assessee is company and proceedings relates to its assessment f o r assessment year 1977-78. main issue involved is whether assessment for year as made on 25-9-1980 under section 143(3), read with section 144B, of Income-tax Act, 1961 (' Act ') is barred by limitation which in turn depends on answer to question whether provisions of section 144B are applicable in this case. 2. relevant facts in brief are that by notification issued on 31-7-1977 under section 125A of Act, concurrent jurisdiction over assessee for purpose of assessment was conferred on IAC, Allahabad. Ordinary jurisdiction over assessee for purpose of assessment, etc., vested in ITO. territorial or administrative IAC over ITO is IAC, Gorakhpur. It is on record that IAC, Allahabad, issued comprehensive letter dated 8- 11-1979 giving certain guidelines/instructions to ITO for proceeding with assessee's assessment for year. In spite of it, ITO did not complete assessment finally. He only prepared draft assessment order on 25-3-1980 and forwarded copy of it to assessee as laid down in section 144B(1) and on receipt of objections from assessee forwarded draft assessment order along with assessee's objections to IAC, Allahabad, under sub-section (4) of section 144B. On receipt of directions dated 25-9-1980 from IAC, Allahabad, ITO has completed assessment under sub-section (3) of section 143, read with section 144B, on 27-9-1980. 3. assessee's submission is that provisions of section 144B are not applicable in this case in view of sub-section (7) of section 144B thereof and, therefore, assessment as made on 27-9-1980 by ITO is barred by limitation, has been considered and rejected by Commissioner (Appeals) for reasons given in paragraph Nos. 2 to 4 of his order. 4. At time of hearing of appeal before Division Bench, departmental representative relied on order of Tribunal, Allahabad Bench, in case of Dr. Surendrasingh Majithia [IT Appeal No. 645 (All.) of 1981 dated 3-9-1982), to show that contention raised by assessee's counsel is not tenable in law. On hearing parties, Bench, however, took view that issue involved in appeal was intricate and required careful consideration particularly as order relied upon by departmental representative was ex parte order, none having appeared on behalf of assessee. Reference was made to President for constitution of Special Bench. proposal was accepted. This is how appeal has come up before Special Bench. 5. In order to appreciate rival contentions, it is desirable to refer to provisions of sections 123 and 124 of Act, which provide for scope and jurisdiction to be ordinarily exercised by IAC and ITOs, respectively. Sections 125 and 125A of Act, on other hand, respectively, provide for conferring of powers of ITOs in specified cases, exclusively or concurrently on IACs. In contradistinction with sections 123, where expression used is ' Inspecting Assistant Commissioner ', expression ' Inspecting Assistant Commissioner ' is used in sections 125 and 125A. first question that arises for consideration is whether use of article ' ' before expression ' Inspecting Assistant Commissioner ' in sections 125 and 125A is, if at all, of any significance. According to Shri Sharma, learned counsel for assessee, use of article ' ' is not without significance. His submission is that concurrent jurisdiction can be conferred on IAC under whose administrative or territorial jurisdiction particular ITO functions. contention of learned counsel, according to us, is too good to be accepted. Section 123, it may be stated, contemplates assignments of functions to more than one IAC in respect of same area or same persons or same incomes or classes of income, etc., who shall have concurrent jurisdiction and shall perform such functions concurrently in relation to all such cases. It is perhaps for this reason that no article is used before ' IACs ' in section 123. As against this, sections 125 and 125A provide for conferment of jurisdiction, exclusively or concurrently on particular IAC which justifies use of article ' ' before expression ' Inspecting Assistant Commissioner '. Moreover, on going through provisions of section 125A(3), one is hardly left in doubt that Legislature has contemplated jurisdiction of two IACs on ITO in specified cases, i.e., IAC, who has concurrent jurisdiction over assessee along with ITO and IAC, who has administrative or territorial jurisdiction over ITO. That is why Legislature has taken particular care to make it clear by means of sub- section (3) of section 125A that even in cases where IAC has got concurrent jurisdiction with ITO over assessee, ITO shall also observe and follow any instructions as may be issued to him for his guidance by IAC within whose jurisdiction he performs his functions, etc. Accordingly, we hold that there is nothing wrong in conferring of concurrent jurisdiction over assessee to IAC, Allahabad, along with ITO, while IAC within whose jurisdiction ITO performs his functions continued to be IAC, Gorakhpur. 