1996 (4) TMI 68 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 144B to reassessments under Section 147.
2. Interpretation of "assessment" under Section 143(3) and its inclusion of "reassessment."
3. Limitation period for reassessments under Section 147 and the applicability of extended time limits under Explanation 1 to Section 153.

Issue-wise Detailed Analysis:

1. Applicability of Section 144B to Reassessments under Section 147:

The primary issue was whether the expression "an assessment to be made under section 143(3)" used in Section 144B includes reassessments under Section 147. The Tribunal concluded that Section 144B applies only to original assessments under Section 143(3) and not to reassessments under Section 147. This interpretation was based on the legislative intent and the specific wording of the statutes. The Tribunal emphasized that Section 144B was designed to provide a safeguard against high-pitched assessments during the original assessment process, not during reassessments.

2. Interpretation of "Assessment" under Section 143(3) and Its Inclusion of "Reassessment":

The court examined whether the term "assessment" in Section 144B should be interpreted to include "reassessment" as defined in Section 2(8) of the Income-tax Act, 1961. The Tribunal and the court concluded that the context of Section 144B does not support the inclusion of reassessments. The court noted that the legislative scheme differentiates between original assessments and reassessments, as evidenced by separate provisions for appeals and time limits under Sections 143, 144, and 147.

3. Limitation Period for Reassessments under Section 147 and the Applicability of Extended Time Limits under Explanation 1 to Section 153:

The court addressed whether the extended time limit provided in Explanation 1 to Section 153 applies to reassessments under Section 147. The Tribunal held that since Section 144B does not apply to reassessments, the extended time limit under Explanation 1 to Section 153 is also not applicable. Consequently, the reassessments in these cases were barred by limitation. The court upheld this view, stating that the extended time limit is available only for original assessments under Section 143(3) and not for reassessments under Section 147.

Conclusion:

The court concluded that the expression "assessment under section 143(3)" does not cover "reassessment" and is confined only to original assessments. Therefore, the procedure prescribed under Section 144B is not applicable to reassessments under Section 147. Consequently, the extended time limit provided in Explanation 1 to Section 153 is not available for reassessments. The reassessments in these cases were time-barred, and the Tribunal's decision to dismiss the Department's appeals was upheld. The common question referred to the court was answered in the affirmative and against the Department. No costs were awarded.