1990 (6) TMI 65 - HC - Income Tax

Summary

Issues Involved:
1. Whether the assessment for the years 1970-71 and 1971-72 was barred by limitation.
2. Whether the Income-tax Officer's satisfaction regarding the concealment of income was valid and timely.

Summary:

Issue 1: Limitation Period for Assessment
The primary question was whether the assessments for the years 1970-71 and 1971-72 were barred by limitation considering the provisions of sections 143(3), 148, 153(1)(a)(iii), 153(2)(a), and 153(1)(b). The assessee argued that the assessments should have been completed by March 31, 1973, for 1970-71 and by March 31, 1974, for 1971-72. The Revenue contended that notices were issued on March 27, 1973, and the larger period of eight years u/s 153(1)(b) was applicable due to the concealment of income.

Issue 2: Satisfaction of the Income-tax Officer
The crux of the matter was whether the Income-tax Officer was satisfied on March 27, 1973, that the assessee had concealed income, thus invoking the larger period of limitation. The Tribunal held that the Income-tax Officer was satisfied "in a bona fide manner" and the finding was "not a colourable one." However, the court found it difficult to understand how such a conclusion could dislodge the statutory period of limitation.

The court examined several precedents, including cases from the Supreme Court and High Courts, which emphasized that the satisfaction of the Income-tax Officer must fall within the normal period of limitation. The court concluded that the Revenue could not take the case out of the normal period of limitation without informing the assessee.

Final Determination:
For the assessment year 1970-71, the court held that the proceedings were barred as the notice was served on April 9, 1973, beyond the normal period of limitation. For the assessment year 1971-72, the court held that the assessment was not barred as the notice was served within the permissible period.

Conclusion:
The assessment order for 1970-71 was barred by limitation, and the answer was recorded against the Revenue. For the assessment year 1971-72, the assessment order was not barred, and the answer was in favor of the Revenue. No costs were awarded.