Demand not aligned with assessment order cannot survive when returned income is accepted without modification.

A demand under section 156 of the Income-tax Act cannot survive where the assessment order accepts the returned income without modification and the notice of demand does not conform to that order. The tribunal noted that the computation sheet and demand must flow from a valid assessment order; if they do not accord with the assessed income recorded in the order, the demand is unsustainable. The remaining grounds were not examined because they were only academic. The demand raised in the computation sheet was vacated, and the issue was decided in favour of the assessee.

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Issues: Whether the demand raised in the computation sheet could survive when the assessment order accepted the returned income without any modification and the notice of demand was not in conformity with the assessment order.

Analysis: The assessment order recorded that the returned income was accepted as assessed income without making any modification. A notice of demand under section 156 of the Income-tax Act, 1961 can arise only in consequence of an order passed under the Act. Where the computation sheet and the demand raised therein do not accord with the assessment order, the demand cannot stand. The other grounds were not adjudicated, as they would have been academic.

Conclusion: The demand raised in the computation sheet was directed to be vacated and the issue was decided in favour of the assessee.

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