This appeal by department relates to income-tax assessment for t h e year 1979-80 of assessee, Muthulakshmi Timber Depot, Theni. assessee is registered firm carrying on business as timber merchants. For assessment year 1979-80 under appeal, for which accounting year ended on 31-3-1979, assessee filed its return of income on 22-3-1980 declaring total income of Rs. 45,360. ITO, however, proposed to make addition of more than Rs. 1 lakh and in view of extent of variation he issued draft assessment order to assessee under section 144B(1) of Income-tax Act, 1961 ('the Act') as required therein on 29-3-1982. This draft assessment order was served on assessee on 1-4-1982. In said draft assessment order ITO proposed addition of Rs. 10,000 on account of general defects in account books of assessee and further addition of Rs. 1,04,555 on account of unexplained credits appearing in name of one Sebastian & Co., Nagercoil. assessee sent letter dated 5-4-1982 objecting to addition proposed under section 144B, which was received by ITO on 7-4-1982. In that letter assessee pointed out that at time of hearing they had submitted many facts to prove genuineness of all transactions and stated that they object to proposed addition, which is arbitrary. It is also further stated that they have to get further particulars to submit their detailed objection against proposal and requested further time of at least 14 days for same. It appears, ITO had in his order-sheet on 8-4-1982 noted that 'time granted as requested', but this note, it appears, was not communicated to assessee. On 16-4-1982, assessee sent another letter to ITO which was received by him on 17-4-1982 wherein assessee wanted further time of 15 days for filing further particulars, but ITO in this connection noted in order-sheet on 24-4-1982 as under: "Further time cannot be granted under section 144B. Assessment order dictated." He, therefore, made final assessment order on 24-4-1982, which was received by assessee on 30-4-1 982. 2. assessee preferred appeal against assessment order contending, inter alia, that assessment is bad in law as it violated statutory requirements and, therefore, should be annulled. Commissioner (Appeals) accepted this contention and held that assessment order passed by ITO himself, when it ought to have been made after reference to IAC under section 144B, suffered from fundamental infirmity. He also considered that final assessment order passed on 24-4-1982 was time barred as assessment for that year should normally have been made by 31-3-1982. Posing question as to whether in such case where order of assessment suffers from major infirmity appellate authority should set aside assessment with direction to ITO to make it de novo or he should annul assessment in toto, Commissioner (Appeals) following order of Tribunal, Bombay Bench 'D', in Rajendra V. Deshprabhu Cos. v. First ITO [1982] 8 TAXMAN 41 annulled assessment. Aggrieved by his order, department is in appeal before Tribunal. 3. learned departmental representative contended that on facts of this case, Commissioner (Appeals) is not justified 'in annulling assessment relying on decisions of Punjab and Haryana High Court and Gauhati High Court on ground that principles of natural justice were violated. It is argued that failure of ITO to forward draft assessment order and refer matter to IAC is only procedural irregularity which can always be rectified and, therefore, Commissioner (Appeals) should have set aside assessment and directed ITO to follow procedure laid down under section 144B after referring matter to IAC. He submitted that decisions of Punjab and Haryana High Court and Gauhati High Court relied on by Commissioner (Appeals) in this connection are distinguishable. learned departmental representative relied in this connection on order of Special Bench of Tribunal in case of Third ITO v. Shivaji Park Gymkhana [1983] 4 ITD 462 (Bom.). 4. learned counsel for assessee, on other hand, supported order of Commissioner (Appeals). He pointed out that Commissioner (Appeals) has annulled assessment not for mere non-compliance under section 144B, but for certain fundamental infirmities stated in paragraph No. 6. learned counsel submitted that Special Bench decision referred to and relied on by departmental representative is distinguishable because in that case no draft order at all was sent to assessee. He also took us through Special Bench order, paragraph No. 9 in this connection. It is pointed out that in present case draft order was sent proposing certain additions in regard to which there were earlier some discussions and final order of assessment refers to certain attempts to cross-verify transactions claimed by assessee, but result of such cross-verifications have not been put to assessee for rebuttal and, thus, there has been gross violation of natural justice, which has rendered assessment illegal and void and in such situation there is no case for sending back matter to departmental authorities for fresh assessment. It was submitted that decision of Madhya Pradesh High Court in Banarsidas Bhanot & Sons v. CIT [1981] 129 ITR 488 is distinguishable. Reliance is also placed in this connection on decision of