TaxTMI 
TaxTMI 
1982 (9) TMI 91
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....126 & 127 (Bang.) of 1977-78 and WT Appeal Nos. 131 & 132 (Bang.) of 1977-78 annulled the assessment on the ground that there is no computation of the tax made in the assessment order. After the above order of the Tribunal, the WTO, with a view to re-do the assessment under the provision of section 16(3), read with section 17A, of the Act, issued a notice under section 16(2) to the assessee calling upon his objections. The assessee's representative filed objections contending that the Tribunal has annulled the assessment order and there is no direction to re-do the assessment. Hence, it is not competent for the WTO to re-commence the assessment proceedings. The WTO did not accept the objections raised by the assessee. He held that when an assessment is annulled, it goes back to the stage of filing of return of wealth by the assessee. Annulment does not wipe out the assessee's liability if it can legally be enforced upon de novo again by resorting to permissible provisions of law. Section 16(3), read with section 17A, permits passing of an assessment order on a return of wealth filed by the assessee for the assessment year 1975-76 before 31-3-1980. The return of wealth for the asses....
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....e strongly urged that the Tribunal has annulled the assessment. Since there is no direction to make a fresh assessment, the WTO has no jurisdiction to make a fresh assessment. An assessment can be made only once and, if that is annulled, the WTO has no power to make the assessment again. In this connection, he placed reliance on a decision reported in AIR 1964 Mad. 111, Surrendra Overseas Ltd. v. CIT [1979] 120 ITR 872 (Cal.) and CIT Presidency & Aden v. Khemchand Ramdas [1938] 6 ITR 414 (PC). He distinguished the decision in 1978 see (Tax) 149 and submitted that the decision in AIR 1964 Mad. 111 is not disapproved. He further submitted that when two views are taken by two Courts, the view favourable to the assessee should be accepted. He also submitted that section 17A(1)(a) prescribes only time limit but does not enlarge the powers of the WTO. Thus, he justified the order of the AAC. 5. We have considered the rival submissions. Earlier, the assessee had come up in appeal before the Tribunal in WT Appeal No. 127 (Bang.) of 1977-78 for this year. The relief claimed in the appeal was--(1) exclusion of the whole of the value of the converted property from the net wealth of the asses....
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....oid for lack of jurisdiction by the WTO. He had ample jurisdiction. When an order is vacated or annulled on account of some illegality which occurred in the course of the assessment proceedings, it is open to the WTO to take up the matter again from the stage at which the illegality supervened and make the assessment afresh. In this case, the assessee had filed a return of net wealth which remains to be disposed of. The WTO has jurisdiction to take up the proceedings from the stage at which the illegality has occurred and dispose of the return by making the proper assessment order. In this connection, we may refer to the decision of the Supreme Court in Guduthur Bros. In this case, the assessee failed to file a return within time. A notice under section 28(1)(a) of the 1961 Act was issued in response to which the assessee filed an explanation. The ITO levied penalty without affording hearing to the assessee as required under section 28. In appeal, the AAC held that an opportunity of being heard was not granted to the assessee and, as such the penalty order was defective. He set aside that order and directed the refund of penalty if it had been recovered. Thereafter, the ITO issued ....
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....ated 30-4-1927 was issued by the ITO of the district having jurisdiction over the assessee. Subsequently, the Commissioner had transferred the file to the Special ITO who made the assessment on 30-3-1928 which order was cancelled by the Calcutta High Court on the ground that the Special ITO had no jurisdiction to make an assessment. Thereafter, the ITO having jurisdiction made the assessment on 20-1-1930. On the above facts, the Calcutta High Court held that the illegal proceedings of the Special ITO did not abrogate the notice of 30-4-1927 which had not proceeded to a final assessment and the assessment made on the basis of that valid notice served during the assessment year was legal. 8. In Raza Buland Sugar Co. Ltd., the facts are : The original assessment was completed for the assessment year 1957-58 on 29-1-1960 allowing a set off of loss. Subsequently, the ITO issued on 12-3-1962 a notice under section 34(1)(b) of the 1922 Act. While this notice was pending, the 1961 Act came into force on 1-4-1962. The ITO made the re-assessment on 12-3-1963 under section 144 of the 1961 Act, which was cancelled under section 146 and a fresh assessment was made under section 143(3) on 20-5-....
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....ment is a valid proceeding. It seems to us that the contention that the Appellate Assistant Commissioner should have made an order under section 31(3)(a) must be negatived. Section 31(3)(a) speaks of the power of the Appellate Assistant Commissioner to annul an assessment. That is a power to be exercised where the assessment proceeding is a nullity in the sense that the Income-tax Officer had no jurisdiction ab initio to take the proceeding. A proceeding is a nullity when the authority taking it has no jurisdiction either because of want of pecuniary jurisdiction or of territorial jurisdiction or of jurisdiction over the subject-matter of the proceeding. A proceeding is a nullity when the authority taking it has no power to have seisin over the case. The omission of the Income-tax Officer to issue a notice under section 23(2) does not affect the ab initio jurisdiction enjoyed by the Income-tax Officer in respect of the proceeding. The Income-tax Officer had seisin over the case, he had overall jurisdiction over the case and in that sense had power to initiate the proceeding. The omission to issue a notice under section 23(2) merely prevents the Income-tax Officer from making an ass....
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....." Thereafter, the Assistant Collector issued a fresh notice for starting fresh proceedings against which a writ petition was filed. The High Court allowed the petition on the ground that there was no indication in the appellate authority's order directing the Assistant Collector to start fresh proceedings. By special leave, the appeal was carried to the Supreme Court. On behalf of the revenue, it was contended that the appellate authority had merely vacated the order of the Assistant Collector because it suffered from technical infirmity and had not barred the commencement of fresh adjudicatory proceedings. On behalf of the respondent, it was urged that there was no jurisdiction in the Assistant Collector to issue a fresh notice and start adjudicatory proceedings again. The contention of the revenue was accepted by the Supreme Court. It was observed as under : "... In our opinion, the contention of counsel for the appellants appears to be sound and must prevail. A perusal of the order of the Appellate Collector extracted above clearly shows two important facts : (1) that the Appellate Collector has not set aside or vacated the order of the Assistant Collector on merits but has v....
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....ll that is done is that the order issued by virtue of its inherent defect is vacated but the proceedings are not terminated. Here, the decision of the Andhra Pradesh High Court in the case of Thimmasamudram Tobacco Co. v. Assistant Collector of Central Excise AIR 1961 AP 324 was approved. In that case, it was held by the Andhra Pradesh High Court that nothing stands in the way of the Assistant Collector initiating the proceedings afresh when his order was quashed not on merits but on technical grounds and it is open to the officer concerned to start the procedure once again with a view to follow the rules of procedure and the principles of natural justice. The decision of the Gujarat High Court in the case of Marsden Spg. & Co. Ltd. v. L.V. Pol, Superintendent of Central Excise Tax ILR 1965 Guj. 111, which was referred to in the above decision of the Supreme Court, is a case where the impugned order was passed on merits of the case and the order was clear, explicit and final. On those facts, it was held that it was distinguishable, In our view, that decision of the Gujarat High Court is distinguishable and has no application to the facts of the instant case. 11. The decision of th....