VINBROS AND CO Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) MRS. Pushya Seetharaman, learned Senior Standing Counsel for Income Tax takes notice for the respondents. By consent of both parties, the writ petition itself is taken up for final disposal.

(2.) THE short facts for deciding the issue involved, and as set out in the affidavit, are as follows: in respect of the year 2001-02, the petitioner filed its return of income on 30. 10. 2001. The return was processed and thereafter, after due enquiry, the Assessing Authority made an assessment on the petitioner on 31. 03. 2004, under Section 143 (3) of the Income Tax Act (hereinafter referred to as the Act ). In the assessment order, the Assessing Authority concluded that the activity of the petitioner constituted manufacture within the meaning of Section 80ib of the Income Tax Act and, accordingly, the petitioners claim for relief under Section 80ib was granted. According to the petitioner the tax based on the above said assessment has been duly paid by the petitioner and the proceedings have become final.

(3.) WHILE so, the Commissioner of Income Tax, the second respondent herein, initiated proceedings under Section 263 of the Income Tax Act on the ground that the assessment made by the first respondent is erroneous, in so far as he had granted relief to the petitioner under Section 80ib of the Act. The second respondent revised the order of the first respondent by an order, dated 02. 03. 2006. By the said order, the second respondent held that the petitioner is not engaged in the manufacture and, consequently, deduction under Section 80ib has been wrongly allowed. Consequently, the second respondent directed the first respondent to re-compute the total income of the petitioner, ignoring the deduction under Section 80ib and determine the tax and interest payable on the re-computed income and raise a demand accordingly issuing a notice under Section 156 of the Income Tax Act. The order of the second respondent was served on the petitioner on 03. 03. 2006. Along with the said order of the second respondent, an order of the first respondent made on 02. 03. 2006, determining the revised total income of the petitioner and tax thereon, along with a notice of demand under Section 156 of the Income Tax Act, was also served on the petitioner. As per the contention of the petitioner, the order dated 02. 03. 2006 made by the first respondent constitutes a fresh assessment of the total income of the petitioner and it has been made in gross violation of the Act and the principles of natural justice under Section 156. A notice of demand is liable to be served only along with an order determining the tax, interest or other sums payable by the assessee.