Tribunal, in Rajendra V. Deshprabhu Co.'s case. learned departmental representative submitted that observations of Commissioner (Appeals) in paragraph Nos. 6, 7 and 8 all touch on question whether provisions of section 144B are applicable. He also further brought to our notice that there has been amendment by section 26 of Taxation Laws (Amendment) Act, 1984, with effect from 1-4-1984 by which reference under section 144B has been done away with. 5. rival contentions of parties before us on facts involved in this case throw for our consideration and decision only one point, namely, whether assessment made by ITO in this case without referring matter to IAC as required under section 144B has to be struck down as illegal and without jurisdiction or whether assessment made merely reveals mere procedural irregularity curable by setting it aside and directing ITO to follow procedure prescribed under Act. On careful consideration of facts involved and submissions, we are not inclined to accept department's stand that assessment does not suffer from fatal infirmity, but involves only procedural defect which can be remedied by setting aside assessment and directing ITO to follow procedure prescribed under Act. 6. It is common ground that before ITO framed draft assessment order, there was hearing given to assessee and discussion on various items of additions proposed in draft assessment order including objections items of additions proposed in draft assessment order including objections from assessee against any proposal to include any such item. It is borne out by draft assessment order under section 144B dated 24-3-1982 itself. Therefore, it is obvious that even when ITO framed draft assessment order and sent it to assessee, there had already been objections of assessee against additions supported by its explanation in regard to different items. draft assessment order has apparently become necessary for ITO to frame and forward to assessee because various explanations and objections of assessee to items considered by ITO in course of discussion were not found to acceptable to him and aggregate of additions in respect of those items amounted to Rs. 1 lakh. This is not case where without prior hearing of assessee and discussions on various doubtful items considered by ITO as warranting addition, he has proposed additions of certain items on his own and was yet to receive assessee's explanation or objection to proposal. In other words, even when he had issued draft assessment order, there was already on record objections raised by assessee which were considered by him to be not satisfactory. In such circumstance what he has done by sending draft assessment order is only to comply with statutory requirement of section 144B of having to forward draft assessment of proposed order of assessment and to invite formal objection. It is seen that draft order was served on assessee on 1-4-1982. assessee sent its objection letter dated 5-4-1982 which was received by ITO on 7-4-1982. In that letter assessee, inter alia, pointed out that at time of hearing they have submitted many facts to prove genuineness of all transactions and that they object to proposed addition, which is arbitrary. In second paragraph they stated that they have to gather further particulars to submit their detailed objection for proposal and requested for further time of 14 days for submission of such detailed objections. It is finding of Commissioner (Appeals) that ITO in his order sheet on 8-4-1982 had noted that time was granted as requested, but this was not communicated to assessee. On 16-4-1982 assessee sent another letter received by ITO on 17-4-1982 seeking further time of 15 days for filing further particulars of its objections. ITO, however has dictated assessment on 24-4-1982 noting in order-sheet that further time cannot be granted under section 144B. Thus, it is obvious that ITO has made assessment on his own without referring draft to IAC as required under Act. In final assessment order passed by him ITO states with reference to request of assessee for time that "the assessee had applied for time to extent of 14 days for filing their objections to proposed draft assessment order. assessee-firm did not file any objections but filed another letter on 17-4-1982 asking for further extension of 15 days' time to file objection. Under section 144B(2) assessee has to forward its objection within 7 days of receipt of draft order. He is permitted to file objection within further period of not exceeding 15 days as ITO may allow on application made in this regard. Thus, maximum time allowed to assessee to file objection from date of receipt of order is only 22 days and ITO does not have any power to grant further extension of time. In these circumstances, in accordance with provisions of section 144B, I proceed to complete assessment on basis of draft order sent to assessee". We fail to see how ITO can proceed on face of facts stated earlier, that there was no objection of assessee to additions proposed by him in draft assessment order. letter of assessee quoted above clearly and categorically records its objection to proposed additions contending it to be arbitrary. All that assessee