CHANDRAKANTHARAJ, J. ( 1 ) THIS reference under Section 256 (2) of the income tax Act with a statement of the case has come before us with the following question raised for answer:"whether, on the facts and in the circumstances of the case, the tribunal was right in holding that the assessment order for the assessment year 1973-74 Was valid in law despite the fact that the Income-tax officer had altered the depreciation allowance in the assessment order after the approval under Section 144-B of the Act given by the Inspecting Assistant Commissioner?" ( 2 ) BEFORE we proceed to give our answer tothe question, the facts may be stated briefly and they are as follows: for the assessment year 1973-74, the assessee - M/s. Manipal Industries Ltd. , Manipal - in the return claimed depreciation on machinery at rs. 2,69,672/ -. the Assessing Authority did not accept the return as filed. He, therefore, assessed the assessee-petitioner under sub-section (3) of Section 143 of the Act. In that behalf, following the procedure prescribed under Section 144-B of the Act, he sent a proposal in the form of draft assessment order wherein the Assessing authority had provisionally accepted the sum of rs. 2,69,672/- claimed as depreciation. On receipt of the objections from the assessee, he sent the draft assessment order as well as the objections to the Inspecting Assistant Commissioner as required by sub-section (4) of Section 144-B of the Act for approval of the Inspecting assistant Commissioner having jurisdiction. ( 3 ) IN the instant case that has been doneis not disputed. the Inspecting Assistant Commissioner, it is submitted, approved the reduction of the depreciation claimed from Rs. 2,69,672/- by Rs. 61,968/-, disallowing apparently the depreciation originally claimed. In that manner, the assessment came to be concluded without giving a further opportunity as provided in the proviso to sub-section (4) of Section 144-B of the Act. ( 4 ) THE assessee, aggrieved by the said order,preferred an appeal to the Appellate Assistant commissioner of Income-tax, Hassan Range, hassan. The said Appellate Authority, by its order dated 2-12-1977, dismissed the appeal for various reasons given, but without considering and dealing with the grounds urged by the assessee that such reduction in the depreciation claimed could not have been done without an opportunity of being heard given to the assessee. The said Appellate Authority, by its order dated 2-12-1977, dismissed the appeal for various reasons given, but without considering and dealing with the grounds urged by the assessee that such reduction in the depreciation claimed could not have been done without an opportunity of being heard given to the assessee. ( 5 ) AGGRIEVED by the dismissal order, the assessee preferred an appeal to the Income-tax Appellate tribunal in Income-tax Appeal No. 1094/bang. /1977-78. the tribunal, by its order dated 30th September, 1980, partly allowed the appeal, but in so far as the appeal related to the reduction of depreciation claimed, the tribunal after noting the contention, had this to say, "in the draft order, depreciation was taken as claimed at Rs. 2,69,672/ -. The Income-tax Officer has stated that this was accepted provisionally. " In the final order, the depreciation worked out was Rs. 2,13,445/ -. We find that even when the draft order was sent, the depreciation was provisionally worked out and in the circumstances, there is no merit in the contention either. In that circumstance, to the extent the assessee-appellant failed before the tribunal, he sought a reference of this question which was in the first instance rejected. the assessee having approached this Court under Section 256 (2) of the Act, obtained a direction for the reference and, therefore, the matter is before us as earlier stated. ( 6 ) THE question really falls in the narrowest of the compasses possible within the proviso to sub-section (4) of Section 144-B of the Act as it stood then. Section 144-B is a procedural section for concluding assessment under sub-section (3) of Section 143 and it is as follows:"144-B. (1) Notwithstanding anything contained in this Act, where, in an assessment to be made under sub-section (3) of Section 143, the Income-tax Officer proposes to make, before the 1st day of October, 1984, any variation in the income or loss returned which is prejudicial to the assessee and the amount of such variation exceeds the amount fixed by the Board under sub-section (6), the Income-tax Officer shall, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the assessee. (2) On receipt of the draft order, the assessee may forward his objections, if any, to such variation to the Income-tax Officer within seven days of the receipt by him of the draft order or within such further period not exceeding fifteen days as the Income-tax officer may allow on an application made to him in this behalf. (3) If no objections are received within the period or the extended period aforesaid, or the assessee intimates to the Income-tax officer the acceptance of the variation, the Income-tax Officer shall complete the assessment on the basis of the draft order. (4) If any objections are received, the Income-tax Officer shall forward the draft order together with the objections to the Inspecting Assistant Commissioner and the inspecting Assistant Commissioner shall, after considering the draft order and the objections and after going through (wherever necessary) the records relating to the draft order, issue, in respect of the matters covered by the objections, such directions as he thinks fit for the guidance of the Income-tax Officer to enable him to complete the assessment: provided that no directions which are prejudicial to the assessee shall be issued under this sub-section before an opportunity is given to the assessee to be heard. (5) every direction issued by the Inspecting assistant Commissioner under sub-section (4) shall be binding on the Income-tax Officer. (6) For the purposes of sub-section (1), the board may, having regard to the proper and efficient management of the work of assessment, by order, fix, from time to time, such amount as it deems fit: provided that different amounts may be fixed for different areas: provided further that the amount fixed under this sub-section shall, in no case, be less than twenty-five thousand rupees. (7) Nothing in this section shall apply to a case where an Inspecting Assistant Commissioner exercises the powers or performs the functions of an Income-tax Officer in pursuance of an order made under Section 125 or Section 125-A. " ( 7 ) IT is obvious from the provisions contained insub-section (4) that once the objections are received, the Assessing Authority or the Income-tax officer is bound to forward the objections together with the draft assessment order to the Inspecting Assistant Commissioner for his approval. thereafter, if an adverse order is to be passed, as provided in the proviso clearly, an opportunity must be afforded to the assessee of being heard. thereafter, if an adverse order is to be passed, as provided in the proviso clearly, an opportunity must be afforded to the assessee of being heard. If that opportunity of being heard, which means a personal hearing, is. denied to the assessee, then the order is bound to be vitiated as violating the rules of natural justice expressly provided in the scheme of the procedure under section 144-B of the Act. ( 8 ) THEREFORE, we answer the question in the negative against the Revenue. We further direct that the matter be remitted back to the Incometax officer concerned to complete the assessment providing an opportunity to the assessee to make out his case as to why the depreciation should not stand at the amount he had returned. ( 9 ) THE tribunal's order to that extent is setaside. Order accordingly. --- *** --- .