2011 (7) TMI 136 - HC - Income Tax

Limitation - Assessment u/s 158BC read with Section 158BD and Section 143(3) - Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in holding that the assessment order dated 29.7.1998 was not barred by limitation in terms of Section 158 BE(1)(a) of the Income Tax Act 1961 - Assessee appeal before the Tribunal - Evidently the assessee did not appear before the Tribunal nor the Department representative appeared on the date of hearing - Assessee pointed out that the assessee had immediately filed a miscellaneous petition to set aside the order - Considering the fact that the plea of limitation is taken on appeal in the fitness of things, feel that the order of the Tribunal be set aside and restored to the file of the Appellate Forum for them to consider the assessee s appeal and pass orders in accordance with law.

Summary

Issues:
1. Interpretation of Section 158 BE(1)(a) of the Income Tax Act, 1961 regarding the limitation period for assessment orders.

Analysis:
The case involved a substantial question of law regarding the interpretation of Section 158 BE(1)(a) of the Income Tax Act, 1961. The assessee's premises were searched on 13.9.1996, leading to an assessment under Section 158BC read with Section 158BD and Section 143(3) of the Act. The assessee appealed to the Tribunal, specifically challenging the assessment order on the grounds of limitation. Despite the absence of the assessee and the Department representative during the Tribunal hearing, the Tribunal rejected the appeal citing lack of evidence from the assessee to support the claim that the search order was served on 13.9.1996. Consequently, the Tribunal upheld the assessment order based on the limitation plea.

Furthermore, the counsel for the assessee highlighted that a miscellaneous petition was promptly filed to set aside the order. However, the Court, considering the significance of the limitation issue raised on appeal, set aside the Tribunal's order and remanded the case back to the Appellate Forum for a fresh consideration of the assessee's appeal in accordance with the law. The Tax Case Appeal was disposed of without any costs imposed on either party.

This judgment underscores the importance of providing adequate evidence to support claims made during tax assessment proceedings, particularly concerning the timeline of events such as the service of search orders. It also emphasizes the need for proper adherence to legal procedures and timelines, as failure to do so can impact the validity of assessment orders and subsequent appeals.