assessee has set aside the assessment with a direction to the ITO to make the assessment afresh in accordance with law. 4. In the appeal before the Tribunal, the learned counsel for the legal heir of the deceased assessee, Mr. S.B. Gupta, highlighted the revised loss returned by the deceased assessee of Rs. 41,239 and the total income determined of Rs. 62,901. Since, the difference between the loss retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout complying with the provisions of section 144B, he lacked the jurisdiction to make the assessment and the assessment so made was void ab initio. In support of his arguments, Mr. Gupta relied on the ratio of the following decisions : Banwarilal Agarwalla v. State ofBihar[1962] 1 SCR 33, Jagdish Chandra Gupta v. Union of India AIR 1965 Punj. 129 at pages 161-163, Ratilal Bhogilal Shah v. State ofGujarat AIR1966 Guj. 244 at pages 246-247, Jai Prakash Singh v. CIT [1978] 111 ITR 507 (Gauhati) and CIT v. Sumantbhai C. Munshaw (Decd.) [1981] 128 ITR 142 (Guj.). 5. These arguments were controverted by the departmental representative, who has relied on the orders of the tax authorities. According to the departmental representative, Mr. Kapil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed above. The Special Bench of the Tribunal at Bombay in the case of Rex Cinema Co-owners v. Sixth ITO [1983] 3 ITD 633 has held that the provisions of section 144B touch the procedural law. 7. There is no quarrel with the proposition of law urged by the legal heir of the deceased assessee as to the true meaning which the words ' nullity ', ' illegality ' and ' irregularity ' bear in the eye of law. A nullity results from an error which is incurable and, therefore, fatal to the proceeding and an illegality occurs when there is a breach of some provision of law and an irregularity, which is usually amendable, occurs when some error of procedure is committed in the course of a proceeding. When there is a contravention of some provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only be waived if it is not conceived in the public interest, but in the interest of the party that waives it ". 8. At this stage, we will also like to refer to the decision of the Supreme Court in the case of Kapurchand Shrimal. Therein, their Lordships of the Supreme Court have held that under section 25A of the 1922 Act, the ITO is bound to hold an inquiry into the claim of partition in a HUF if it is made by or on behalf of any member of the HUF which is being assessed hitherto as such and record a finding thereon if no such finding is recorded, sub-section (3) of section 25A becomes clearly attracted. When a claim of partition in the HUF is made in time and the assessment is made on the HUF without holding an enquiry as contemplated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n followed. The ITO completed the assessment of the deceased assessee without complying with the procedure laid down in section 144B. The AAC in the appeal filed by the deceased assessee noticed the violation of procedure prescribed by section 144B. In these circumstances, the AAC was competent to set aside and not annul the assessment, in view of the ratio of the decision of the Supreme Court in the case of Kapurchand Shrimal. Rather, the AAC was under the statutory obligation to pass such an order. This view of ours also finds support from the ratio of the decision of the Supreme Court in Guduthur Brothers as also the ratio of the Special Bench of the Tribunal in the case of Ram Gopal Neotia. We hold likewise. 10. The cases relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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