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TMI Blog1973 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to mention a few facts which are not disputed by the counsel for the parties. The assessee is carrying on business in the name and style of Messrs. Amar Industries, Srinagar. The accounting year in dispute is the year 1963 assessment year 1963-64. The assessee filed his return for the year 1963-64 on May 18, 1965, showing an income of Rs. 570. It may be mentioned here that the assessee carries on business in the manufacture and sale of ruffal and silk. In the return which was signed by the assessee, his mother, Mst. Shobawati, was shown as the proprietor of the business. Notice under section 143(2) of the Income-tax Act (hereinafter to be referred to as " the Act ") was issued to the assessee on January 19, 1968, fixing the date of hearing for January 29, 1968. On several dates the Income-tax Officer examined the case of the assessee and in the course of his examination found that the cash credits in the books of the assessee during the period January 1, 1962, to March 31, 1963, stood as follows : Rs. Triloki Nath Tiku 8,500 Dr. Amar Nath Tiku 7,000 Shambu Nath 2,500 Rattan Lal Tiku 3,500 (the assessee) --------------------- Total 21,500 --------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of reference made by the Tribunal. We find no difficulty in answering the first question, namely, as to whether or not section 143(3) is a procedural section. In fact, a perusal of section 143 shows that this section is purely procedural and contains various of making an order of assessment. Section 143(1) and (2) run thus : "143. (1) Where a return has been made under section 139 and the Income-tax Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that the return is correct and complete, he shall assess the total income or loss of the assessee, and shall determine the sum payable by him or refundable to him on the basis of such return. (2) Where a return has been made under section 139 but the Income-tax Officer is not satisfied without requiring the presence of the assessee or the production of evidence that the return is correct and complete, he shall serve on the assessee a notice requiring him, on a date to be therein specified, either to attend at the Income-tax Officer's office or to produce, or to cause to be there produced, any evidence on which the assessee may rely in support of the return. " A peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch decision of the Allahabad High Court in Rajmani Devi v. Commissioner of Income-tax, wherein their Lordships observed as follows: " In the present case the contention on behalf of the assessee is that because the Income-tax Officer had reached the frame of mind when he bad reason to believe that the return made under section 22 was incorrect or incomplete, he was bound to issue a valid notice under section 23(2), and as this mandatory notice was not issued, the officer could not proceed to make the best judgment assessment on failure of compliance with notice under section 22(4), because if a valid notice had been issued under section 23(2), the assessee might have removed the suspicions of the officer and might have satisfied him that his return was correct and complete, and it would be a great hardship if a best judgment assessment was made under section 23(4) because of a non-compliance with the notice to produce accounts when such accounts were in reality not necessary for the purpose of checking the return. There is some force in this contention.. . . . . The phraseology of section 23(2) suggests that under the circumstances of the present case a valid notice under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Officer to make further inquiry and report the result of the same to the Appellate Assistant Commissioner. " The second part of this sub-section clearly empowers the A.A.C. to give directions to the Income-tax Officer to make further inquiry. The power of setting aside the order of assessment, where it is illegal, is inherent in any appellate court and the A.A C. has passed a perfectly legal order in directing the Income-tax Officer to issue notice to the assessee before making an assessment because he was not satisfied regarding the correctness of the assessee's return. We do not see how this order prejudices the assessee : in fact the order is in favour of the assessee rather than against him. The A.A.C. had ample jurisdiction either to call for a report or to give directions to the Income-tax Officer to comply with the requirements of law. In the instant case the assessee had no doubt filed his return and his accounts showed certain transactions which were not clear and understandable and, therefore, it would have been a wrong exercise of discretion on the part of the A.A.C. to annul the assessment altogether and thus deprive the revenue of an opportunity to reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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