Law:

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Section 144A of the Income-tax Act, 1961 - Inspecting Assistant Commissioner - Power to issue directions - Assessment year 1978-79 - Whether provisions of section 144A can be invoked even while exercising power under section 144B subject to assessee being heard in matter - Held, yes Interpretation of statutes - Interpretation of procedural provisions FACTS In the course of proceedings under section 144B while considering objections of the assessee under section 144B(4) the IAC also issued certain directions purporting to be under section 144A. Before issuing such a direction under section 144A, the assessee was heard in respect of the said matter also as provided under the proviso to section 144A(1). According to the assessee such a direction could not be issued under section 144A because no proceeding was then pending before the assessing authority. The Tribunal upheld the assessee's contention. On reference : HELD Sections 144A and 144B are procedural and part of the machinery to complete the assessment order. The procedural provisions are liberally construed to smoothen the working of the machinery and to advance the object behind the said provisions. Technical and literal approach is not normally resorted to. The two provisions empower the IAC to issue appropriate directions to the ITO, but the basic requirement is that the assessee will have to be heard before a direction is issued. In the instant case there was no dispute that such an opportunity was given to the assessee. By permitting the invocation of section 144A at the time of exercising the power under section 144B, no prejudice would result to the assessee. The next contention pertained to the question whether the assessment should be pending before the ITO. The substance of section 144A is that the records of the proceedings should be available to the IAC. There can be no doubt that assessment is not complete when only a proceeding under section 144B is pending. In fact, under section 144B only draft order is prepared. The assessment is to be completed only after the IAC issues an appropriate direction under section 144B(4) after which the ITO would have to complete the assessment. Similarly,…

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