K.S. Paripoornan, J.@mdashAt the instance of the assessee, the Income Tax Appellate Tribunal (for short ""the Tribunal"") has referred the
following two questions of law for the decision of this court:
(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in confirming the order of the Commissioner of
Income Tax (Appeals) setting aside the assessment and directing the Income Tax Officer to make a fresh assessment ?
(2) Whether the Tribunal having found that the Income Tax Officer did not comply with the procedure prescribed u/s 144B was right in merely
setting aside the assessment and in not annulling the same ?
2. The applicant is an assessee to Income Tax, We are concerned with the assessment year 1975-76. He filed the return on November 6, 1975,
showing nil income. The Income Tax Officer completed the assessment on March 18, 1980, on a total income of Rs. 1,83,450. The income
comprised entirely of capital gains. In the appeal before the Commissioner of Income Tax (Appeals), the assessee took up the plea that the
variation in the returned income (which was nil) and the assessed income, Rs. 1,83,450, was more than Rs. 1,00,000, and, therefore, the Income
Tax Officer was obliged to follow the procedure laid down by Section 144B of the Income Tax Act. He should have issued a draft assessment
order to the assessee and after receiving the objections of the assessee, if any, he should have referred the matter to the Inspecting Assistant
Commissioner for getting direction for completion of the assessment. This plea was accepted by the Commissioner of Income Tax (Appeals). He
held that Section 144B(1) applies to the instant case. It was found that the said provision was not complied with. He, therefore, set aside the
assessment and directed the Income Tax Officer to complete the assessment along the lines indicated by him in his order.
3. The assessee filed a second appeal before the Income Tax Appellate Tribunal. It was contended that the Commissioner of Income Tax was in
error in setting aside the assessment order and ordering a remit. It was argued that the assessment made, ignoring Section 144B(1) of the Income
Tax Act, 1961, was void and so the assessment order should have been nullified and a remit should not have been ordered. The Appellate
Tribunal held that Section 144B of the Act is only a procedural provision and the Commissioner of Income Tax was justified in setting aside the
assessment order for the irregularity noticed by him and in ordering a remit. Aggrieved by the said order passed by the Appellate Tribunal, dated
November 6, 1982, the petitioner filed an application u/s 256(1) of the Income Tax Act to refer the questions of law, formulated hereinabove, for
the decision of this court. Accordingly, the Tribunal has referred the above questions for our decision.
4. We heard counsel for the applicant-assessee, as also counsel for the Revenue. It was argued that Section 144B is a substantive provision and
failure to effect an assessment in accordance therewith renders the assessment order a nullity. The Commissioner of Income Tax should have held
so and nullified the assessment order. The remit ordered by the appellate authorities was unjustified and unauthorised. We see no force in this plea.
We are of the view that Section 144B of the Income Tax Act is only a procedural provision and an order of assessment effected in breach thereof
will not render the assessment void or a nullity. The irregularity committed by the Income Tax Officer in not conforming to Section 144B of the Act
can certainly be a ground for the appellate authority to set aside the assessment and to order the remit. The Commissioner of Income Tax and also
the Appellate Tribunal were justified in doing so. We are not inclined to accept the plea of the assessee that the failure to conform to Section 144B
of the Income Tax Act is a fundamental infirmity or a juris-dictional infirmity, rendering the assessment order void or a nullity. Failure to conform to
Section 144B is only an irregularity. It is only a procedural provision. When the irregularity was noticed, the appellate authority was justified in
setting aside the assessment and directing the ITO to effect a fresh assessment in accordance with law. We see no error in the order of remit
ordered by the Commissioner of Income Tax and upheld by the Appellate Tribunal. We are fortified in this view by the following decisions : H.H.
Maharaja Raja Pawer Dewas Vs. Commissioner of Income Tax, , Kimtee Vs. Commissioner of Income Tax, , G.R. Steel and Alloys Pvt. Ltd.
Vs. Commissioner of Income Tax, and K. Ashok Kumar and Others Vs. Commissioner of Income Tax,
5. In the light of the above, our answer to question No. (1) referred to us is in the affirmative, against the assessee and in favour of the Revenue.
Our answer to question No. (2) is also in the affirmative, against the assessee and in favour of the Revenue.
6. A copy of this judgment under the seal of this court and the signature of the Registrar will be forwarded to the Income Tax Appellate Tribunal,
Cochin Bench.