H. S. AHLUWALIA, J. M. very ticklish issue is involved in this appeal. In original proceedings, assessee failed to comply with notice issued to it under ss. 142(1) and 143(3). ITO, therefore, proceeded on to make on assessment under s. 144 of IT Act. This order was responded in proceedings under s. 146 on 20th Nov., 1978. However again assessment was made under s. 144. Since difference between declared and assessed income was more than Rs. 1. Lakh, ITO forwarded draft order to assessee and submitted proceedings to IAC under s 144B of IT Act. assessee s objections was that s. 144B could not apply to assessment made under s. 144. Therefore, forwarding of proceedings was bad in law. IAC not only accepted this contention, he also returned proceedings to ITO. Subsequently, ITO served challen dt 3rd April, 1984 along with covering letter that assessment had been completed on 28th Nov., 1979 and challan was being sent for depositing amount due under that assessment. assessee went in appeal to CIT(A) and contended what order dt. 28th Nov., 1979 was not assessment order since no tax was determined along with order as required by s. 143(3)(a) of IT Act, therefore, challan forward on 28th April, 1984 was barred by limitation. This contention was rejected by CIT(A) on ground that if reference to IAC under s. 144BN was unnecessary then IAC was not competent to give any directions regarding legality or otherwise of order under s. 144. Therefore, date o f passing of this order under s. 144 should be taken to be date when said assessment was completed. Although demand notice was received by assessee only on 23rd April, 1984 impugned order was not barred by limitation. assessee has come up in second appeal before us. We have heard representative of parties at length in this appeal. On behalf of assessee. it was urged that original order dt. 28th Nov., 1979 was not valid order of assessment according to law. In this behalf our attention was drawn to number of authorities, namely Mahendra J. Thakkar & Co vs. CIT 1981 Tax LR 1811, R. Giridhar vs. CIT (1982) 136 ITR 774 (Kar) and CIT vs. Smt. Krishnawanti Punjabi & Raj Kumar Punjabi (1981) 23 CTR (Cal) 255 and provisions of s. 143 itself according to which assessment order should contain computation of total income or loss of assessee and determine sum payable by assessee or refundable to him on basis of such assessment. contention of Department in this behalf was that it w s not necessary that amount of tax should be mentioned in assessment order itself and could be mentioned in notice of demand and merely because notice of demand was issued after period of limitation, assessment was not barred by ,limitation. Reliance was placed upon decision of Gauhati High Court in Ramanand Agarwala vs. CIT (1984) 39 CTR (Gau) 110: (1985) 151 ITR 216(Gau). After carefully considering all facts and circumstances of case we are of opinion that present assessment orders cannot be considered to be strictly in accordance with law. first order dt. 28th Nov., 1979 was not on assessment order in as much as it was only draft of assessment order suggesting variation proposed to income of assessee and inviting assessee's objections thereto for being furnished to IAC. No amount of tax due on basis of this assessment order was determined by ITO at that time. Nor is there any evidence to suggest that any computation sheet was prepared at time of passing of this order. This however is not end of matter. At that time it appears that ITO honestly believed that proceedings had to be forwarded to IAC and he has forwarded proceedings accordingly. This order of ITO may be wrong. Wrong order does not necessarily render correct proceedings nugatory. In Guduthut Bros. vs. ITO (1960) 40 ITR 298 (SC) Hon'ble Supreme Court has held that once there is any illegality proceedings which were lawfully initiated do not cease to be operative and it is open to officer to take up matter from point at which illegality supervened and to correct his proceedings. assessee had urged before IAC in proceedings under s. 144B that it had not committed any default as to be liable for being proceeded against under s. 144. It filed affidavit of Sri Sewaram and Mohanlal stating before him that original account books had been lost in transit. Initially assessee did not object to proceedings under s. 144B which were initiated on 28th Nov., 1979. It was only later 18th July, 1980 that assessee took as objection regarding compentence of ITO to make reference under s. 144B which objections was sustained. Therefore, ITO had been directed to make proper assessment in accordance with law. It has been held by Hon'ble Supreme Court in Kapoorchand Srimal vs. CIT (1981) 24 CTR (SC) 345: (1981) 131 ITR 451 (SC) that appellate authority has jurisdiction as well as duty to correct all errors in proceedings under appeal and to issue, if necessary, appropriate directions to authority against whose decision appeal is preferred to dispose of whole or any part of matter afresh, unless forbidden from doing so by statute another in J.P. Sharma & Co. vs. CIT (1984) 40 CTR (Raj) 346: (1985) 151 ITR 131 (Raj) it was held by Rajasthan High Court itself that bar created by provisions of s. 275 of IT Act 1961 refers only to initial order and if order of penalty is passed on account of direction by higher authority in appeal or revision or on account of answer given in reference by High Court or even in pursuance of order passed by High Court time limit laid down in s. 275 will not apply. Recently it has been held by Patna High Court in CIT vs. Sheo Kumari Debi (1986) 50 CTR (Pat) 350: (1986) 157 ITR 30 (Pat) that in interpreting taxing provisions object of enactment should be taken into consideration and provision made to check evasion of tax need not be necessarily construed in favour of assessee. No doubt there are some cases in which assessment which become time barred due to delay in proceedings have been cancelled but that view is not absolute. In CIT vs. Balkrishna Malhotra (1971) 81 ITR 759 (SC) which is probably kest case for assessee, appeal was dismissed by their Lordships of Supreme Court on ground that Courts could not ignore harm that was likely to be caused by unsetting law, but contrary interpretation of provisions of s. 32(1)(a) of Act, regarding computation of tax due being necessary part of assessment was held to be quite plain. In present case, there is absolutely no allegation of mala fides against IT authorities. In any case decided cases on subject were prior to inclusion of s. 292B of IT Act, which reads as under: "No return of income, assessments, notice summons or other proceeding furnished or made of issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake defect or omission in such return of income assessment, notice, summons or other proceedings if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to intent and purpose of this Act." mistake of ITO in forwarding proceedings to IAC was there, but i t cannot be fatal to proceedings altogether. irregularity can only be correct because purport and intention of ITO has been to act according to intent and purpose of IT Act. Therefore, interpretation could not be taken in such manner so as to bar right of Revenue to assess assessee altogether. In this behalf we may point out that although ground was taken before us in relation to merits and quantum of assessment, representative of assessee frankly conceded that had nothing to say in support of that ground and he did not also urge this ground before CIT(A). It would be adding insult to injury that is done to Revenue in this case, if assessee is allowed to evade payment of tax merely on ground that at some stage ITO did not proceed according to law. We, therefore, direct that ITO shall make fresh assessment in accordance with law. Such assessment should not be time barred in view of Rajasthan High Court decision in case of J.P. Sharma above quoted, in as much as it would be in pursuance of order passed by Tribunal. It needs be pointed out that while IT Act contains provisions for extending limitation in case of assessment order made, as result of any decision of appellate authority, there is no corresponding provisions in relation to levy of penalties, but Hon'ble Rajasthan High Court has extended that principle in relation to penalties as well. Therefore, there is absolutely no reason why because of mistake here and there, present assessment proceedings which were being duly conducted according to law, should be held to be time barred because of intervening irregularity. In result appeal is allowed for statistical purposes only. *** PEERULAL MOHANLAL v. INCOME TAX OFFICER