- (1.) FOR the assessment year 1973-74, the asses-see filed a return on October 19, 1973, showing income of Rs. 2,19,410. On March 29, 1976, the Income-tax Officer finalised the assessment at Rs. 4,71,798 which was rounded off to Rs. 4,71,800. On the top of the order, it was written : "draft assessment order under Section 144b". By the aforesaid assessment order, the income of the firm was allocated among its partners and in the end, the following lines were written : "penalty notices under Sections 271 (1) (c), 271 (1) (a) and 140a and under Section 273 have already been issued. "
(2.) THE order was signed by the Income-tax Officer. The aforesaid order was served on the assessee on March 30, 1976, along with the demand notice and challans. On April 7, 1976, the Income-tax Officer passed the following order under Section 144b (3) of the Income-tax Act, 1961 (hereinafter called "the Act" ). "the draft assessment order served on March 30, 1976, on you should be treated as final as the statutory period of one week has already elapsed and no objection has been filed. Demand notice, challan and penalty notices have already been issued and served. However, copies of the same are again enclosed for necessary action. "
(3.) THE Commissioner of Income-tax initiated proceedings under Section 263 of the Act for revising the orders of the Income-tax Officer dated March 29, 1976, as he had not followed the provisions of Section 144b and the same was considered to be erroneous and prejudicial to the interests of the Revenue. The Commissioner dropped the proceedings, vide order dated August 31, 1976, with the observations that Section 263 of the Act was not applicable for revising the draft statement and issued fresh notice on November 1, 1976, under the same provision to revise the order dated April 7, 1976. By order dated December 8, 1976, the Commissioner cancelled the order of the Income-tax Officer dated April 7, 1976, and ordered that fresh proceedings should be taken by the Income-tax Officer in accordance with law after following the procedure.;