Procedural breach in draft assessment does not void jurisdiction; assessment may be set aside for fresh compliance.

Non-compliance with the draft-assessment procedure under section 144B was treated as a breach of a procedural safeguard, not a jurisdictional defect. The assessing officer did not lose authority to complete the assessment merely because the prescribed reference procedure was not followed. The proper appellate response was to correct the error by setting aside the assessment and directing a fresh assessment in accordance with law, rather than treating the assessment as void ab initio and annulling it. The assessment was therefore not a nullity.

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Issues: Whether non-compliance with section 144B of the Income-tax Act, 1961 by the Income-tax Officer rendered the assessment void ab initio so as to require annulment rather than setting aside and remand by the Appellate Assistant Commissioner.

Analysis: Section 144B was treated as laying down a procedural safeguard for draft assessment and reference to the Inspecting Assistant Commissioner where the proposed variation exceeded the prescribed limit. The Income-tax Officer did not lose jurisdiction to complete the assessment merely because the procedure was not followed. The breach was a violation of the prescribed procedure, not a defect going to the root of jurisdiction. In such a case, the appellate authority had the power and duty to correct the error and could set aside the assessment with a direction for fresh assessment in accordance with law.

Conclusion: The assessment was not a nullity. The Appellate Assistant Commissioner rightly set aside the assessment instead of annulling it.

Ratio Decidendi: Non-compliance with a procedural requirement like section 144B does not by itself destroy the assessing officer's jurisdiction; the proper appellate course is to set aside the assessment and direct fresh assessment in accordance with law.

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