Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1978-79, the following questions have been referred to this court : "(1) Whether, under the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment order under Section 143(3) read with Section 144B of the Income-tax Act, 1961, was not rendered invalid for the reason that the successor-Income-tax Officer (coming only at the stage of finalisation of the assessment) having not given an opportunity to the assessee asked for under the proviso to Section 129 of the Income-tax Act, 1961? (2) Whether, under the facts and in the circumstances of the case, the Tribunal was justified in holding that the time taken in the proceedings under Section 144B of the Income-tax Act, 1961, was required to be excluded and, as such, the assessment was not barred by limitation."
(2.) Shortly stated, the facts are that the assessee-company submitted a return for the assessment year 1978-79 declaring a total income of Rs. 18,67,075. The Income-tax Officer, J-Ward, Comp. II, in making the assessment under Section 143(3), prepared a draft assessment order as the variation in the income returned by the assessee and the income to be assessed exceeded Rs. 1,00,000. He, accordingly, forwarded a draft assessment order in terms of Section 144B to the assessee on March 28, 1981. The assessee filed objections to the draft assessment proposals of the Income-tax Officer by its letter dated April 2, 1981. Subsequently, the draft assessment order together with the assessee's objections were forwarded to the Inspecting Assistant Commissioner, Range-VII, Calcutta. Some time later, the Commissioner of Income-tax, West Bengal IV, Calcutta, by his order dated June 1, 1981, transferred the jurisdiction of the assessee's case from the Income-tax Officer, J-Ward, Comp. Distt. II, to the Income-tax Officer, B-Ward, Special Circle III, Calcutta. At the time the order pertaining to the change in the jurisdiction of the Income-tax Officers was passed by the Commissioner, proceedings under Section 144B for the assessment year under reference were pending before the Inspecting Assistant Commissioner, Range VII, Calcutta. The assessee, by its letter dated August 3, 1981, desired a rehearing of the case in terms of Section 129 read with the proviso to the said section. The Income-tax Officer having jurisdiction over the assessee's case informed the assessee by letter dated August 6, 1981, that since the assessment at the material time was pending before the Inspecting Assistant Commissioner, Special Range, Calcutta, the question of rehearing of the case by him did not arise. The Income-tax Officer, on receipt of the Inspecting Assistant Comissioner's instructions under Section 144B(4), completed the assessment under Section 143(3)/144B on August 31, 1981.
(3.) Before the Commissioner of Income-tax (Appeals), the assessee challenged the said order of the Income-tax Officer on the ground that the assessee was not allowed proper opportunity in terms of the proviso to Section 129 of the Act. The Commissioner of Income-tax (Appeals) rejected the assessee's contention. He was of the view that the Income-tax Officer had the power to give an opportunity of the hearing to the assessee only before passing the draft order and not thereafter. The Commissioner of Income-tax (Appeals) further observed that the assessee was allowed sufficient opportunity by the Inspecting Assistant Commissioner before he passed his order under Section 144B(4) of the Act ; but the assessee did not avail of the opportunity so given during the pendency of the proceedings under Section 144B before the Inspecting Assistant Commissioner.;