TaxTMI 
TaxTMI 
1980 (11) TMI 33
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.... Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order passed by the Income-tax Officer and the Appellate Assistant Commissioner and directing the Income-tax Officer to frame a fresh assessment after duly complying with the provisions of section 144B of the Income-tax Act? " The relevant assessment year is 1973-74. The assessee returned an income of Rs. 2,83,873. The ITO assessed the total income at Rs. 6,97,136. As the amount of variations in the income returned exceeded rupees one lakh, the ITO followed the procedure under s. 144B. A draft of the proposed order of assessment was served on the assessee on 6th March, 1976. The assessee's objections were receive....
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....ssee. (2) On receipt of the draft order, the assessee may forward his objections, if any, to such variation to the Income-tax Officer within seven days of the receipt by him of the draft order or within such further period not exceeding fifteen days as the Income-tax Officer may allow on an application made to him in this behalf. (3) If no objections are received within the period or the extended period aforesaid, or the assessee intimates to the Income-tax Officer the acceptance of the variation, the Income-tax Officer shall complete the assessment on the basis of the draft order. (4) If any objections are received, the Income-tax Officer shall forward the draft order together with the objections to the Inspecting Assistant Commis....
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....nt year; that all steps including the issuance of a draft order must be taken within this period; and that as the draft order issued was defective, the assessment made was a nullity and the Tribunal could not direct the making of a fresh assessment. The issuance of a draft order as required by s. 144B is not necessary to clothe the ITO with jurisdiction to make the assessment. The ITO has jurisdiction to make the assessment under s. 143. Section 144B provides special procedure to be followed in cases where the variation in the income or the loss returned which is prejudicial to the a exceeds the amount fixed by the Board, i.e., Rs. 1 lakh. In such a case, a draft order is required to be served on the assessee and if the assessee takes ob....
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.... in the income returned by it. The draft order was wanting merely in the computation of total income, the necessary material for which was already mentioned in the order. The defect in the draft order was, therefore, not such which could have in any way caused prejudice to the assessee. Indeed the assessee had no difficulty in filing its objections but as it did not do so within 7 days, the assessment order was made before the receipt of the objections by the ITO. The assessment order passed by the ITO in the instant case could not be said to be a nullity even though the draft order suffered from the defect that it did not contain the computation of total income. This is not a case where the ITO did not start the assessment proceedings w....