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TMI Blog1988 (1) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings before the ITO concluded with the forwarding of draft assessment order to the assessee, the provisions of section 129 cannot apply to the facts of the present case. 4. That the order of the learned CIT (A) being erroneous in law and on facts of the case may be set aside and that of the ITO say be restored. The brief facts giving rise to the present appeal and the cross-objections are these. The ITO has prepared a draft assessment order on 30th April, 1984. Thereafter it was forwarded by him to the assessee and the assessee had filed objections against the same on 12th April, 1984. After receipt of the assessee's objections, the ITO had forwarded the copy of the draft assessment order along with the objections the assessee to the IAC with his letter dated 16th April 1984. The IAC had afforded an opportunity of hearing to the assessee and in fact, Shri. A. N. Mehrotra, Advocate, for the assessee had appeared before him on assessee's behalf. After considering the objections raised by the assessee, the IAC had issued directions dated 14th June, 1984 under section 144B of the IT Act, such directions were received in the office of the ITO on 18th June, 1984. By that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals) set sided the assessment with the direction that the present ITO shall give proper and adequate opportunity as required under section 129 and thereafter framed fresh assessment in accordance with law. 4. The correctness of the order of the CIT (Appeals) is being challenged by the revenue. The assessee had filed cross-objections with a view to support the order of the CIT (Appeals). 5. The learned Departmental Representative has argued that the cases of Umrao Lal and Balkrishna Malhotra support the case of the revenue and the ratio of the said decisions has been wrongly applied by the CIT (Appeals). He has also submitted that the said decisions do not directly relate to the point involved in the case. He pointed out that the case of Umrao Lal was a case of penalty and the case of Balkrishna Malhotra was a case of reassessment. Referring to the provisions contained in section 144B and its sub-sections he has argued that after forwarding the draft to the IAC, the ITO becomes functus officio and after receipt of the instructions issued by the IAC the ITO is bound to carry out the instructions. According to him, the stage before forwarding the draft assessment order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessment is passed against him. The words 'continue' and 'continued' occurring in the said section are significant. They indicate that the proceeding about which reopening can be demanded, is pending and is in progress and has not concluded already. This provision, to our mind, cannot be applied to a proceeding which has already concluded and is no more pending before the ITO or over which the ITO has no further control. In this connection, we may also refer to sub-section (5) of section 144B of the Act, which reads as follows : "Every direction issued by the Inspecting Assistant Commissioner under sub-section (4) shall be binding on the Income-tax Officer." The aforesaid provision makes it clear that every direction issued by the IAC under sub-section (4) shall be binding on the ITO and as such the ITO cannot act contrary to any such direction. There is no provision in the Act which may entitle an assessee to a hearing by the ITO against the directions issued by the IAC. Therefore, there is a force in the contention advanced on behalf of the revenue that the stage of hearing before the draft is forwarded to the IAC stands closed and concluded as soon as the draft assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings without issue of a fresh notice and after providing a fresh opportunity of being heard to the assessee. 11. We may also refer to the case of K. Venkata Ramana and Budha Appa Rao v. CIT [1987] 168 ITR 747 (AP) which is squarely applicable to the facts of the present case. The facts of that case are almost similar to the facts of the case before us. In that case, the Hon'ble High Court of Andhra Pradesh has recorded the following findings : "Section 144B says that in an assessment to be made under section 143(3), if the Income-tax Officer proposes to make, before October 1, 1984, any variation in the income or loss returned which is prejudicial to the assessee and the amount of such variation exceeds that amount fixed by the Board under sub-section (6), the Income-tax Officer, shall in the first instance, forward a draft of the proposed order of assessment to the assessee. On receipt of such a draft order, it is open to the assessee to forward his objections. Unless the assessee accepts the proposed variation, the matter, has to be referred to the Inspecting Assistant Commissioner to whom the matter is to be forwarded. The Inspecting Assistant Commissioner has to consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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