Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessment as made by the ITO, in total disregard of, and without complying with the provisions contained in s. 144B of the IT Act, 1961, was not void and a nullity and, as such, was not liable to be annulled?

Counsel Appeared

B.S. Gupta with Sanjay Bansal, for the Assessee : L.K. Sood, for the Revenue

GOKAL CHAND MITAL, J.:

The assessee filed a return showing an income of Rs. 80,300 for the asst. yr. 1977-78. The ITO, by his order dt. 7th March, 1980, assessed the income at Rs. 2,15,440. In doing so, the ITO did not follow the procedure laid down in s. 144B of the IT Act, 1961 (for short “the Act”).

2. The assessee went up in appeal before the CIT(A) and prayed that the assessment be cancelled as the provisions of s. 144B were not complied with. Instead of cancelling the assessment, the CIT (A) set aside the assessment and remanded the case to the ITO for de novo assessment after following the procedure laid down in s. 144B of the Act. The assessee still felt aggrieved and appealed to the Tribunal but failed. The Tribunal has referred to the following question for opinion of this Court :

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessment as made by the ITO, in total disregard of, and without complying with the provisions contained in s. 144B of the IT Act, 1961, was not void and a nullity and, as such, was not liable to be annulled?”

The main contention raised on behalf of the assessee is that since the procedure under s. 144B of the Act was not followed, the assessment made by the ITO was null and void and the appellate authority could annul that order but could not set aside the same and refer the case back to the Assessing Officer for making a fresh assessment in accordance with the directions given by the appellate authority. Sec. 251(1) of the Act deals with the power/jurisdiction of the appellate authority. The appellate authority has the power to confirm, reduce, enhance or annul the assessment; or may set aside the assessment and refer the case back to the ITO for making a fresh assessment in accordance with the directions given by the appellate authority. Therefore, on the facts of each case, the appellate authority has to consider whether it is a fit case for annulling the assessment or for setting aside the assessment. It cannot be disputed that if the assessment order is set aside, remand is permissible and this is what has been done by the appellate authority and the second appellate authority.

We had occasion to deal with a somewhat similar question in IT Ref. No. 60 of 1981 [reported as Des Raj Kul Bhushan vs. CIT (1989) 79 CTR (P&H) 98 : (1989) 180 ITR 297 (P&H) : TC7R.550], decided on 19th April, 1989. For the reasons recorded therein and for the aforesaid reasons, we find no error in the orders of the CIT(A) and the Tribunal and answer the question in the affirmative, that is, in favour of the Revenue, leaving the parties to bear their own costs.

[Citation :180 ITR 625]