K.M. Agarwal, J.
1. This is a reference under Section 256(1) of the Income-tax Act, 1961 (in short 'the Act'), at the instance of the Revenue. The Tribunal has referred the following question of law arising out of the Tribunal's consolidated order dated October 11, 1984, passed in ITA Nos. 183 and 184 of 1983 for the assessment years 1976-77 and 1977-78 for the opinion of this court :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the calculation of tax payable by the assessee having been done as per ITNS-150 forms in March, 1982, the rectification under Section 154 of the Income-tax Act, 1961, was barred by limitation ?'
2. The assessment orders for both the years 1976-77 and 1977-78 were passed under Section 143(1) of the Act on October 29, 1977. Later on, certain mistakes in the assessment orders were detected by the Income-tax Officer and, therefore, notices were issued to the assessee for rectification of the mistakes. The assessee filed her reply on October 24, 1981, and was also heard on the very day. The Income-tax Officer purported to have passed his order under Section 154 of the Act on the said date. The rectification resulted in enhancement of tax payable by the assessee. But the demand notices for both the years were served on the assessee only on March 27, 1982. The assessee preferred appeals before the Appellate Assistant Commissioner of Income-tax and contended that the orders under Section 154 were not passed on October 24, 1981, but were actually passed sometime in March, 1982. Accordingly, it was contended that the orders were barred by time. It was further contended that the purported orders dated October 24, 1981, were not complete rectification orders as they did not determine the tax payable by the assessee. It was urged that the calculation of tax payable by the assessee having been made after October 24, 1981, the rectification was barred by time. No finding was recorded by the Appellate Assistant Commissioner as to whether the purported orders dated October 24, 1981, under Section 154 of the Act were made on the very date or on any subsequent date. He, however, recorded a finding that the calculation of the tax payable by the assessee was not made within the period of limitation, i.e., on or before October 25, 1981, and held that the rectification was barred by time, because rectification formed part of assessment which required determination of tax liability of the assessee. Accordingly, the rectification orders purported to have been made on October 24, 1981, were set aside as barred by time. The Revenue preferred appeals before the Tribunal against the orders made by the Appellate Assistant Commissioner of Income-tax. It was argued on behalf of the Revenue that the calculations of tax in ITNS-150 forms, prepared in pursuance of the orders passed under Section 154 of the Act by the Income-tax Officer, were made on October 24, 1981 itself which was evident from the date mentioned on the calculation forms and, therefore, the entire exercise of passing an order under Section 154 of the Act and the determination of tax liability was completed within the period of limitation. It was admitted by the departmental representative before the Tribunal that the calculation of tax and/or of refund was an integral part of the assessment proceedings which included rectification and that the said calculation also had to be made within the period of limitation. The Tribunal held that the calculations of tax payable by the assessee in Form No. ITNS-150 was not made on October 24, 1981, but were made somewhere in March, 1982. Accordingly, the Tribunal was pleased to uphold the orders passed by the Appellate Assistant Commissioner of Income-tax and to dismiss the appeals filed by the Revenue. Being aggrieved, the Revenue applied for a reference under Section 256(1) of the Act. The application was allowed and the aforesaid question of law was referred to us by the Tribunal for our opinion.