had requested in that letter is time to gather further particulars to submit detailed objections against proposal. absence or failure to submit further particulars to support its objections within time prescribed does not obliterate positive objection taken by assessee against proposed addition in draft order and we fail to see how ITO can reasonably believe that there was no objection to proposed order. We need not go into question whether when assessee objects to addition proposed in draft assessment order he must adduce reasons therefor even at that stage and any failure to do so would render objection non est because as we have already noticed, proposed additions have already been earlier discussed and assessee has given its reasons and explanations against proposed additions and unless assessee has categorically withdrawn those explanations or reasons, they continue to constitute reasons for objections taken by assessee against addition proposed in draft assessment order. All that assessee has stated in letter in reply to draft order is that it wanted to reinforce objection by further particulars for which time was sought. Further, in out view, there is nothing in provisions of section 144B to show that assessee must send its objections to ITO along with reasons therefor and that unless reasons are adduced, objections cannot be regarded as objections. This is because assessee has opportunity, in proposed draft assessment order objected to by it, to explain its stand and stating reasons against additions proposed before IAC, superior authority, and even if assessee were to submit its reasons along with objections to ITO, it will be mere idle formality because ITO is not competent at that stage to consider such objections and take any decision thereon and that will have to be considered only by IAC in course of hearing before him. What is required under section, therefore, in our view, is that in order to divest jurisdiction of ITO to make assessment straightaway without referring matter to IAC is that assessee must object to proposed additions and need not necessarily support objection with any reasons or explanations which it can always do at hearing before IAC. On particular facts of this case, ITO has proceeded to make assessment not on ground that assessee has not supported its objection with proper or valid reasons, but on ground that there are no objections at all from assessee, which is contrary to facts and materials on record and we cannot help observing that such finding is perverse. Consequently, we come to finding that ITO had completed assessment without jurisdiction because once it is found that assessee objected to proposed additions in draft assessment order, ITO loses his jurisdiction to complete assessment on his own as he has to refer matter to IAC and abide by latter's directions. Indeed, department does not dispute that ITO's order making assessment is contrary to provisions of section 144B on facts of this case and all that is agitated in grounds of appeal before us is that Commissioner (Appeals) should not have annulled assessment as invalid because all that happened is that procedural irregularity has intervened in process of assessment and he should have set aside assessment with direction to redo same according to procedure laid down under section 144B. Whether assessment was rightly annulled by Commissioner (Appeals) or it ought to have been set aside by him with direction to redo it after observing procedure is question that arises for our consideration. 7. We may now consider decisions stated by parties. In Banarsidas Bhanot & Sons' case, case relied on by department, facts were that draft assessment order was served on assessee setting out various proposed additions and disallowances, but quantum of total income was not computed. assessee's objections to proposed draft assessment order were not received within prescribed time, but were received by ITO after h e completed assessment. Tribunal in that case set aside assessment order and restored matter to ITO for making fresh assessment after serving fresh and complete draft order on assessee. It is in these circumstances that High Court upheld order of Tribunal. It was pointed out that in that case draft order contained full details of proposed additions and variations and all that it lacked was computation of total income which could not have caused any prejudice to assessee. It was not case where ITO did not start proceeding or complete assessment within time prescribed. In H.H. Maharaja Raja Pawer Dewas v. CIT [1982] 138 ITR 518 (MP) relied on by department, facts were that assessment for year 1973-74 was made on income of Rs. 1,19,760 against returned income of Rs. 17,354 disclosing variation of lakh of rupees, but without following procedure under section 144B. Commissioner, revised order of assessment under section 263 of Act on ground, inter alia, that assessment order not following procedure under section 144B prejudiced interests of revenue. Tribunal in appeal held that revenue is prejudiced because there is always risk to revenue in sense that objection regarding non-compliance of section 144B can be taken at any time and it is in interests of revenue to get irregularity cured. High Court held that though assessment order without compliance with procedure laid down under section 144B is erroneous, it is not prejudicial to interests of revenue so as to confer revisional jurisdiction on t h e Commissioner under section 263. Here also, we find that facts are distinguishable. 