Forwarding of draft assessment order requires actual despatch to assessee; a mere office direction does not extend limitation.

For section 153, Explanation 1(iv), forwarding a draft assessment order under section 144B requires actual despatch or transmission to the assessee within time; an internal office direction to send it is not enough. The statutory scheme distinguishes between preparing the draft order and forwarding it, and only the latter triggers the relevant exclusion from limitation. On the facts discussed, the draft order was actually forwarded after the limitation period had expired, so the assessment could not be saved by the earlier noting in the file and was treated as time-barred.

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Issues: Whether the assessment was barred by limitation because the draft order under section 144B was not actually forwarded to the assessee within the prescribed period, and whether a mere direction in the file to forward the draft order could amount to forwarding for the purpose of section 153, Explanation 1(iv).

Analysis: The assessment scheme required completion within the limitation period, subject to exclusion of the period commencing from the date on which the Income-tax Officer forwards the draft order under section 144B. The statutory scheme distinguished between making a draft order and forwarding it to the assessee. The decisive act was actual despatch or transmission of the draft order, because forwarding means putting the order into the course of transmission. A mere internal direction to the office to send the draft order did not satisfy the requirement. Since the record showed that actual forwarding took place only on 8 April 1982, after the limitation period had expired, the assessment could not be saved by the earlier noting dated 16 March 1982.

Conclusion: The assessment was barred by limitation and the reference was answered in favour of the assessee.

Ratio Decidendi: For the purposes of section 153, Explanation 1(iv), forwarding of a draft assessment order under section 144B requires actual despatch or transmission to the assessee within the prescribed time, and a mere direction to forward is not enough.

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