The Income-tax Officer has no jurisdiction to make a de novo assessment where the earlier assessment was set aside by the Appellate Assistant Commissioner and the Income-tax Officer was directed to receive a duplicate application for registration and to deal with it according to law.

P. SATYANARAYANA RAJU, J.

( 1 ) THIS is an application for the issue of a writ of prohibition restraining the Income-Tax Officer, Vijayawada, from making a de novo assessment.

( 2 ) IN order to appreciate the contentions raised in this petition, it is necessary to state the material facts. The petitioner is a firm consisting of five partners and carrying on commission and other kinds of business at Vijayawada. It was previously assessed in the status of a registered firm. For this assessment year 1952-53, the Income-tax Officer, Vijayawada, assessed the petitioner on the 28/06/1953, and determined its loss in a sum of Rs. 100980. 00. In making the assessment the officer treated the petitioner as an unregistered firm on the ground that it did not file an application for registration. Aggrieved by the said order, the petitioner preferred an appeal before the Appellate Assistant Commissioner of Income-tax who by his order dated the 17/09/1954, set aside the assessment and directed the Income-tax Officer to receive a duplicate application for registration from the petitioner and to deal with it according to law. By the time the appeal was disposed of, the officer who made the assessment was succeeded by another. The succeeding incumbent of the office issued a memo to the petitioner on the 19/05/1956, calling upon it to produce its account books by the 28/05/1956. The petitioner objected to this procedure. It contended that the assessment order passed by the Appellate Assistant Commissioner did not envisage a de novo assessment and that the only matter which the Income-tax Officer had to consider was the application for registration. In this writ petition, the petitioner has contended that the Income-tax Officer has no jurisdiction to make a de novo assessment.

( 3 ) IN the counter-affidavit filed by the Income-tax Officer, it is stated that the earlier order of assessment passed by his predecessor in office having been set aside by the Appellate Assistant Commissioner the earlier assessment is non est in law and that therefore he has a duty to make a fresh assessment on the material before him.

( 4 ) THE petitioner was assessed by the predecessor in office of the 2nd respondent who determined the loss incurred by the firm at Rs. 1,00,980. 00. The petitioner preferred an appeal to the Appellate-Assistant- Commissioner. In this connection it is important to note that in the appeal the petitioner made no grievance against the actual assessment. A perusal of the memorandum of appeal filed by the petitioner before the Appellate Assistant Commissioner clearly shows that the ground was not with regard to the determination of the quantum of the loss but with regard to the refusal of the Income-tax Officer to treat the firm as a registered firm.

( 5 ) IN his order, at the very outset, the Appellate Assistant Commissioner stated: "the appeal is against the non-registering of the firm. "

( 6 ) IT was alleged before him that an application for registration of the firm was actually filed on the 28/02/1953 but that it was not considered. On a consideration of the circumstances-placed before him, the Appellate Assistant Commissioner was satisfied that there was an application for registration and the completion of the assessment without considering that application was illegal. He, therefore, set aside the assessment and directed the Income-tax Officer to receive a duplicate application for registration and to deal with it according to law.

( 7 ) THE question then is :-- Is it open to the Income-tax Officer to treat the earlier assessment as honest and to make a de novo assessment ignoring the previous assessment altogether? It is no doubt true that the Appellate Assistant Commissioners powers under Section 31 of the Act are of wide-amplitude. Section 31 (3) (b) confers a specific power on the Appellate Assistant Commissioner to make a direction to the Income-tax Officer, whereupon the Income-tax Officer should proceed to make such fresh assessmen

Click Here to Read the rest of this document