8. We may now turn to Special Bench decision of Tribunal in case of Shivaji Park Gymkhana. In that case, against nil income returned by case of Shivaji Park Gymkhana. In that case, against nil income returned by assessee, ITO determined assessable income at over Rs. 1 lakh thereby disclosing variation of Rs. 1 lakh. In such situation provisions of section 144B were attracted, but ITO completed assessment without such reference. Commissioner (Appeals) accepted assessee's submission that assessment order was not legal and, hence, nullity, but Tribunal in further appeal held that omission to make reference under section 144B w s only procedural irregularity which could not render assessment nullity, but it was curable by setting aside assessment for being redone according to law. It must be observed that in that case apparently ITO was not aware of presence of section 144B or its requirement and had proceeded to make assessment as if he had jurisdiction to do so in regular course. It was also observed in that order that there is nothing wrong with assumption of initial jurisdiction, but if some mandatory provision has not been complied with while computing assessment, assessment cannot be sustained and will have to be set aside, but appellate authority has also to give direction to make fresh assessment after complying with legal requirements. facts in this case are distinguishable from facts in case before us. This is not case where ITO was not aware of procedure and had made assessment which he had jurisdiction to do. He was fully aware of requirement of section 144B and had followed it up to stage of sending draft assessment order and inviting objections of assessee. Where he has committed illegality, which, in our opinion, is not curable, but fatal, is to assume jurisdiction to make assessment on face of categorical objection of assessee in proposed draft assessment order by perversely holding that there is no objection and, thus, trying to vest himself with jurisdiction to make assessment, even though requirement under section required that he should refer matter to IAC and abide by his directions. Further, as pointed out by learned counsel for assessee, ITO appears to have gathered materials and information in regard to certain items subsequent to draft assessment order, which is used in his final order and obviously these materials could not have been put to assessee for rebuttal. Thus, there is gross violation of principles of natural justice, which is fatal to validity of assessment. decision of Punjab and Haryana High Court in CIT v. Sham Lal [1981] 127 ITR 816 relied on by assessee supports assessee's contention. It was held in that case that where assessment is made based on material relied on by ITO and not communicated to assessee, only correct course for Tribunal was to annul assessment orders passed by ITO. Similarly, in case of Gauhati High Court in Jai Prakash Singh v. CIT [1978] 111 ITR 507 it was held that violation of statutory principles of natural justice takes away jurisdiction of authority concerned to continue with proceedings and pass orders and necessarily invalidate proceedings and orders passed therein. It is to be noted that in this decision, assessment was made by issue of notice under section 143(2) to only one of several legal representatives. In case of Sudhir Sareen v. ITO [1981] 128 ITR 445 (Delhi) ITO sent draft assessment order for enhanced amount after assessee was heard on his objections against earlier draft order before IAC and it was found that draft order was on directions of IAC without hearing assessee in respect of same. High Court held that opportunity of being heard is condition precedent to issuance of any prejudicial directions and entire procedure from stage of directions given by IAC were quashed. point emphasised in all these decisions is that any order in violation of natural justice by denying assessee reasonable opportunity of being heard in respect of matters prejudicial to interests of assessee is not mere irregularity but it is illegal and requires to be quashed and there is no question of setting aside such order and directing fresh order. 