TaxTMI 
TaxTMI 
1981 (1) TMI 167
X X X X Extracts X X X X
X X X X Extracts X X X X
....the earlier year the AAC has allowed rebate on certain additional expenditure though incurred in India. We, accordingly, claim the rebate on the expenditure incurred on staff engaged directly on export of Rs. 35,760, shipment and sampling expenses Rs. 71,427, export credit guarantee premium of Rs. 24,132, and difference due to foreign exchange fluctuation on remittance of supervision charges abroad of Rs. 5,789. The last item of Rs. 5,789 is, however, paid outside India." The details of this expenditure is as under: Rs. - Expenses on staff directly engaged on export 35,760 &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome as returned by the assessee and the income proposed to be determined by the ITO. Once the ITO submitted a draft assessment order to the IAC, he became functus officio and he was entirely subordinate to the IAC under section 144B(5). Therefore, the assessee's plea before the ITO in its letter dated 26-2-1977 claiming additional relief under section 35B was of no consequence and has to be ignored. Further it is submitted by the learned departmental representative that the assessee could not have taken up this ground before the Commissioner (Appeals) at all as explained by the learned Judges of the Supreme Court in the case of Addl. CIT V. Gurjargravures (P.) Ltd. [1978] 111 ITR 1. Therefore, the learned departmental representative has proceeded to argue that the Commissioner (Appeals) was not competent to entertain the assessee's appeal on this ground and his direction on this issue being without authority should be vacated. 7. On behalf of the assessee, the learned counsel has proceeded to argue that any objection could be raised by the assessee before the ITO at any time before the assessment was made. The provisions of section 144B were placed on the statute book as an ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... draft assessment order under section 144B(2), gave certain directions to the ITO in respect of the proposed variations. The ITO was bound to carry out the directions issued by the IAC in respect of such variations by virtue of the provisions of section 144B(5); about this there is no dispute. 9. The dispute in the present appeal, with which we are concerned, arises from the fact that while submitting its objections to the variations proposed by the ITO under section 144B(2), the assessee made a fresh claim before the ITO for further deduction under section 35B, which according to the assessee it was entitled on the basis of the facts already on record. The question to be considered is whether the ITO was justified in ignoring the assessee's claim. According to the learned departmental representative in a case to which the provisions of section 144B applied, once the ITO forwarded a draft assessment order to the IAC under section 144B(1), he became functus officio. He had nothing further to do except to carry out the orders of the IAC issued by the IAC under section 144B(4). Further, under section 144B(5) every direction issued by the IAC under sub-section (4) was binding on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e were variations, the ITO was bound by the guidance of the IAC. Thus, to our mind, the provisions of section 144B have a very limited operation. Section 144B is merely in the nature of an additional safeguard to the assessee against frivolous and fantastic assessments. It did not take away the right of an assessee to raise issues before the ITO in respect of any other item of claim or deduction which it would be entitled to, which it had omitted to claim in the first instance before the ITO through ignorance of law or otherwise. The assessee had always got such a right before section 144B was placed on the statute book. Under section 143(3), the ITO was under an obligation to take into consideration all relevant material on the subject of the assessee's income or loss and then to frame an assessment. The assessee's entitlement to any statutory relief is a material very relevant for the assessment. Before section 144B was placed on the statute book the assessee could always claim such a relief at any time before the ITO signed the order. We are unable to find anything in the language of section 144B which would take away this precious right of the assessee. Further, we find no impe....