2007 (4) TMI 147 - HC - Income Tax

Re-opening of Completed Assessment Where W.D.V. has been changed upon appeal for the earlier year the same shall be treated as error apparent on record for the subsequent years for the purpose of Section 154 of the ITA

Summary

Issues:
Interpretation of section 153 of the Income-tax Act, 1961 regarding the extended time limitation period of 180 days for assessment completion.

Analysis:
The judgment addressed the question of law referred by the Income-tax Appellate Tribunal regarding the availability of the extended time limitation period under Explanation 1(iv) of section 153 of the Income-tax Act, 1961. The case involved the completion of assessment for the assessment year 1978-79, where the initial assessment order was set aside, and a fresh assessment was made after remand. The Tribunal, relying on a previous order, held the assessment to be time-barred as it was not completed within two years of the remand. However, the Tribunal did not consider the extended period of limitation of 180 days under Explanation 1(iv) of section 153.

The High Court examined the provisions of section 153 of the Act, specifically sub-section (2A) and Explanation 1(iv), to determine the applicability of the extended time limitation period. The Court emphasized that the Explanation attached to a section is an integral part of it and must be considered while interpreting the provisions. It was noted that the normal period of limitation for assessment completion had not expired, and the extended period of 180 days should be excluded in this case.

Referring to a Supreme Court decision, the Court reiterated that an Explanation forms an essential part of the section and must be given due consideration. Additionally, previous judgments by the High Court supported the availability of the extended period of limitation in similar cases. The Court concluded that the extended time limitation period of 180 days should be applied in the present case, and the Tribunal's decision was incorrect in not considering this provision.

Based on the above analysis, the High Court answered the question referred in favor of the Revenue and against the assessee, highlighting the importance of considering all relevant provisions, including explanations, while interpreting the Income-tax Act.