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1980 Supreme(Del) 336
High Court Of Delhi
SUDHIR SARIN - Appellant
Versus
INCOME TAX OFFICER - Respondent
Civil 1832 of 1979
Decided On : 12/03/1980
G.C.Sharma, K.K.VADHERA, M.L.VARMA, MUKHERJI, O.P.Dua, R.Saini
Under Section 144b of the Income Tax Act, 1961, an Income Tax Officer is not empowered to issue more than one draft assessment order.
Headnote:
INCOME TAX - Section 144b - Draft assessment order - Power of Income-tax Officer to issue more than one draft assessment order - Interpretation of Section 144b - Whether an Income-tax Officer acting under Section 144b is empowered to confront an assessee with more than one proposed draft orders of assessment, each time raising the amount of assessment or whether he can do the said-exercise only once.
Fact of the Case:
The petitioner challenged the Income-tax Officer's power to issue multiple draft assessment orders under Section 144b of the Income Tax Act, 1961, arguing that it would lead to harassment and expose the assessee to unjustified proceedings.
Finding of the Court:
The court held that Section 144b of the Income Tax Act, 1961, does not authorize an Income Tax Officer to issue more than one draft assessment order. The court interpreted the language of the section, particularly the use of the singular "a draft" and "the draft order," to indicate that only one draft order is contemplated.
Issues: 1. Whether an Income-tax Officer acting under Section 144b is empowered to confront an assessee with more than one proposed draft orders of assessment, each time raising the amount of assessment? 2. Whether such an interpretation would lead to harassment and expose the assessee to unjustified proceedings?
Ratio Decidendi: 1. The court relied on the plain language of Section 144b, specifically the use of the singular "a draft" and "the draft order," to conclude that only one draft order is contemplated by the section. 2. The court also considered the object of Section 144b, which is to reduce the area of dispute between the Income-tax Officer and the assessee and to avoid unnecessary appeals. The court found that allowing multiple draft orders would defeat this object and lead to multiplicity of proceedings and harassment of the assessee.
Final Decision: The court set aside the impugned order and allowed the Department to restart the proceedings at the stage of Inspecting Assistant Commissioner under the proviso to sub-section 4 of Section 144b.
( 1 ) A short question for decision in this petition is whether an Income-tax Officer acting under Section 144b, is empowered to confront an assessee with more than one proposed draft orders of assessment, each time raising the amount of assessment or whether he can do the said-exercise only once. The petitioner s contention is that Section 144b restricts the power of the Income-tax Officer only to one draft order of assessment and not more. He further contends that any other interpretation would expose an assessee to unjustified harassment.
( 2 ) SECTION 144b read as follows :
"144b. (1) Notwithstanding anything contained in this Act, where, in as assessment to be made under subsection (3) of section 143, the Income-tax Officer proposes to make any variation in the income or loss returned which is pre-judicial to the assessee and the amount of such variation exceeds the amount fixed by the Board under sub-section (6), the Income-tax Officer shall, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the assessee. (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 aloresaid, 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 objection are received, the Income-tax Officer shall forward the draft order together with the objections to the Inspecting Assistant Commissioner shall, after considering the draft order and 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 us is 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 Sec. 125-A. "
( 3 ) THE said section was inserted by the Taxation Laws Amendment Act, 1975 which took effect from January 1, 1976. The Notes on Clauses in the amending Bill do not throw much light on the need of enacting Section 144b. However, in the counter-affidavit filed the object is stated as follows :
"the purpose of this section is to reduce the area of dispute between the Income-tax Officer and the Department making the assessment and the assessee so that unnecessary appeals against the order need not be filed. "
( 4 ) THE contention of the petitioner is that the language of the Section is very clear. The petitioner refers to the words "in the first instance", "a draft" in Section 144b (1 ). The petitioner argues that they point out to only one draft and not more. He submits that the singular "a draft" does not include plurality of drafts. He further takes support of the words "the draft o
