1987 (3) TMI 68 - HC - Income Tax

Court upholds Income-tax Officer's assessments for 1973-74 and 1974-75, clarifies sections 144B & 129

The court upheld the validity of the assessments made by the Income-tax Officer for the assessment years 1973-74 and 1974-75, ruling in favor of the ... Assessment Issues:Validity of assessments made by the Income-tax Officer for the assessment years 1973-74 and 1974-75 under the Income-tax Act, 1961.Interpretation of the provisions of section 144B(1) and section 129 of the Income-tax Act regarding reference to the Inspecting Assistant Commissioner and change of incumbent of the Income-tax Officer.Validity of the reference made by the Income-tax Officer to the Inspecting Assistant Commissioner under section 144B prior to receiving objections from the assessee.Analysis:1. Validity of Assessments:The case involved assessments made by the Income-tax Officer for the years 1973-74 and 1974-75. The Income-tax Officer proposed additions to the declared incomes of the assessee firm, exceeding Rs. 1,00,000 for each year. The draft assessment orders were sent to the assessee and the Inspecting Assistant Commissioner under section 144B(1) of the Act. The Inspecting Assistant Commissioner issued orders directing the Income-tax Officer to complete the assessments as proposed. The change in the incumbent of the Income-tax Officer during the process raised a question regarding the validity of the assessments. The assessee contended that the new officer did not afford an opportunity as required by section 129 of the Act. However, the Tribunal held that section 129 did not apply in this case due to the provisions of section 144B, where the Income-tax Officer is bound by the directions of the Inspecting Assistant Commissioner. The Tribunal's decision favored the Revenue, upholding the validity of the assessments.2. Interpretation of Sections 144B(1) and 129:Section 144B of the Income-tax Act outlines the procedure for assessments, requiring the Income-tax Officer to forward draft assessment orders to the assessee and refer the matter to the Inspecting Assistant Commissioner if proposed variations exceed a specified amount. The Inspecting Assistant Commissioner issues directions binding on the Income-tax Officer. In contrast, section 129 deals with the change of incumbent of an income-tax authority during proceedings. The court emphasized that in cases governed by section 144B, the change in the incumbent of the Income-tax Officer does not necessitate compliance with section 129, as the officer is expected to follow the directions of the Inspecting Assistant Commissioner. The court concluded that section 129 was not applicable in this scenario, given the specific provisions of section 144B and the nature of the proceedings before the Inspecting Assistant Commissioner.3. Validity of Reference to Inspecting Assistant Commissioner:The reference made by the Income-tax Officer to the Inspecting Assistant Commissioner under section 144B before receiving objections from the assessee was also a point of contention. The court did not delve deeply into this issue as it was not extensively argued by the assessee's counsel. Consequently, the court did not express any opinion on the validity of this reference. The judgment focused primarily on the applicability of sections 144B and 129 in the context of the assessments and the change in the assessing authority during the proceedings.In conclusion, the court upheld the validity of the assessments made by the Income-tax Officer, ruling in favor of the Revenue. The interpretation of sections 144B and 129 was crucial in determining the procedural requirements regarding the change in the incumbent of the assessing authority. The judgment clarified that in cases governed by section 144B, the provisions of section 129 may not apply, particularly when the matter is pending before the Inspecting Assistant Commissioner.