TaxTMI 
TaxTMI 
1981 (12) TMI 101
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.... two years on 4th Feb., 1978 and 5th July, 1978 respectively under s. 143(1)(a) of the Act [Sec. 143 as amended by the Taxation Laws (Amendment) Act, 1970 w.e.f. 1st April, 1971]. The total incomes were Rs. 990 and Rs. 30,750 respectively. Thereafter on 24th Sept., 1979 the ITO sent a proposal to his IAC for action under s. 143(2)(b) as under: "In both the years the assessee has claimed interest payment of Rs. 20,926 and Rs. 23,550 respectively. The interest payments are all of loans raised for the purpose of construction of a property for the firm in the accounting years 1975-76 and 1976-77. There are no sufficient profits available for the partners to draw monies in the said asst. yrs. In spite of there being no profits partner Shri E.....
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....erred to the ITO's letter dt. 24th Sept., 1980 to the IAC (extracted above). The AAC held that the ITO has power to make a fresh assessment under s. 143(3)(b) if he is of opinion that the assessment made under s. 143(1) is incorrect, inadequate or incomplete, but such opinion of the ITO should be formed after (and not before) (i) hearing such evidence as the assessee may produce, (ii) having such other evidence as the ITO may require on specified points, and (iii) taking into account all relevant material which the ITO has gathered. The AAC concluded for the reasons stated by him that if the ITO's opinion is based on the material which was already on record at the time of making the assessment under s. 143(1), the ITO could not make a fresh....
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....n the assessment. On the other hand the ld. Counsel for the assessee would argue that the ITO and the IAC had used the phrase 'to reopen the assessments' such reopening of the assessments by the ITO could be only under s. 147(b). Further for the asst. yr. 1979-80 the ITO had taken an adverse view regarding the allowability of the interest in the assessment made by him on 24th Sept., 1979 and on the same day the ITO had sent the proposal to the IAC under s. 143(2)(b) regarding the assessments under present appeal. Thus the ITO had resorted to reopening even before verifying the material. The counsel thus supported the AAC's order. 5. We have heard the parties and are of the view that there is substantial force in the Revenue's contention.....
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....ced, any evidence on which the assessee may rely in support of the return: Provided that, in a case where an assessment has been made under sub-s. (1), the notice under this sub-section except where such notice is in pursuance of an application by the assessee under cl. (a) shall not be issued by the ITO unless the previous approval of the IAC has been obtained to the issue of such notice: (3) On the day specified in the notice issued under sub-s., (2), or as soon afterwards as may be, after hearing such other evidence as the ITO may require on specified points, and after taking into account all relevant material which he has gathered,- (a) in a case where no assessment has been made under sub-s. (1), the ITO shall, by an order in ....
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....e in all respects (popularly known as summary assessment). The assessment thus made under s. 143(1) will be final unless proceedings are initiated under s. 143(2) for making a fresh assessment. Sec. 143(2)(b) empowers the ITO where he considers it necessary or expedient to verify the correctness and completeness of the return to issue a notice to the assessee for personal attendance or production of evidence on which the assessee might rely in support of the return. Under s. 143(3) (b) the ITO after hearing the assessee, may make a fresh assessment redetermining the assessee's total income or loss if he finds that the original assessment is incorrect, inadequate or incomplete. The original assessment is deemed to be incorrect, inadequate or....