1991 (1) TMI 22 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order under section 143(3) read with section 144B without opportunity under section 129.
2. Exclusion of time taken in proceedings under section 144B for limitation purposes.

Issue-Wise Detailed Analysis:

1. Validity of the Assessment Order under Section 143(3) read with Section 144B without Opportunity under Section 129:
The primary issue was whether the assessment order was invalid because the successor-Income-tax Officer did not provide an opportunity to the assessee as required under the proviso to section 129 of the Income-tax Act, 1961. The facts revealed that the assessee had requested a rehearing under section 129 after the jurisdiction was transferred. However, the Income-tax Officer informed the assessee that the assessment was pending before the Inspecting Assistant Commissioner, and thus, a rehearing by him was not feasible.

The Tribunal upheld that the Inspecting Assistant Commissioner had given effective and substantive opportunity to the assessee under both sections 144B and 129. The court concurred, stating that once the draft assessment order is forwarded to the Inspecting Assistant Commissioner, the successor-Income-tax Officer has no authority to rehear the case. The right to be heard under section 129 does not persist after the draft order is forwarded. The court emphasized that the procedure under section 144B is clear: the Income-tax Officer prepares a draft, the assessee files objections, and the Inspecting Assistant Commissioner issues binding instructions. Thus, the opportunity provided by the Inspecting Assistant Commissioner was deemed sufficient and valid.

2. Exclusion of Time Taken in Proceedings under Section 144B for Limitation Purposes:
The second issue was whether the time taken in proceedings under section 144B should be excluded, thereby making the assessment not barred by limitation. The court noted that the draft assessment order was forwarded on March 28, 1981, and the assessment was completed on August 31, 1981. According to section 153(3) and its Explanation, the period from forwarding the draft to receiving the Inspecting Assistant Commissioner's instructions is excluded from the limitation period.

The court found that the entire process was completed within the prescribed time frame. The assessment year was 1978-79, and the assessment had to be completed by March 31, 1981. The forwarding of the draft order on March 28, 1981, extended the limitation period, allowing the necessary time for the Inspecting Assistant Commissioner to review and provide instructions. Hence, the assessment was not barred by limitation.

Conclusion:
The court answered both questions in the affirmative, ruling in favor of the Revenue. The assessment order was valid despite the lack of opportunity under section 129 by the successor-Income-tax Officer, and the time taken in section 144B proceedings was correctly excluded, making the assessment timely.