ORIENT TRADING COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that has been referred to us by the Tribunal, Ahmedabad Branch "A" (hereinafter referred to as "the Tribunal"), under S. 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), for our opinion runs as under :

(2.) THE question arises in the following circumstances. The assessee is a registered partnership firm and the assessment year under reference is 1971 72, previous year being the year ending on December 31, 1970. The assessee filed its return of income for the asst. year 1971 72 on June 28, 1971. The ITO (hereinafter referred to as "ITO" for brevity's sake) by an order dated March 18, 1974, passed under S. 143(1) of the Act, assessed the assessee's total income at Rs. 11,079 against the income of Rs. 9,556 declared by the assessee in its return. The ITO thereafter sought to reopen the assessment under S. 147 of the Act, by issuing a notice dated March 6, 1976, under s. 148.

(3.) BEING aggrieved by the order passed by the CIT, the assessee carried the matter in appeal before the Tribunal. The contention which was raised by the assessee before the Tribunal was that once the ITO issued a notice dated March 6, 1976, under S. 148, the assessment made by the ITO on March 18, 1974, stood set aside and, consequently, there was no assessment order in existence which could be set aside by the CIT in exercise of the powers under S. 263 of the Act. In support of this contention, reliance was sought to be placed on a decision of the Supreme Court in Jaganmohan Rao vs. CIT (1970) 75 ITR 373 (SC). The Tribunal, by its order dated February 15, 1977, held that the previous assessment or under assessment could be said to have been set aside only when the reopening of the assessment was valid. Since the assessee had not accepted that reopening of the original assessment was valid, the assessment could not be said to have been set aside. In the result, the Tribunal dismissed the assessee's appeal. It is in the background of the above facts that the question which we have set out above has been referred to us for our opinion.