TaxTMI 
TaxTMI 
TaxTMI 
1995 (3) TMI 8
X X X X Extracts X X X X
X X X X Extracts X X X X
....om the statement of the case and the order of the Tribunal are that the assessee is a private limited company dealing in purchase of grey cloth, colour, chemicals, etc., and subjecting that cloth to bleaching, dyeing, printing, etc. It would then sell it as a finished product like printed cloth, poplin, etc. The assessee claimed benefit of the provisions under section 80J of the Income-tax Act on its capital outlay. The Income-tax Officer did not agree with the same on the ground that the activity of the assessee did not qualify to be treated as an activity of manufacture, and therefore, he made a draft assessment order under section 144B of the Act and on an objection being raised to the proposed draft order it was referred to the Inspecting Assistant Commissioner under the provisions of section 144B(4). The assessee had also claimed depreciation/initial depreciation in respect of three machines, which claim of the assessee was not put at variance by the Income-tax Officer in his draft order. It may be noted that the draft assessment order was drawn on April 28, 1978. Objections were raised by the assessee on May 15, 1978. The Inspecting Assistant Commissioner issued directions u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te commodity having its own character, use and name. Transformation of grey cloth to the extent that it became a commercially different commodity was sufficient to hold that there was manufacture or production of an article within the meaning of clause (iii) of sub-section (4) of section 80J of the Act. On the aforesaid finding, the assessee was held entitled to the relief under section 80J of the Act. The decision is founded on the decision of the Supreme Court in the case of Empire Industries Ltd. v. Union of India [1986] 162 ITR 846; [1987] 64 STC 42, under the Central Excises and Salt Act. We are in respectful agreement. Accordingly, question No. 3 referred to above is answered in the affirmative, in favour of the assessee and against the Revenue. This brings us to consider questions Nos. 1 and 2. In fact question No. 2 is corollary to question No. 1. It will be appropriate here to reproduce the relevant provisions of sections 144A and 144B of the Income-tax Act. "144A Power of Inspecting Assistant Commissioner to issue directions in certain cases.--(1) An Inspecting Assistant Commissioner may, on his own motion or on a reference being made to him by the Income-tax Officer o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the objections and after, going through (wherever necessary) the records relating to the draft order, issue, in respect of the matters covered by the objections, such directions as he thinks fit for the guidance of the Income-tax Officer to enable him to complete the assessment: Provided that no directions which are prejudicial to the assessee shall be issued under this sub-section before an opportunity is given to the assessee to be heard. (5) Every direction issued by the Inspecting Assistant Commissioner under sub-section (4) shall be binding on the Income-tax Officer. (6) For the purposes of sub-section (1), the Board may, having regard to the proper and efficient management of the work of assessment, by order, fix, from time to time, such amount as it deems fit: Provided that different amounts may be fixed for different areas Provided further that the amount fixed under this sub-section shall, in no case, be less than twenty-five thousand rupees. (7) Nothing in this section shall apply to a case where an Inspecting Assistant Commissioner exercises the powers or performs the functions of an Income-tax Officer in pursuance of an order made under section 125 or section 12....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fficer until he completes the assessment by passing an effective order under sub-section (3) of section 144B, where no objection to variation is raised, and where any objections to the variation proposed by the Income-tax Officer are raised, the assessment is not complete, until the Inspecting Assistant Commissioner issues such direction as he thinks fit for the guidance of the Income-tax Officer to enable him to complete the assessment and thereafter the Income-tax Officer makes an effective order of assessment in accordance with the directives issued from the Inspecting Assistant Commissioner. It is pertinent to note that sub-section (3) of section 144B specifically envisages that the Income-tax Officer shall "complete the assessment" on the basis of the draft order if no objections are received within the period. So also sub-section (4) makes it abundantly clear that a reference being made to the Inspecting Assistant Commissioner his power exists to issue such instructions as he deems fit for the guidance of the Income-tax Officer to enable him to "complete the assessment", i.e., to say, completion of the assessment is a stage posterior to framing of the draft assessment order a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y on the basis of which tax can be recovered or the aggrieved party can exercise his right of appeal or challenge it in whichever forum it is permissible to do so. Until that stage is reached, it cannot be said that the assessment proceeding before the Income-tax Officer has come to an end. The two decisions relied on by the respective counsel for the parties which apparently gives look of conflicting decision really do not pertain to a question raised before us. Both the decisions cited at the Bar relate to the question whether a revised return filed after a particular stage can be treated as valid return required to be considered by the Income-tax Officer before completion of the assessment. In Shri Vallabh Glass Works Ltd. v. ITO [1995] 212 ITR 433 (Guj), a revised return was filed during the pendency of the proceeding before the Inspecting Assistant Commissioner under section 144B before the concerned assessing authority. The assessment order was passed by ignoring the revised return filed by the petitioner. It was that action of ignoring the revised return which was challenged before this court and the court held that the return which is filed earlier than the assessment is m....