Law:

Section:

I. Section 251, read with section 150 of the Income-tax Act, 1961 [Corresponding to section 31(3) read with, section 34(3) of Indian Income-tax Act, 1922] - Commissioner (Appeals) – Power of – Assessment year 1960-61 – Whether where an assessment is found to be defective because of being made under an incorrect provisions of law, assessment would not be without jurisdiction and void and in such a case, it would be open to appellate authority to confirm assessment by reference to appropriate provisions of law or set aside assessment and direct ITO to make fresh assessment with reference to correct provisions of law notwithstanding expiry of prescribed period of four years – Held, yes II. Section 154, read with section 141 of the Income-tax Act, 1961 - [Corresponding to section 23B of Indian Income-tax Act, 1922] – Rectification of mistakes – Apparent from record – Assessment year 1960-61 – Whether provisional assessment does not merge with regular assessment and, therefore, if regular assessment is set aside for any reason, it would not follow that provisional assessment also stood set aside - Held, yes – Whether where merely because regular assessment was set aside, provisional tax was refunded, it was a patent mistake that could be rectified under section 154 – Held, yes FACTS Pursuant to a notice issued by the ITO under section 22(2) of the 1922 Act, the assessee filed his return of income for the relevant assessment year on 20-12-1960. On 23-12-1960, the ITO made provisional assessment under section 23B of the 1922 Act and on the basis of the provisional assessment, he raised a demand. Thereafter, the ITO also issued a notice under section 23(2) of the 1922 Act. The assessment was completed on 24-3-1965 under section 143(3). The assessee preferred an appeal to the AAC under section 246. One of the grounds urged by the assessee before the AAC was that the ITO should have completed the assessment under the 1922 Act, and not under the new Act. This contention was accepted by the AAC who set aside the assessment directed the ITO to complete the assessment afresh from the return stage. No argument was advanced at that stage to the effect that the order of…

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