9. There is one more reason why, according to us, assessment cannot be set aside with direction to make fresh one, but must be struck down as nullity. It would be seen that assessment year involved is 1979-80. Under ordinary period of limitation prescribed under section 153 of Act, assessment will be required to be completed by 31-3-1982, but under Explanation 1 to that section, in case where procedure under section 144B is resorted to, period not exceeding 180 days from date on which ITO forwards draft order under section 144B(1) to assessee and ending with date on which ITO receives directions from IAC or in case where no objections to draft order are received from assessee, period of 30 days is excluded. In present case, as we have already found and it was also undisputed on behalf of department, that objection has been received from assessee to draft order and, therefore, period of 30 days applicable to case where no objection is received is not applicable, but only period ending on date on which ITO receives directions from IAC if he had referred matter to IAC and obtained his directions within period of 180 days allowed under section. ITO cannot avail himself of period of 30 days from date on which he forwarded draft order as it applies only to case where no objections are received from assessee and, therefore, assessment made by him is clearly time barred. All decisions where it is held that assessment can be set aside and ITO directed to redo assessment afresh proceeded on proposition of law that ITO had jurisdiction to make assessment when he made assessment and only certain procedural irregularity had intervened and not cases where ITO was divested of his jurisdiction to make assessment. Moreover, it is apparent from facts stated in assessment order of ITO that he was aware of fact that assessment was getting time barred and, therefore, proceeded to issue draft order even before results of certain enquiry made by him were received and as already stated he has acted on basis of materials subsequently received without giving opportunity to assessee to rebut evidence thereof. To set aside assessment and direct ITO to make fresh assessment in these circumstances would not only amount to authorising ITO to make assessment after period of limitation has expired, which is illegal, but also putting premium on lapse on part of ITO in not taking appropriate steps to complete assessment within period of limitation and observing procedure prescribed in law, especially when, as it appears to us in this case, he has consciously flouted mandatory provisions of Act. 10. In view of reasons stated above, we reject objections of department and uphold order of Commissioner (Appeals) annulling assessment. appeal is dismissed. Per Shri T.R. Thiruvengadam, Accountant Member--I am unable to agree with my learned brother, upholding order of Commissioner (Appeals) that assessment is annulled. I do not agree that infirmity in assessment is assessment is annulled. I do not agree that infirmity in assessment is so fatal as to cut at root of jurisdiction of ITO in making assessment. 2. I need not repeat facts. I would, however, point out one aspect of factual position. controversial additions proposed by ITO in draft assessment order are two. They are in sums of Rs. 1,04,555 and Rs. 10,000. first figure has not been adhered to in final assessment order issued by ITO. He has changed it to Rs. 91,055. It is to be noticed that he has actually reduced addition originally proposed by him by Rs. 13,500. This was by his taking into account reply received by ITO from his counterpart at Nagercoil. This reply confirmed one of transactions propounded by assessee and ITO has accepted claim of assessee by reducing addition by Rs. 13,500. 3. One of points made out by assessee and accepted by my brother is that ITO has varied draft assessment order on basis of material not disclosed to assessee, to wit, aforesaid reply from ITO, Nagercoil, and has, thus, violated principles of natural justice. It is difficult to accept this point in view of fact that ITO's acting on information in this letter has only been to reduce addition originally proposed. action of ITO has enured to benefit of assessee and not to his detriment. It cannot, therefore, be said that ITO has acted in violation of principles of natural justice. As far as rest of additions are concerned, ITO has provided opportunity to assessee of being heard before he issued draft assessment order. assessment, in my opinion, cannot be annulled on this score. 4. ITO has passed final assessment order without referring draft assessment order to his IAC. He has considered that assessee has not really made any objections in draft assessment order proposed by him. It is on this reading of reaction of assessee to draft assessment order that ITO has chosen to pass final assessment order without reference to IAC. I agree with my learned brother that in so doing ITO cannot be considered to have correctly followed procedure laid down in section 144B. assessee has stated in its first letter to ITO that it has objections to draft assessment order proposed. It may not be necessary for assessee to give in detail various objections that he may have for proposed draft assessment at this stage. proper thing for ITO could have been to refer draft assessment order to his IAC as envisaged in section 144B. 5. However, it cannot be said that because he has not referred draft assessment order to his IAC, he has acted without jurisdiction in passing final assessment order. His completing assessment without reference to his IAC might be beyond his jurisdiction at this stage. But that does not, in my opinion, upset valid jurisdiction that ITO had assumed for making assessment on assessee. His action in finalising assessment without reference to his IAC stands, in my opinion, on same footing, as case in H.H. Maharaja Raja Pawer Dewas, where even though