1991 (10) TMI 35 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 144B to assessments under Section 147.
2. Procedural nature and applicability of Section 144B to pending assessments.
3. Timeliness of assessments under Section 147.

Summary:

Issue 1: Applicability of Section 144B to assessments under Section 147:
The court examined whether Section 144B of the Income-tax Act, 1961, applies to proceedings initiated under Sections 147/148. The key question was if the draft assessment procedure under Section 144B, introduced by the Taxation Laws (Amendment) Act, 1975, should be followed in reassessments under Section 147. The court noted conflicting judgments from the Kerala High Court in Kerala Kaumudi P. Ltd. v. CIT and the Punjab and Haryana High Court in CIT v. Usha Aggarwal. The court ultimately held that Section 144B, being procedural and beneficial to the assessee, applies to assessments under Section 147. The court emphasized that the procedure under Section 143(3) should be followed in reassessments under Section 147 to avoid anomalies.

Issue 2: Procedural nature and applicability of Section 144B to pending assessments:
The court addressed whether Section 144B is purely procedural and applies to all assessments pending at the time of its introduction. The court noted that Section 144B was enacted following the Wanchoo Committee's recommendation to ensure that taxpayers receive adequate opportunity to address proposed additions before final assessments. The court held that Section 144B is procedural and beneficial to the assessee, thus applicable to pending assessments, including those initiated under Section 147.

Issue 3: Timeliness of assessments under Section 147:
The court considered whether assessments in the case of J. Dalmia (HUF) for the assessment years 1947-48 and 1948-49 and in the case of the association of persons for the assessment year 1947-48 were barred by time. The court noted that if Section 144B applies, the assessment would be within the limitation period prescribed under Section 153. The court concluded that the time taken to comply with Section 144B should be excluded from the limitation period, thus making the assessments timely.

Conclusion:
The court held that Section 144B is applicable to assessments made under Section 147, is procedural in nature, and applies to all pending assessments. The assessments in question were deemed timely, and the reference was answered in favor of the Revenue. There was no order as to costs.