6. It is pertinent to mention that Shri Bharatji Agarwal, learned counsel for department, had contended that authority of notification could not be challenged before Tribunal. It could be, if at all, challenged by way of writ before Hon'ble High Court. Though on face of it, we are in agreement with standing counsel, in view, we have taken about validity of notification, we do not consider it necessary to express ourselves finally on contention raised by him. 7. Assuming provisions of section 144B are attracted in case like one before us, next pertinent question raised is which of two IACs has or will have jurisdiction under that section. Having regard to scheme of Act and keeping in view purpose for which section 144B was introduced in Act, with effect from 1-4-1976 and provisions of sub-section (7) of section 144B which exclude application of section 144B in certain cases, we are inclined to accept Shri Sharma's submission that assuming provisions of section 144B are applicable, it is IAC within whose jurisdiction ITO performs his functions and not IAC, who holds exclusive or concurrent jurisdiction under section 125 or section 125A, will have jurisdiction. 8. There being no dispute that section 144B will have no application to cases which are covered or fall within provisions of sub-section (7) of section 144B, next question that requires consideration is as to meaning, purport and scope of provisions of sub-section (7) of section 144B, which read as under: " Nothing in this section shall apply to case where Inspecting Assistant Commissioner exercises powers or performs functions of Income-tax Officer in pursuance of order made under section 125 or section 125A." It is evident that sub-section uses expressions ' exercises powers ' and ' performs functions ' of ITO in pursuance of orders, respectively, passed under section 125 or section 125A. Emphasising on use of above expressions in contradistinction to expressions such as ' has powers ' and ' has powers to perform ' learned standing counsel contended that mere fact that exclusive or concurrent jurisdiction has been conferred on IAC under section 125 or 125A is not sufficient and that in order to fall under sub-section (7) of section 144B, it is necessary that IAC has, as matter of fact, exercised powers or performed functions referred to in sections 125 and 125A. In this context, standing counsel relied on Delhi High Court's decision in case of Bishamber Nath Ram Sarup v. ITO [1980] 15 CTR (Delhi) 106 and Bombay High Court's decision in case of Bhagwanji Haridas v. Premji Parashotam AIR 1959 Bom. 47. Shri Sharma, learned counsel for assessee, on other hand, submitted that two decisions relied upon by learned standing counsel are not applicable to facts of case and that once concurrent jurisdiction has been conferred on IAC, powers of ITO are circumscribed, who can thereafter exercise only such powers and perform only such functions under Act as IAC may direct. submission, thus, is that if IAC does not give any directions as such, it has to be presumed that in exercise of his powers under section 125A, IAC has allowed ITO to exercise all powers and functions under Act in relation to particular case. On carefully going through two decisions, relied upon by learned standing counsel, we find that they are not of any help to department. No doubt, Bombay High Court has held that expression ' concurrent jurisdiction ' in section 3(1) of Act only means that even though court subordinate to district court may be invested with jurisdiction under Act, district court would still continue to possess jurisdiction under Act. Therefore, notwithstanding fact that assistant judge may have been invested with jurisdiction under Act by notification issued under section 3(1), he would still be court subordinate to district court. To our mind, this is exactly purport of provisions contained in sub-section (3) of section 125A. question before us is not whether ITO continues to be subordinate to IAC. It is, whether in view of specific provisions of sub-section (7) of section 144B, application of provisions of section 144B is excluded. Delhi High Court is directly concerned with provisions of section 125A. question in that case was whether, after concurrent jurisdiction was conferred on IAC, ITO could reopen proceedings for assessment under section 148, read with section 147(a), of Act. It was held that meaning of concurrent jurisdiction is that both officers have jurisdiction to make assessment. However, by virtue of sub-section (2) of section 125A, ITO has to exercise his powers and perform his functions as IAC may direct. This only means that if IAC has directed that in certain cases or kind of cases certain steps will be taken by him only, ITO will not be competent to take such steps. Again, in this case also question did not pertain to purport and scope of sub-section (7) of section 144B. Moreover, in view of sub-section (2) of section 125A, which provides for exercising of powers and performing of functions by