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Section 144B of the income-tax act, 1961-Draft assessment order-Reference to IAC-Whether provisions of section 144B were only procedural and non-compliance with Provisions would not make assessment ab initio void-Held, yes Facts The ITO varied the return submitted by the assessee-company by more than Rs. 1,00,000 and passed the assessment order without following the procedure prescribed under section 144B. On appeal, the AAC cancelled the assessment. The Tribunal, however, directed the ITO to make a fresh assessment after following the procedure prescribed under section 144B on the ground thas the non-compliance of the procedure prescribed under section 144B would not render the assessment ab initio void and at best it was only a procedural infirmity. On reference: Held Section 144B(4) contains procedure for completing the assessment and it cannot have the effect of invalidating the assessment when not complied with. The Tribunal, therefore, was justified in directing the ITO to re-do the assessment after following the procedure prescribed under section 144B(4). IT REFERENCE CASE NO. 5 OF 1981. G. Sarangan for the Applicant. K. Srinivasan and H. Raghavendra Rao for the Respondent. ORDER SHETTY, J.-The Tribunal, Bangalore Bench, has referred the following question for the opinion of this Court: "Whether, on the facts, the learned Income-tax Appellate Tribunal was right in holding that the provisions of section 144B of the Act were only procedural and the non-compliance with the provisions would not make the assessmentab initio void ?" 2. The reference arises out of the order of assessment made on the assessee-company for the assessment year 1977-78. The assessee filed a return declaring loss of Rs. 16,866. The final result of the order of the ITO was that a sum of Rs. 75,315 was the depreciation to be carried forward. So, the ITO varied the return by more than Rs. 1,00,000. The assessee appealed to the AAC who found that the ITO did not follow the procedure prescribed under section 144B of the Income-tax Act, 1961 ('the Act') and, therefore, he cancelled the assessment. The revenue appealed to the Tribunal. The Tribunal found that non-compliance of the procedure…

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