variation between returned income and assessed income was more than Rs. 1 lakh, ITO had not followed procedure under section 144B. difference between two cases is only one of degree and not of kind. In that case, Commissioner revised order of assessment under section 263 on ground that assessment order not following procedure under section 144B prejudiced interests of revenue. Tribunal upheld this view, but High Court held that not following procedure laid down under section 144B was not prejudicial to interests of revenue on footing that assessment has been made with valid jurisdiction. In case of Banarsidas Bhanot & Sons, High Court held, even though there were certain defects in draft order, assessee had no difficulty in filing its objections but as he did not do so within seven days assessment order passed by ITO before receipt of objections by ITO could not be said to be nullity, that though Tribunal could have affirmed assessment made by ITO, it took view more favourable to assessee by setting aside assessment and sending back case to ITO which would enable assessee to object within time to variation which ITO proposed to make. These cases clearly show that any irregularity in following procedure laid down in section 144B cannot have effect of displacing jurisdiction of ITO to make assessment and assessment so made cannot be annulled but necessary orders will have to be passed to rectify error in procedure which might have caused prejudice to assessee. 6. order of Special Bench of Tribunal in case of Shivaji Park Gymkhana has drawn distinction between cases where assessments should be annulled and cases where assessments could only be set aside. It has been held that it is only in cases where there was inherent lack of jurisdiction to assess, that assessment could be annulled. It cannot be said in this case that ITO did not have jurisdiction at time he commenced proceedings for making assessment on assessee herein. He had valid jurisdiction to make assessment. Such valid jurisdiction cannot become ineffective because of irregularity in observance of procedure laid down in one of provisions for making assessment, namely, section 144B. I would, therefore, set aside assessment and direct ITO to make proper assessment according to law. 7. objection has been taken by learned counsel for assessee that Taxation Laws (Amendment) Act, 1984 has deleted provisions of section 144B from Act and, therefore, if assessment is set aside, assessee would not have benefit of procedure contemplated in section 144B. It has been held that section 144B is only procedural section in various decisions. If and when ITO proceeds to make assessment afresh, he can only follow procedure laid down in Act as it stands at time of making t h e assessment. I do not think that any prejudice would be caused to assessee because section 144B has been removed from statute. In any event, that cannot be argument for supporting case that assessment should be annulled. 8. appeal is treated as allowed for statistical purposes. ORDER UNDER SECTION 255(4) OF INCOME-TAX ACT, 1961 As required by section 255(4) of Act, we hereby state following point of difference between us in this case for President for necessary action: "Whether assessment in this case requires to be annulled as illegal and invalid or it only requires to be set aside with direction to make fresh assessment?" THIRD MEMBER ORDER Per Shri T.D. Sugla, President--On difference of opinion between Members who heard appeal, originally, following point of difference was stated: "Whether assessment in this case requires to be annulled as illegal and invalid or it only requires to be set aside with direction to make fresh assessment?" 2. assessee is registered firm and proceedings relate to its assessment for assessment year 1979-80. Return was filed on 22-3-1980 disclosing income of Rs. 45,361. ITO examined case from time to time and proposed to make addition of Rs. 1,14,555. proposed addition being more than Rs. 1 lakh, he forwarded copy of draft assessment order to assessee on 29-3-1982 as laid down in section 144B. copy of d r ft assessment order was received by assessee on 1-4-1982. assessee sent letter dated 5-4-1982 objecting to addition proposed by ITO. This letter was received by ITO on 7-4-1982. In above letter, assessee had, inter alia, requested for time of at least 14 days for submitting its detailed objections against additions/disallowances. It is evident from entry dated 8-4-1982 in order-sheet that time was granted by ITO as requested. It, however, appears that contents of entry were not communicated to assessee. On 16-4-1982 assessee sent another letter to ITO which was received by him on 17-4-1982 requesting for further time of 15 days for filing detailed objections. ITO has passed following order in his order-sheet on 24-4-1982: "Further time cannot be granted under section 144B--Assessment order dictated. final assessment order has been made by him on 24-4-1982 which has been received by assessee on 30-4-1982. 