2001 (4) TMI 61 - HC - Income Tax

Summary

Issues:
1. Whether the reassessment order framed by the first respondent was barred by limitation?

Detailed Analysis:
The petitioner filed a writ petition challenging the reassessment order by the first respondent, contending that it was illegal and against the law as it was passed after the prescribed period of limitation. The original assessment was done on December 6, 1978, and a notice for reassessment was issued on August 17, 1982. The reassessment was framed on September 7, 1982, determining a higher value and tax payable. The petitioner argued that the reassessment was beyond the three-year limitation period prescribed under section 73A(b) of the Act. The petitioner filed an application under section 61 seeking rectification of the assessment due to the limitation issue, but it was not disposed of by the first respondent. The petitioner challenged subsequent penalty notices and demands, claiming they had no legal force due to the reassessment being time-barred.

The petitioner's counsel argued that the reassessment order was void and illegal as it was initiated and framed beyond the prescribed three-year limitation period. The petitioner had filed the rectification application promptly after the reassessment, but no action was taken by the first respondent. The standing counsel for the respondents supported the reassessment, stating it was done within the time limit and that the petitioner had the remedy of appeal, which was not pursued. The respondents claimed that the rectification petition was rejected and communicated to the petitioner. The court considered the arguments from both sides and reviewed the material on record.

The court analyzed the provisions of section 73A of the Act, which prescribe a three-year limitation for reassessment proceedings. As the reassessment was framed beyond three years from the date of the original assessment, it was deemed to be barred by limitation. The court found that the reassessment order dated September 7, 1982, and the consequential demand dated February 9, 1990, were quashed. The court allowed the writ petition, ruling in favor of the petitioner. The court did not award any costs in this matter.