2002 (7) TMI 85 - HC - Income Tax

Assessment Limitation - Whether on the facts and in the circumstances of the case the present assessment proceedings should be considered to be barred by law because of the intervening irregularities and the consequent delay? - In our view the time barring assessment does not come within the purview of mistake defect or omission referred in section 292B of the Act 1961 therefore the order of the Tribunal is erroneous. - In the result we answer the question in the negative i.e. in favour of the assessee and against the Revenue.

Summary

Issues Involved:
1. Assessment proceedings time-barred due to irregularities and delay.

Analysis:
The case involved an application under section 256(1) of the Income-tax Act, 1961, where the Tribunal referred the question of whether the assessment proceedings should be considered time-barred due to irregularities and delay. The assessee initially filed a return declaring income for the relevant assessment year. Subsequently, there were multiple instances of assessment orders being passed, recalled, and reassessed over several years, leading to a final assessment order in 1984. The key contention was regarding the timing of the determination of tax and the sending of the notice of demand, with the assessee arguing that the assessment was not completed within the stipulated time frame. The Commissioner of Income-tax (Appeals) and the Tribunal considered the issue, with the Tribunal relying on section 292B of the Income-tax Act, 1961, to justify the delay in issuing the demand notice.

The legal representatives for both parties presented their arguments based on relevant case laws. The assessee's counsel contended that the assessment was not completed until the tax was determined, citing precedents to support the argument that time-barring assessments cannot be cured under section 292B. On the other hand, the Revenue's counsel argued that separate determination of tax after assessment can be rectified under the same section. The court delved into the provisions of section 153(2A) and section 143(3) of the Act to understand when an assessment is considered complete. The court referred to previous judgments to interpret the distinction between the assessment of income and the determination of tax liability, emphasizing the importance of both aspects for a complete assessment order.

Ultimately, the court concluded that the time-barring of an assessment does not fall under the purview of mistakes, defects, or omissions that can be rectified under section 292B. Therefore, the Tribunal's decision was deemed erroneous, and the question was answered in favor of the assessee against the Revenue. The judgment highlighted the significance of completing both the assessment of income and the determination of tax within the prescribed time frame to avoid time-barring assessments.