O.CHINNAPPA REDDY,J. - (1.) THE facts of the case have given rise to an interesting situation though not to questions of complexity as we first thought. Pursuant to a notice issued by the Income-tax Officer under Section 22 (2) of the Income-tax Act, 1922, the petitioner (assessee) submitted his return of income for the Assessment year 1960-61 on 20-12-1960. On 23-12-1960, the Income-tax Officer made provisional assessment under Section 23-B of the Act and on the basis of the provisional assessment, he raised a demand on the petitioner for payment of provisional tax of Rs. 50,808/ -. Thereafter, the Income-tax Officer also issued a notice under Section 23 (2) of the Act. The Income-tax Act, 1961, came into force with effect from 1-4-1962. The assessment of the petitioner for the year 1960-61 was completed by the Income-tax Officer on 24-3-1965. He purported to complete the assessment under Section 143 (3) of the 1961 Act. The assessee preferred an appeal to the Appellate Assistant Commissioner under Section 246 of the 1961 Act. One of the grounds urged by the petitioner before the Appellate Assistant Commissioner was that the Income-tax Officer should have completed the assessment under the provisions of Indian Income-tax Act, 1922, and not under the provisions of the Income-tax Act, 1961. This contention was accepted by the Appellate Assistant Commissioner who set aside the assessment made by the Income-tax Officer and directed the Income-tax Officer to complete the assessment afresh from the "return" stage. The order of the Appellate Assistant Commissioner which may be usefully extracted here was as follows:-" Assessment has been challenged both on technical grounds as well as on merits. Taking the technical objections first, it is contended before me that as the return of income was filed on 20-12-1960 before the commencement of the Income-tax Act, 1961, the assessment should have been completed under the provisions of the Indian Income-tax Act, 1922 and the Income-tax Officer has erred in completing the assessment under the provisions of the Income-tax Act, 1961. I have considered the assessee's submissions very carefully and find that they have great force. The assessee's contention about the filing of the return before the commencement of the Income-tax Act, 1961 is correct and supported by the record. The appellant's contention that the Income-tax Officer should have completed the assessment under the provisions of the Indian Income-tax Act, 1922 and has erred in completing the assessment under the provisions of the Income-tax Act 1961 is also correct and is supported by Section 297 (2) (a) of the Income-tax Act 1961. The assessment is, therefore, set aside with a direction to the Income-tax Officer to complete the fresh assessment from the return's stage. As I have set aside the assessment on the technical objections taken by the appellant, I have not considered it necessary to discuss the objections on merits. "
(2.) FROM a perusal of the order of the Appellate Assistant Commissioner, it is apparent that no argument was advanced at that stage to the effect that the order of assessment made by the Income-tax Officer on 24-3-1965 was a nullity and that the Appellate Assistant Commissioner had no jurisdiction to direct the Income-tax Officer to make a fresh assessment as such fresh assessment would be barred by the time-limit prescribed by Section 34 (3) of the 1922 Act. Though the Appellate Assistant Commissioner did not expressly direct the Income-tax Officer to complete the assessment under the provisions of the 1922 Act, such a direction is patently implicit in the order. The order of the Appellate Assistant Commissioner was passed on 16-10-1967. The petitioner preferred an appeal to the Income-tax Appellate Tribunal on 4-12-1967 but withdrew the same subsequently. Consequent upon the direction issued by the Appellate Assistant Commissioner, the Income-tax Officer issued a fresh notice under Section 23 (2) of the 1922 Act on 12-1-1968. On 17-1-1968, the assessee submitted written objections claiming that no assessment was permissible as the period of four years prescribed by Section 34 (3) of the Act had elapsed. As the Income-tax Officer was going ahead with the assessment despite his objections, the petitioner filed Civil Writ Petition No. 546 of 1968 challenging the notice issued to him on 12-1-1968. On 27-2-1968, the Income-tax Officer purporting to act under Section 240 of the 1961 Act, granted a refund of tax of Rs. 97055.00, making adjustments against demands of tax for later years. Subsequently, he issued a notice seeking to rectify the order for refund of tax on the ground that it had been wrongly allowed to the extent of Rs. 55242/ -. The assessee submitted his objections and, finally, the Income-tax Officer passed order dated 5-6-1971 rectifying the order of refund to the extent to Rs. 55,242/ -. The Income-tax Officer observed in his order that the provisional tax paid pursuant to the provisional assessment dt. 23-12-1960 had been wrongly refunded. The appellate order of the Appellate Assistant Commissioner merely set aside the assessment made under Section 143 (3 ). The provisional assessment and provisional tax were never disputed and were never cancelled by the Appellate Assistant Commissioner. Therefore, the refund of provisional tax was wrong. The petitioner filed Civil Writ Petition No. 3396 of 1971 questioning this order of the Income-tax Officer.
(3.) THE first submission of Shri B. Section Gupta, learned counsel for the assessee was that there was no direction in the order of the Appellate Assistant Commissioner to complete the assessment under the provisions of the Income-tax Act, 1922, but that there was only a direction to dispose of the matter in accordance with law. According to the learned counsel, the effect of the order of the Appellate Assistant Commissioner was to declare the assessment dated 24-3-1965 a nullity, leaving it to the Income-tax Officer to proceed with fresh assessment if that was permissible under the law. Since by then the period of four years prescribed by Section 34 (3) had already expired, the Income-tax Officer had no jurisdiction to proceed with fresh assessment We do not think we can agree with Shri Gupta's interpretation of the order of the Appellate Assistant Commissioner. If the Appellate Assistant Commissioner was declaring the order of assessment a nullity, there was no need for him to remit the matter to the Income-tax Office for fresh assessment since even by then the period of four years had expired. Though the actual direction contained in the concluding part of the Appellate Assistant Commissioner's order did not refer to the provisions of 1922 Act, it is clear on a reading of the whole of the order that what the Appellate Assistant Commissioner in fact did was to direct the Income-tax Officer to complete the fresh assessment under the provisions of the Income-tax Act, 1922.;