1995 (7) TMI 59 - HC - Income Tax

Summary

Issues:
Validity of assessment for the assessment year 1979-80 under section 143(3) read with section 144B of the Income-tax Act, 1961.

Analysis:
The High Court of Orissa addressed the issue of the validity of an income-tax assessment for the assessment year 1979-80. The matter stemmed from a draft assessment order made under section 144B(1) of the Income-tax Act, 1961, on March 16, 1982, and despatched to the assessee on April 8, 1982. The final order of assessment was made in September 1982, with the exact date not specified but falling after September 3, 1982. The assessee contended that the assessment was time-barred due to the delayed despatch of the draft order. The Commissioner of Income-tax (Appeals) acknowledged the potential limitation issue but noted an entry made by the Income-tax Officer on March 16, 1982, regarding the assessment under section 144B. The Tribunal, however, determined that the actual forwarding of the draft order occurred on April 8, 1982, rejecting the notion that the earlier notings constituted forwarding. Citing the decision in CIT v. Om Agencies [1994] 207 ITR 794, the High Court emphasized the distinction between the acts of making a draft order and forwarding it to the assessee. The court held that failure to establish timely forwarding of the draft order would result in the proceedings being time-barred. Ultimately, the High Court upheld the Tribunal's decision in favor of the assessee, emphasizing that a mere direction without actual transmission does not constitute forwarding, thereby ruling against the Revenue.

In conclusion, the High Court ruled in favor of the assessee, affirming the Tribunal's decision that the assessment for the assessment year 1979-80 was indeed barred by limitation due to the delayed forwarding of the draft assessment order. The court relied on the principles outlined in CIT v. Om Agencies [1994] 207 ITR 794, highlighting the necessity for actual forwarding within the prescribed period to avoid time-bar issues in income-tax assessments. Judge D. M. Patnaik concurred with the judgment delivered by Judge Sushanta Chatterji, and no costs were awarded in the case.