The ITAT had no jurisdiction to give directions on the assessment of income, and the Assessing Officer should assess the income afresh without being bound by any lower or upper limit as laid down by the Tribunal.

Deepak Gupta, J.(Oral):-Both the aforesaid appeals are being disposed of by this common judgment since they arise out of the same order and have been admitted on following identical questions of law which read as follows:-

“(i)Whether the ITAT was justified in holding that the directions given in the order dated 2.9.2003 to the effect that “the income assessed by the A.O. should not be less than the income returned”, was an apparent mistake and could be rectified through a misc. application.

(ii) Whether the ITAT was right in issuing a fresh direction to the effect that “the assessed income should not be more than Rs.1.4 crore, for the A.Y. 1993-94, while completing the assessment” as it is totally against the law, particularly when the direction has been issued in a misc. application even though there was no such point in issue during the original appellate proceedings.

(iii) Whether the ITAT was right in law in directing the Assessing Officer to reassesses the income of the assessee which should not be more than income already assessed u/s 144 of the Income Tax Act, 1961 without bringing on record any material evidence as to the quantum of income of the assessee.

(iv) Whether the direction given by the Ld. ITAT in their order dated 30.7.2004 constitutes rectification of mistake u/s 254(2) of the Income Tax Act, 1961 occurred in earlier order dated 2.9.2003 or it may be termed as review of ITAT’s own order.”

2. Briefly stated the facts of the case are that the assessee-M/s. H.P State Forest Corporation is engaged in the business of purchase, conversion and sale of timber. The assessee filed returns of income for the assessment years 1993-94 and 1994-95 declaring income of Rs.58 lacs and Rs.57 lacs respectively. These returns were filed on estimate basis since the accounts of the assessee had not been audited by the office of the Comptroller and Accountant General. The Assessing Officer treated these returns to be “non est” as the audited accounts were not annexed with the returns and he issued notices under Section 148 of the Income Tax Act for filing fresh returns. Fresh returns were admittedly not filed and thereafter the Assessing Officer completed the assessment for both the assessment years in exercise of the powers vested in him under Section 144 of the Act by using the best judgment method. He assessed the income for the two years at Rs.1.40 crores and Rs.1.50 crores respectively.

3. These assessments were challenged before the Commissioner, Income Tax (Appeals), Shimla who confirmed the action of the Assessing Officer. The assessee then filed appeals before the Income Tax Appellate Tribunal (ITAT), Chandigarh. The assessee gave an explanation that since the auditors were not appointed by the CAG, the audited accounts could not be filed. This explanation was accepted by the ITAT and it held that since the Assessing Officer had not gone through the audited accounts, the assessment order was liable to be set aside. The matter was remanded to the Assessing Officer to frame afresh assessment keeping in view the audited accounts now submitted by the assessee. This order itself makes it clear that the assessments were to be framed “de novo”. However, the ITAT went on to hold that the income to be assessed by the Assessing Officer should not be less than the income returned by the assessee for both the assessment years in his original returns which had been treated as “non est”.

4. Thereafter, the assessee filed rectification applications and prayed that the direction of the ITAT not to assess the income less than the income originally returned be set aside and further a direction be issued that the income should not be more than the income assessed by the Assessing Officer under Section 144 of the Act. These rectification applications were decided by the impugned order dated July 30, 2004 whereby the rectification applications were allowed. The condition that the fresh assessment framed should not be more than the