Failure to object to draft assessment does not waive appeal rights; remand for hearing upheld

Failure to object to a draft assessment under section 144B does not extinguish the statutory right of appeal under section 246 of the Income-tax Act, 1961. The appellate view that the assessee could no longer challenge the assessment was therefore unsustainable. The Tribunal was correct in setting aside that decision and remitting the appeal for fresh disposal, because the assessee had not been given an opportunity of being heard. The matter was thus to be reconsidered by the first appellate authority after hearing the assessee.

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Issues: Whether the assessee's failure to object to the draft assessment under section 144B barred the statutory right of appeal under section 246, and whether the Tribunal was correct in remitting the matter to the Commissioner of Income-tax (Appeals) for a fresh decision after hearing the assessee.

Analysis: The failure to file objections to the draft assessment did not extinguish the right of appeal conferred by section 246(1) or section 246(2) of the Income-tax Act, 1961. The appellate view that the assessee could not challenge the assessment was therefore unsustainable. The Tribunal's order setting aside the appellate decision and remitting the appeal for fresh disposal was proper, particularly since the assessee had not been given an opportunity of being heard.

Conclusion: The Tribunal was legally correct in remitting the matter to the Commissioner of Income-tax (Appeals) for fresh disposal after giving the assessee an opportunity of being heard; the question was answered in the affirmative, against the Revenue and in favour of the assessee.

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