9911796707
TMI Blog1982 (12) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... the trustees but clause 4 of the deed states that the trust will be managed by the Board of Trustees and the names of the first 17 persons who would be in the Board of Trustees are given in that clause. There is no separate object clause for which the trust is created except the preamble which makes it clear that the object was to establish Arts, Science and Commerce College at Karkala. The rest of the clauses in the trust deed deal with the powers of the trustees in the administration of the college. 3. In the return filed by the trust for the assessment year 1977-78, the trust claimed exemption under section 11 of the Act. It also claimed that the donations of Rs. 1,85,209 received by the trust would not form part of the income for the purpose of section 11. The ITO did not accept the assessee's claim. He made out a draft assessment order in which he had held that the assessee was fully taxable. 4. When the draft assessment order was forwarded to the IAC, the assessee made out a new claim before him that the income of the trust would the exempt under section 10(22). The IAC, however, did not accept this claim. According to him, the exemption under section 10(22) is available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proceedings before the IAC. The real object appears to be to provide competent scrutiny at the Assistant Commissioner's level and to reduce relative finality and free play at the ITO's level. The language of the section also does not permit any interpretation favouring more than one draft order. If an assessee accepts the variation the matter ends there. In other words, there is no prejudicial order against the petitioner. But where he raises objections, he gets an opportunity of persuading the revenue at a higher level to his own point of view . . . ." It will be seen from the above quotation that where the assessee has certain objections with regard to the additions proposed by the ITO, he gets an opportunity of persuading the revenue at a higher level to accept the assessee's own point of view. In making the revenue accept the assessee's point of view it is open for an assessee to take up new arguments which were hitherto not put before the ITO. 8. The second authority is the decision of the Madhya Pradesh High Court in the case of Banarsidas Bhanot Sons v. CIT [1981] 129 ITR 488. The following extracts are useful to the point at issue : "The issuance of a draft order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of assessment and he gives directions to the ITO and in the light of those directions the ITO has to pass the order of assessment. Therefore, what is material is the furnishing of the draft of the proposed order of assessment to the assessee concerned when the variations between the income or loss returned and the amount at which the ITO proposes to assess the assessee in that case exceeds rupees one lakh. The whole purpose of the exercise which is enacted in section 144B is to give an opportunity to the assessee concerned at the earliest stage to be heard against the line of action which the ITO proposes to take. . . ." The last line in the quotation above makes the point abundantly clear. In the opportunity of being heard given by the IAC under section 144 the assessee could show what line of action he proposed to take. 10. We may also mention two Tribunal decisions wherein a similar point has come up. The Nagpur Bench was considering a case, where the assessee making a new claim for deduction before the IAC after the draft assessment orders have been issued. The judgment is reported in the Income-tax Tribunal Decisions, Vol. 1, page 77. The following observations have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be procedural in character in regard to the making of the assessment and they have nothing to do with the right of an assessee either to file an appeal or agitate assessment in any forum as envisaged under law. That it is a matter of procedure is so clear that any argument is hardly needed. It is only a step in the process of making an assessment. It is seen that the ITO gives only 7 days' time to file objections. No doubt he can extend the period by not more than 15 days. The purpose here again is to expedite the completion of the assessment and nothing else. . . ." 11. All these authorities would go to show that the proceedings before the IAC under section 144B is only part and parcel of the assessment proceedings. What the assessee could have done in such proceedings pending before the ITO he could continue to do in the proceedings under section 144B before the IAC. It requires hardly any argument to show that normally in the assessment proceedings before the ITO the assessee can buttress his claim for exemption by citing certain other provisions in the Act which he had hitherto not cited. If this much is available to him in the normal proceedings before the ITO, it contin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
