High Court affirms Tribunal's decision on tax assessment irregularity, remits for fresh assessment

The High Court upheld the Appellate Tribunal's decision to confirm the Commissioner of Income-tax's order setting aside the assessment and directing a fresh assessment. The Court ruled that the failure to comply with the procedural requirements of section 144B did not render the assessment void, but constituted an irregularity justifying a remit. The Court found in favor of the Revenue, affirming the Tribunal's decision and dismissing the assessee's appeal. The case will be referred back to the Income-tax Appellate Tribunal, Cochin Bench.

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Issues involved: The judgment addresses the following issues: (1) Whether the Appellate Tribunal was justified in confirming the order of the Commissioner of Income-tax setting aside the assessment and directing a fresh assessment, and (2) Whether the Tribunal was correct in not annulling the assessment despite the Income-tax Officer's non-compliance with the procedure prescribed under section 144B.

Issue 1 - Assessment Setting Aside: The applicant, an assessee to income-tax, filed a return for the assessment year 1975-76 showing nil income. The Income-tax Officer completed the assessment on a total income of Rs. 1,83,450, comprising capital gains. The Commissioner of Income-tax (Appeals) accepted the plea that the Income-tax Officer did not follow the procedure under section 144B of the Income-tax Act, and thus set aside the assessment directing a fresh assessment along the lines indicated in the order.

Issue 2 - Compliance with Section 144B: The assessee contended in a second appeal before the Income-tax Appellate Tribunal that the assessment made without following section 144B was void, and thus the assessment order should have been nullified instead of being remitted. The Tribunal held that section 144B is procedural, and the Commissioner of Income-tax was justified in setting aside the assessment for the irregularity and ordering a remit. The High Court agreed, stating that failure to comply with section 144B is an irregularity, not rendering the assessment void, and upheld the Tribunal's decision based on precedents.

The High Court answered both questions in the affirmative, against the assessee and in favor of the Revenue. The judgment will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.

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