1990 (10) TMI 44 - HC - Income Tax

Issues Involved:
1. Whether the assessment is time-barred.
2. Interpretation of the word 'forward' in section 144B(2) and 'received' in section 144B(3) of the Income-tax Act, 1961.
3. Entitlement to claim deduction of the bonus paid in excess of 20% of the salary.
4. Entitlement to weighted deduction under section 35B in respect of E.C.G.C. premium.

Issue-wise Detailed Analysis:

1. Whether the assessment is time-barred:
The court did not find it necessary to address this issue in detail due to the fundamental nature of the second issue, which impacts the validity of the assessment itself.

2. Interpretation of the word 'forward' in section 144B(2) and 'received' in section 144B(3) of the Income-tax Act, 1961:
The court noted that the question was not drafted with precision. The assessee contended that 'forward' should be construed as 'despatched' and should bear the same meaning as 'received' in section 144B(3). The court recast the question for clarity: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the word 'received' used in section 144B(3) of the Income-tax Act should not bear the same meaning as the word 'forward' used in section 144B(2) of the Income-tax Act, 1961?"

The court held that the assessee is obliged only to "forward" his objections within seven days of the receipt of the draft order, meaning the objections should be transmitted or despatched. The assessee is not obliged to ensure that the objections are received by the Income-tax Officer within the said period. The court emphasized that if the objections are put in the course of transmission, the date of receipt by the addressee is beyond the control of the assessee. The court noted that the objections were forwarded by registered post within the time allowed by law and should be considered compliant with section 144B(2). The assessment made without referring the matter to the Inspecting Assistant Commissioner under section 144B(4) was deemed invalid. The court held that the word "received" in section 144B(3) should be understood as "forwarded" within the period provided in section 144B(2).

3. Entitlement to claim deduction of the bonus paid in excess of 20% of the salary:
The court did not address this issue due to the fundamental nature of the second issue, which necessitated a remit of the assessment for redoing after complying with section 144B(4).

4. Entitlement to weighted deduction under section 35B in respect of E.C.G.C. premium:
Similarly, the court did not address this issue for the same reason mentioned above.

Conclusion:
The court answered the recast question No. 2 in the negative, in favor of the assessee and against the Revenue. The court directed a remit of the matter to the Income-tax Officer for redoing the assessment after complying with the formalities enjoined by section 144B(4) of the Act. Consequently, the court declined to answer the other questions referred by the Appellate Tribunal.

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