ITO as IAC may direct, we are inclined to accept that once concurrent jurisdiction is given to IAC under section 125A, ITO even if he has exercised all powers and functions to make assessment he has and could do so as result of IAC's exercising powers to allow him to do so. 9. In any event, discussion on above aspect of matter appears t o us to be of academic nature inasmuch as on going through facts on record, we find that IAC, Allahabad has, as matter of fact, exercised powers and performed functions conferred on him under section 125A. In this context, it is desirable to mention that some time after issue of notification dated 31-1-1977 conferring jurisdiction over assessee on IAC, Allahabad, IAC, Gorakhpur, informed ITO about concurrent jurisdiction and directed him vide his letter dated 1-9-1979 (copy on record), inter alia, not to leave assessee's case entirely for IAC, Allahabad, but to continue proceedings for assessment keeping in touch with IAC, Allahabad, and if necessary to visit Allahabad and discuss matter concerning assessee's case with him. ITO acknowledged above letter of IAC, Gorakhpur, vide his letter dated 5-9-1979. IAC, Allahabad, thereafter issued long letter dated 23-11-1979 to ITO. In this letter, copy of which was endorsed to IAC, Gorakhpur, IAC, Allahabad, directed ITO to proceed to make assessment in assessee's case in particular manner. This letter runs into four single space typed full size pages. IAC, Allahabad also took care to inform IAC, Gorakhpur, about steps he had already taken or proposed to take in matter. 10. It is difficult, if not impossible, to accept in face of such long letter containing directions and guidelines to ITO to proceed with case that IAC, Allahabad had not, as matter of fact, exercised concurrent jurisdiction vested in him under section 125A. Apart from fact that directions and guidelines contained in this letter cannot be brushed aside as mere general administrative directions issued by IAC to his ITO, IAC, Allahabad, it may be stated, had no such powers over ITO. He derived all or any powers/functions from notification issued under section 125A. In circumstances, we have no difficulty in holding that IAC, Allahabad, has exercised powers and performed functions of ITO in terms of section 125A. contention of learned standing counsel that in order to be able to say that IAC, Allahabad, had exercised powers vested in him under section 125A, it must be found as fact that IAC, Allahabad, had himself issued notices and taken proceedings under sections 143, 142, 131, 132 etc., of Act, to our mind, for reasons already stated by us above, deserves straightaway rejection. As already stated, exercise of powers by IAC, Allahabad, includes even directing ITO to exercise powers and perform functions in particular manner himself. It is not at all necessary that IAC, Allahabad, must himself exercise all powers of assessment, which he may have to do in case where exclusive jurisdiction to make assessments is conferred on him under section 125. Accordingly, we hold that assessee's case is squarely covered under sub-section (7) of section 144B and, therefore, provisions of section 144B are not applicable in this case. 11. logical consequence of our above conclusion is that assessment should and could have been completed on or before 31-3-1980, i.e., within ordinary time limit laid down in section 153(1)(a)(iii) of Act. assessment having been actually completed on 25-9-1980 is, thus, clearly barred by limitation. This takes us to two other important questions, viz., (1) whether draft of assessment order prepared by ITO on 27-3-1980 is whether draft of assessment order prepared by ITO on 27-3-1980 is or can be treated as valid order of assessment, and (2) assuming that draft assessment order is not and cannot be treated as valid assessment order, whether such order of assessment requires to be annulled as being void or whether it can be cancelled/set aside, so that fresh assessment according to law can be made. 12. With view to appreciate rival contentions in this regard, we have carefully looked into original copy of draft assessment order. Its each page is initialled by ITO. However, last page of order where total income is computed is not signed. Tax on total income proposed has also not been determined. draft order has been forwarded to assessee with clear indication that it is draft assessment order. assessee has been called upon to give its objections to disallowances/additions, if any. Having regard to all above facts, we are in agreement with Shri Sharma that draft assessment order is not and cannot be treated as assessment order passed under section 143(3), even after taking into account enabling provisions of section 292B of Act. Under circumstances, it has to be held that assessment order for year has been passed by ITO on 25-9- 1980 and is, therefore, clearly barred by limitation. 