3. It was submitted on behalf of assessee before Commissioner 3. It was submitted on behalf of assessee before Commissioner (Appeals) that assessment order passed by ITO was bad in law and required to be annulled. Following order of Tribunal in Rajendra V. Deshprabhu Cos. case, Commissioner (Appeals) annulled assessment. s stated above, learned Members who heard appeal, originally, have differed. While, according to learned Judicial Member, assessment, as made, is illegal and without jurisdiction and requires to be annulled, learned Accountant Member has, though agreed with learned Judicial Member that assessment, as made, is invalid and cannot be upheld, held that assessment only requires to be set aside with direction to make fresh assessment according to law. 4. departmental representative has kly relied on order of learned Accountant Member. In particular, he has laid emphasis on observations of Special Bench of Tribunal in case of Shivaji Park Gymkhana at page 475. Inviting my attention to fact that one of reasons given by learned Judicial Member for holding assessment altogether void, being certain alterations made by him in computation of income without giving assessee opportunity of being heard, he submits that no principles of natural justice were involved in this case as through alterations made suo motu, ITO had reduced additions/disallowances. It was pointed out that as against proposed addition of Rs. 1,14,555 in draft assessment order, ITO made addition of Rs. 1,01,055 only in final assessment. Particular reference in this regard has been made to paragraph No. 5 of learned Accountant Member's order. It is also stated that new situation has arisen because of deletion of section 144B with effect from 1-4-1985. provisions being procedural and if assessment is set aside and assessment is to be made afresh, assessee would not have benefit of procedure contemplated in section 144B. 5. counsel for assessee has, on other hand, kly relied on order of learned Judicial Member. It is pointed out that in all decisions where assessments have been set aside with direction to make fresh assessments even though assessments were found to be invalid, two conditions were satisfied, namely, initial assumption of jurisdiction to make assessment was properly acquired and assessment was made within time limit prescribed for it. In present case, assessment (which is invalid) has been made by ITO on 24-4-1982, i.e., after time limit for completion o f assessment had expired. Time barred assessments, according to counsel for assessee, can never be set aside with direction to make them afresh. In this context, counsel kly relied on paragraph No. 2 of order of t h e Commissioner (Appeals), observations of Madhya Pradesh High Court in case of Banarsidas Bhanot & Sons at page 492, of Delhi High Court in case of Sudhir Sareen at page 449 of Gauhati High Court in case of Sashi Prasad Baruah v. AITO [1973] 91 ITR 488 and of Gauhati High Court in case of Jai Prakash Singh. 6. In order to appreciate rival contentions properly, it is desirable to mention that both learned Members have held that provisions of section 144B are applicable in this case, that it was not case of 'no objection' by assessee and that, therefore, valid assessment could have been made by ITO by forwarding draft assessment order along with assessee's objections to IAC and completing assessment thereafter in accordance with directions received from IAC under section 144B(4). They agree that assessment, as made on 24-4-1982 on assumption that it is case of 'no objection', is invalid and cannot be sustained. difference between them has been on question whether assessment should be annulled altogether or whether it be set aside with direction to make fresh assessment according to law. There is no dispute between parties about controversy. 7. It is pertinent to mention that learned Judicial Member has mainly given two reasons for annulling assessment altogether. For reasons given in paragraph Nos. 5 to 7 he has held that assessment made is illegal and without jurisdiction and, therefore, requires to be annulled. For this purpose he has relied on his finding (about which there is no dispute) that ITO has not complied with mandatory provisions of section 144B. He has also referred to fact that ITO's completing assessment treating case to be that of 'no objection' and yet altering computation of income while passing final order is against principles of natural justice. For reasons given in paragraph No. 9 he has held that assessment has been made after expiry of time No. 9 he has held that assessment has been made after expiry of time limit provided for it and, therefore, it has to be annulled. 8. learned Accountant Member has not agreed with learned Judicial Member. According to him, mere non-compliance with mandatory provisions of section 144B does not displace jurisdiction of ITO duly vested in him. For his this view he has derived support from Madhya Pradesh High Court decisions in cases of Banarsidas Bhanot & Sons, H.H. Maharaja Raja Pawer Dewas and Special Bench order of Tribunal in case of Shivaji Park Gymkhana. 