1993 (2) TMI 76 - HC - Income Tax

Tribunal Upholds AAC's Decision on Assessment Order; Clarifies Registration Issue

The Appellate Assistant Commissioner's decision to quash the assessment order under section 144 was upheld by the Tribunal. The Tribunal clarified that ... Best Judgment Assessment Issues:1. Validity of quashing the assessment order under section 144 by the Appellate Assistant Commissioner.2. Interpretation of law regarding the order passed by the Income-tax Officer under section 185.3. Justification of quashing the order of the Income-tax Officer under section 144 by the Appellate Assistant Commissioner.Detailed Analysis:The case involved the assessment of M/s. Mahabir Fancy Store for the assessment year 1984-85. The assessee did not respond to notices, leading to an ex parte assessment under section 144 of the Income-tax Act, treating the assessee as an unregistered firm. The Appellate Assistant Commissioner allowed the appeal, stating that refusal of registration should be under section 185, not section 144. The Revenue appealed to the Tribunal, which upheld the Appellate Assistant Commissioner's decision (Issue 1).The Revenue argued before the Tribunal that the question of registration should not be addressed in an order under section 144. The Tribunal noted that separate appeals are required for an assessment and refusal of registration. It emphasized that the Income-tax Officer cannot refuse registration while making an assessment under section 144. The Tribunal found no irregularity in the Appellate Assistant Commissioner's order (Issue 2).The Tribunal clarified that separate appeals must be filed for assessment and refusal of registration. In this case, the assessee challenged only the refusal of registration, not the quantum of assessment. The Appellate Assistant Commissioner erred in quashing the entire order under section 144, as the appeal related only to registration. The Tribunal reframed the questions to focus on whether the registration issue can be considered in an order under section 144 (Issue 3).The High Court held that while the registration aspect can be considered in an order under section 144, separate appeals are necessary when challenging both assessment correctness and refusal of registration. Since the assessee in this case questioned only the refusal of registration, the Appellate Assistant Commissioner and the Tribunal should have assessed the legality of the order concerning registration instead of deeming it without jurisdiction. The Tribunal was directed to reconsider this aspect in further proceedings under section 260 of the Act. The reference was disposed of with agreement from both judges (Final Decision).