13. Placing k reliance on decisions of Calcutta High Court in cases of Ram Kumar Sitaram v. Certificate Officer [1963] 49 ITR 797 at p. 800 and Cachar Plywood Ltd. v. ITO [1978] 114 ITR 379 at p. 388 and of S u p r e m e Court in cases of Director of Inspection of Income-tax (Investigation) v. Pooran Mall & Sons [1974] 96 ITR 390 at pp. 398-399 and Grindlays Bank Ltd. v. ITO [1980] 122 ITR 55 at p. 60, learned standing counsel submitted that illegality supervened, if at all, at stage ITO treated order of assessment to be draft assessment order and forwarded copy of same to assessee in terms of section 144B(1). He urged that assessment should, therefore, be set aside with direction to ITO to treat draft order as final order of assessment under section 143(3). Shri Sharma, on other hand, relied on Gujarat High Court's decision in case of P. V. Doshi v. CIT [1978] 113 ITR 22 and order of Tribunal, Delhi Bench, in case of Shelley Products v. ITO [1984] 10 ITD 136, paragraph No. 2, for proposition that in case like one before us, assessment has got to be annulled. 14. question posed is quite interesting and intricate. provisions contained in section 153 prescribing time, limit for completing assessments in different circumstances are absolute. It is categorically provided that ' No order of assessment shall be made under section 143 or section 144 at any time after . . . .' This leaves hardly any scope for doubt that order of assessment can be passed only within stipulated time and not beyond. Besides exceptions referred to in that section itself, Supreme Court has held in case of CIT v. National Taj Traders [1980] 121 ITR 535 that time limit applies to various orders to be passed by authorities originally suo motu and not to orders which are or have to be passed in pursuance of appellate or revisionary orders. That apart Supreme Court has explained effect of orders passed within time but without following certain statutory mandatory provisions or complying with principles of natural justice, in cases of Guduthur Bros. v. ITO [1960] 40 ITR 298 and Kapurchand Shrimal v. CIT [1981] 131 ITR 451. It has been held that orders so passed cannot be sustained as valid orders but it does not mean that orders have to be quashed straightaway. appellate authority has to and should direct for passing of orders afresh in accordance with law. In both above cases, however, orders in question were passed in time. Legal and valid orders could be passed on those dates on which orders which were found to suffer from certain irregularity or illegality were passed. In present case, no order of assessment has been passed within time limit. above two cases, thus, do not help department's contention. 15. As regards two Supreme Court's decisions and two Calcutta High Court's decisions relied upon by learned standing counsel also position is not very much different. question involved in Ram Kumar Sitaram's case was about validity of fresh certificate proceedings which were started after earlier proceedings were filed. question of time limit was not involved at all. In Cachar Plywood Ltd.'s case, question was, no doubt, similar. But in that case, assessee had challenged transfer of its income- tax file in High Court. During pendency of proceedings, ITO to whom assessee's cases were transferred had passed orders of assessment assessee's cases were transferred had passed orders of assessment which were in time. These orders were quashed on ground that orders of transfer were invalid. It was in these circumstances High Court directed ITO who had jurisdiction since inception to pass fresh assessment orders even though time limit for completing assessment orders had expired. Issue in Supreme Court decision in Pooran Mall & Sons' case did not pertain to orders of assessment at all. It pertained to other provisions. However, some order was passed in that case which was agreed upon by assessee. This case has, thus, no application whatsoever. In Grindlays Bank Ltd.'s case, time for completing assessment expired because of stay of proceedings by High Court from 17-3-1975 to 31-3-1977. Since assessment order passed on or before 31-3-1975 would have been in time, it was held that assessment order passed on 31-3-1977 would be in time. 16. Our decision in short, thus, is that once concurrent jurisdiction is conferred on IAC under section 125A, he is deemed to have exercised powers vested in him under section 125A even if he allows ITO to exercise all powers of assessment by himself inasmuch as sub-section (2) of section 125(1)(a) circumscribes powers of ITO, within parameter of directions that IAC may give. In any event, so far as present case is concerned, IAC, Allahabad has, as matter of fact, exercised powers vested in him under section 125A. Therefore, provisions of section 144B are not applicable in this case in view of sub-section (7) of section 144B thereof. order of assessment has been made on 25-9-1980 and is, thus, clearly barred by limitation. Such order requires to be annulled and not set aside. 17. In result, appeal is allowed. *** SARAYA SUGAR MILLS (P) LTD. v. INCOME TAX OFFICER