3. Having heard learned counsel for the parties, we are of the view that the said question of law deserves to be decided in favour of the assessee and against the Revenue. As pointed out by the Appellate Assistant Commissioner of Income-tax, Section 143(1)(a) of the Act enjoins upon the Income-tax Officer not only a duty to assess the income of an assessee, but also a duty to determine the sum payable or refundable on the basis of such assessment. It is, therefore, obvious that an assessment under Section 143(1) comprises computation of income and computation of tax on such income. Section 156 provides that where any tax is payable in consequence of any order passed under the Act, a notice of demand shall be served upon the assessee. It, therefore, follows that a notice under Section 156 of the Act is an integral part of an assessment under Section 143(1). Now, Section 154(1) provides that the Income-tax Officer may amend any order of assessment with a view to rectify any mistake apparent from the record. Secti6n 154(4) says that where an amendment is made under Section 154, an order shall be passed in writing by the income-tax authority concerned. Section 154(6) casts a duty on the Income-tax Officer to serve on the assessee a notice of demand under Section 156 where the amendment has the effect of enhancing the assessment or reducing a refund already made. Lastly, Section 154(7) lays down the limitation by providing that no amendment under this section shall be made after the expiry of four years from the date of the order sought to be amended. A bare reading of these provisions would show that where the income-tax authority amends any assessment order which has the effect of enhancing the assessed income, he is bound to issue and serve on the assessee a notice of demand under Section 156 of the Act. Such notice would indicate the tax demanded. It is, therefore, apparent that the rectification of an assessment order would include rectification of computation of income as also rectification of computation of tax earlier made during the regular assessment and such rectification of mistake would take effect from the date the demand notice under Section 156 is served on the assessee. The view, we are taking is supported by a decision of the Supreme Court in C. A. Abraham v. ITO : [1961]41ITR425(SC) a decision of the Jammu and Kashmir High Court in S. Mubarik Shah Naqshbandi v. CIT and a decision of this court in Smt. Jijeebai Shinde v. CGT : [1986]157ITR122(MP) . In the case of C. A. Abraham : [1961]41ITR425(SC) while interpretating the relevant provisions of the Indian Income-tax Act, 1922 (in short the '1922 Act'), the Supreme Court held that the expression 'assessment' used in the sections of Chapter IV of the 1922 Act was not used merely in the sense of computation of income and when Section 44 declared that the partners or members of the firm or association would be jointly or severally liable to assessment, it referred to the liability to computation of income under Section 23 as well as the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Similarly, in S. Mubarik Shah Naqshbandi's case it was held by the Jammu and Kashmir High Court that Section 144 provided that the Income-tax Officer would make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. On a reading of the section, the determination of the tax payable by the assessee is as much mandatory as the determination of his income. The decision of this court in Jijeebai Shinde v. CGT : [1986]157ITR122(MP) was in a reference under Section 26 of the Gift-tax Act, 1958, where the following question of law was referred to this court for its decision (at page 123) :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Commissioner of Gift-tax had jurisdiction to set aside the alleged order of assessment even though it was not served on the assessee, when the order could not be said to exist unless communicated to the party ?'
4. Following the decision of the Calcutta High Court in CIT v. Mahabir Prasad Poddar : [1974]93ITR215(Cal) it was held that since the assessment order was not communicated to the assessee, there was no valid assessment order in existence so as to entitle the Commissioner to invoke the jurisdiction under Section 24(2) of the Gift-tax Act, 1958, and to exercise powers of suo motu revision. Accordingly, the order passed by the Commissioner was declared to be invalid and without jurisdiction.
5. Learned counsel for the Revenue relied on a decision of the Madras High Court in Velu (S. T.) v. CIT : [1958]33ITR463(Mad) in support of his contention that the limitation under Section 154(7) of the Act would start from the date of an order of rectification and not from the date of determination of the tax liability of an assessee or from the date of service of a notice of demand under Section 156 of the Act. The decision of the Madras High Court in Velu's case : [1958]33ITR463(Mad) does not appeal to us because it overlooks the possibility of ante-dating the order under Section 154(1) by the Income-tax Officer with a view to bringing it, within the limitation under Section 154(7) of the Act. The materials brought on record in the present case would show that the reply to the show-cause notice was filed and the arguments of the assessee were heard on the very date, i.e., October 24, 1981, when the order under Section 154(1) of the Act was said to have been passed by the Income-tax Officer. The calculations of tax were also shown to have been made on October 24, 1981, in the ITNS-150 forms whereas the notices of demand were served on the assessee on March 27, 1982. Had the assessment order been passed and calculations of tax made on October 24, 1981, the notices of demand would also have been served on the assessee on October 24, 1981, itself. As a matter of fact, the Tribunal and the Appellate Assistant Commissioner have both held that though the calculations of tax were shown to have been made on October 24, 1981, they were, in fact, made somewhere in March, 1982. In the light of these facts, no credence can be attached to the date mentioned in the rectification orders under Section 154(1) of the Act by the Income-tax Officer nor is the purported date sacrosanct. Accordingly, it must be held that the orders of rectification under Section 154 were barred by limitation.
6. For the foregoing reasons, we hold that the Tribunal was right in holding that the calculation of tax payable by the assessee having been done as per ITNS-150 forms in March, 1982, the rectification under Section 154 of the Income-tax Act, 1961, was barred by limitation. Accordingly, the aforesaid question of law is decided in favour of the assessee and against the Revenue.
7. In the circumstances of the case, we make no order as to costs of this reference.