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Issues involved: Challenge to notices u/s 148 of Income-tax Act for assessment year 1989-90 on grounds of legality and jurisdiction due to being beyond limitation period.
Summary: The petitioner-assessee challenged notices dated March 15, 1996, and April 18, 1996, u/s 148 of the Income-tax Act, 1961, for assessment year 1989-90, alleging they were illegal and beyond jurisdiction. The Income-tax Officer had previously assessed the petitioner for the same year and allowed a deduction u/s 32AB. The notices did not provide reasons, leading to grievances by the petitioner. The respondent later provided reasons for the notices, including discrepancies in claimed deductions and purchases made by the assessee. The Assistant Commissioner of Income-tax noted discrepancies in the utilization of investment reserve and purchase of machinery, leading to a requirement for verification and possible taxation. The proviso to section 147 sets a four-year limit for reopening assessments unless there is non-disclosure of material facts by the assessee. The court emphasized that the assessing authority must draw inferences from disclosed facts and held that there were no grounds for non-disclosure in this case. Referring to legal precedents, the court emphasized the importance of finality in legal proceedings and the need to avoid reactivating stale issues. Ultimately, the court found that the impugned notices were issued beyond the four-year limit without valid reasons for reopening the assessment, thus quashing the notices as illegal and without jurisdiction.
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