COMMISSIONER OF INCOME TAX Vs. KALA CARTONS

JUDGEMENT

(1.) THIS reference, at the instance of the Revenue, arises out of an order in I. T. A. No. 452/Coch. of 1987. The relevant assessment year is 1980-81. The questions that are referred for the opinion of this court are as follows :

(2.) WHETHER, on the facts and in the circumstances of the case, and on an interpretation of Section 144A, Section 144B read with Explanation l(iv) to Section 153 of the Income-tax Act, 1961, the assessment is time barred and could be cancelled ?

(3.) IT is contended by learned standing counsel for the Revenue that the Tribunal has wrongly applied the decision of the Delhi High Court in Sudhir Sareen v. ITO, 1981 128 ITR 445 , to the present case. The facts of the Delhi High Court decision are entirely different. In that case the Income-tax Officer issued a draft order to the assessee on March 30, 1979, to which the assessee filed his objections. The draft order along with objections was sent to the Inspecting Assistant Commissioner who heard the assessee elaborately. Subsequently, the Income-tax Officer sent a second draft order to the assessee on September 10, 1979, proposing to assess on an enhanced amount. IT was admitted that the second draft order was issued by the Income-tax Officer on the direction of the Inspecting Assistant Commissioner. IT was also admitted that before the Inspecting Assistant Commissioner, gave direction to the Income-tax Officer for enhancement of the amount, which is an order prejudicial to the assessee, no opportunity was given to the assessee. The Delhi High Court took the view that the Inspecting Assistant Commissioner had acted against the provisions contained under the proviso to Sub-section (4) of Section 144B. Since the second draft order was the result of an illegal direction given by the Inspecting Assistant Commissioner, the entire proceedings from the stage of the directions given by the Inspecting Assistant Commissioner onwards were held liable to be quashed. IT was then observed that there is no provision for the Income-tax Officer to send the second draft order. If the Inspecting Assistant Commissioner had given an opportunity to the assessee against his proposal to enhance the amount and if the Inspecting Assistant Commissioner was not persuaded with the objection raised by the assessee, he could give necessary direction to the Income-tax Officer and the Income-tax Officer has to pass a final order. There is no question of the Income-tax Officer issuing a second draft order, as such an action would be contrary to the provisions of Sub-section (5) of Section 144B. IT was on this basis the learned judge of the Delhi High Court took the view that the second draft order issued by the Income-tax Officer was unsustainable in law. IT was further observed that going by the langauge of Section 143 also it is clear that the Income-tax Officer is entitled to issue only one draft order.