1996 (7) TMI 119 - HC - Income Tax

Summary

Issues:
1. Interpretation of the term "forward" in section 144B of the Income-tax Act, 1961.
2. Assessment time-barred by two days.
3. Correct interpretation of the term "forward" in Explanation 1, sub-clause (iv) under section 153.

Analysis:
The judgment by the Andhra Pradesh High Court involved an application by the Revenue under section 256(2) of the Income-tax Act, 1961, regarding the interpretation of the term "forward" in section 144B and the assessment timeline. The court addressed the questions raised by the Revenue concerning the justification of the Appellate Tribunal's decision to cancel the assessment as time-barred by two days and the correct interpretation of "forward" in Explanation 1, sub-clause (iv) under section 153.

In this case, the assessee, an individual, filed a return for the assessment year 1976-77. The Income-tax Officer prepared a draft assessment order on March 27, 1979, which was served on the assessee's representative on March 29, 1979. The objections were filed on April 12, 1979, and the approval from the Inspecting Assistant Commissioner was granted on September 22, 1979. The final assessment order was passed on September 26, 1979. The Tribunal held the assessment as time-barred and allowed the appeal of the assessee on November 30, 1982, leading to the questions raised before the High Court.

The debate centered around the interpretation of the term "forward." The Revenue argued that signing the order by the Income-tax Officer constituted forwarding, while the Tribunal viewed "forward" as meaning "despatch." The court referred to section 144B and the dictionary meaning of "forward," concluding that the draft order was forwarded when handed over to the assessee's representative on March 29, 1979. This date was crucial for calculating the limitation period under section 153.

The court emphasized that the purpose of the legislation was to provide a fair opportunity to the assessee to object to the draft order within a specified time frame. By strictly applying the period of limitation, the court held that the assessment was indeed time-barred. The judgment aligned with the assessee's position on all three questions, ruling in favor of the assessee and against the Revenue.

In conclusion, the High Court's judgment clarified the interpretation of "forward" in the context of assessment timelines, emphasizing the importance of adhering to statutory limitations while ensuring a fair process for the assessee.