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TMI Blog1987 (8) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... essment had to be completed on or before March 31, 1979. The Income-tax Officer issued a notice under section 143(2) of the Act fixing the case for hearing on March 27, 1979. The assessee complied with the notice and at the time of hearing, the Income-tax Officer required the assessee to furnish certain information and adjourned the case to March 31, 1979, on which date the assessment had to be necessarily completed in order to save limitation. On March 31, 1979, it appears, the assessee did not furnish the information. Consequently, the Income-tax Officer completed the assessment under section 144 of the Act to the best of his judgment. The ground for completing the assessment ex parte was that there was non-compliance with the notice issued under section 143(2) of the Act. The assessee filed an appeal against the assessment before the Commissioner of Income-tax (Appeals) in which he questioned the validity of the ex parte assessment made. It was pointed out that there was compliance with the notice issued under section 143(2) inasmuch as the assessee was present on March 27, 1979, and the case was heard. The failure to furnish information required by the Income-tax Officer on M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of section 25 l(1), in an appeal against an order of assessment, the appellate authority may confirm, reduce, enhance or annul the assessment; or he may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the appellate authority. It would, therefore, be seen basically that the appellate authority has the power to set aside the assessment with a direction to make a fresh assessment and also to annul the assessment. The circumstances in which an assessment should be annulled and the cases in which an assessment should be set aside, are not specified in section 251. The appellate authority will have to consider the facts and circumstances of each case and determine whether in the circumstances obtaining in a given case, the assessment should be annulled or should be set aside with a direction to make a fresh assessment. It cannot, therefore, be argued that there is lack of power so far as the Commissioner of Income-tax (Appeals) is concerned to set aside the assessment under appeal and directing making of fresh assessment. The only question for consideration is whether the facts in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so doing, the period of limitation is enlarged. But this is a hazard associated with the direction to make a fresh assessment and it cannot be avoided. The assessee will have to bear with the hardship and inconvenience, if any, arising out of the setting aside of the assessment. The second ground urged by learned counsel was that the Income-tax Officer made additions aggregating to over Rs. 1,00,000 to the income returned and this was, therefore, a case which should have been referred to the Inspecting Assistant Commissioner of Income-tax under section 144B of the Act. The legal formality to refer the case to the Inspecting Assistant Commissioner under section I 44B of the Act was avoided by the Income-tax Officer by making an ex parte assessment on the last day. According to learned counsel, this is another circumstance which would have justified the Commissioner (Appeals) in annulling the assessment. True, in the normal circumstances, the Income-tax Officer would have been obliged to refer the case to the Inspecting Assistant Commissioner under section 144B. But that obligation would have arisen if the assessment were to be made under section 143(3) and not ex parte under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at were to be the correct position in law, in the present case, the Commissioner of Income-tax (Appeals) should have refused to go into the question of the validity of the assessment under section 144 in the appeal against the assessment. It was open to the assessee to file an application under section 146 of the Act and seek reopening of the ex parte assessment. For his own reasons, the assessee did not choose to avail of this remedy provided by section 146 of the Act and the assessee did not seek the reopening of the assessment on the ground that the Income-tax Officer committed an error in making the assessment ex parte under section 144. Having waived his right to avail of the remedy under section 146 of the Act, the assessee should have been prevented from agitating that question in the quantum appeal. Obviously, this matter has escaped the attention of the Commissioner of Income-tax and also the Income-tax Appellate Tribunal, which has gone into the question and held that there was no justification for the making of an ex parte assessment. In our opinion, if the correct principles of law had been applied, the assessee in this case would not have been in a position to agitate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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