9. Special Bench of Tribunal in its decision in Shivaji Park Gymkhana's case, it may be stated, has followed besides abovesaid two Madhya Pradesh High Court decisions Supreme Court decision in case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451. Following Special Bench order in Shivaji Park Gymkhana's case, where all relevant aspects have been considered in great details, I am inclined to agree with learned Accountant Member that fact of mere non-compliance with mandatory procedural provisions after assuming valid jurisdiction to make assessment while completing final assessment, makes assessment invalid but not illegal and without jurisdiction so as to justify annulment of assessment altogether instead of setting it aside with direction to make it afresh. I also do not agree with learned Judicial Member that any principles of natural justice is or can be said to be violated in ITO's allowing relief to assessee without giving opportunity as distinct from making some additions/disallowances. In this context it may not be out of place to mention that as against proposed addition of Rs. 1, 14,555 in draft assessment order, ITO made addition of Rs. 1,01,055 only in final assessment completed on 24-4-1982. 10. This takes me to question of limitation about which learned Accountant Member has not made any observation. Section 153(1) prescribes t h e time limit for completion of assessments. It lays down that no order of assessment shall be made under section 143 or 144 at any time after two years from end of assessment year in which income was first assessable where such assessment year is assessment year, commencing on or after 1- 4-1969. Thus, no order of assessment could have been passed for year under appeal after 31-3-1982 as laid down in section 153(1). assessment has admittedly been made on 24-4-1982. In other words, assessment in present case is on fact of it barred by limitation by 24 days. No doubt, Explanation 1(iv) to section 153 provides for extension of time for completion of assessment in cases where provisions of section 144B are applicable. However, on carefully going through clause (iv) of Explanation 1 it is seen that extension of time limit is not automatic. It depends upon satisfaction of certain conditions. For instance, in case where no objections to draft assessment order are received time limit is extended by 30 days. In case where objections are received time limit is extended by period not exceeding 180 days, commencing from date on which ITO forwards draft order and ending with date he receives directions from IAC under section 144B(4). It is, admittedly, not case of 'no objection'. period cannot also be extended by treating it as objections from assessee as in that case it would be necessary to also have date on which he receives directions from IAC under section 144B(4). In absence of latter date time limit cannot be said to have been extended at all. Thus, assessment as made on 24-4-1982 is barred by limitation. 11. next question that arises for consideration is whether assessment which is barred by limitation can or cannot be set aside with direction to make it afresh according to law. I am afraid I find it difficult to agree with departmental representative that decisions of Supreme Court, High Courts and Special Benches of Tribunal, where it has been held that in cases where initial assumption of jurisdiction is validly acquired, but some procedural mandatory irregularity has been committed while completing assessments, assessment should be set aside with direction to make them afresh according to law are applicable in this case. assessments in all cited cases were made within time. Therefore, I have no hesitation in holding that these decisions will not help department. On other hand, in number of cases it has been held that assessment barred by limitation has got to be annulled. 12. In this context it may be desirable to mention that Madhya Pradesh 12. In this context it may be desirable to mention that Madhya Pradesh High Court has in its decision in case of Banarsidas Bhanot & Sons clearly stated that they were proceeding in case on basis that--"This is not case where ITO did not start assessment proceedings within limitation or did not complete them within limitation." Supreme Court has also held in case of Grindlays Bank Ltd. v. ITO [1980] 122 ITR 55 that setting aside of order of assessment with direction to make fresh assessment in that case was in order as original assessment had been made within time permitted under clause (ii) of Explanation 1 to section 153. One need hardly refer to Supreme Court decision in case of Ahmedabad Mfg. & Calico Printing Co. Ltd. v. S.G. Mehta, ITO [1963] 48 ITR 154 at page 171 in support of proposition that where Act prescribes time limit within which order is to be passed, department cannot pass such order on expiry of that period. Supreme Court in CIT v. National Taj Traders [1980] 121 ITR 535, where it was held that time limit applies to suo motu orders passed by Commissioner under section 263 and not to orders made by him pursuant to direction or order passed by Tribunal, also supports view indirectly I am taking in this case. In this view of matter, I eventually agree with Judicial Member that assessment order in this case has got to be annulled. 13. In result, Third Member's order will now go to Division Bench for deciding appeal according to majority view. *** SECOND INCOME TAX OFFICER v. MUTHULAKSHMI TIMBER DEPOT.