1989 (3) TMI 114 - HC - Income Tax

Summary

Issues:
Whether the time taken for affording an opportunity of being heard to the assessee should be excluded in computing the time limit within which the assessment has to be passed in terms of section 153 of the Income-tax Act.

Analysis:
The case involved a dispute regarding the time limit for completing an assessment under section 153 of the Income-tax Act. The assessee contended that the assessment was time-barred as it was not completed by the specified deadline of March 31, 1980. The Income-tax Officer had sent a draft assessment order to the assessee on March 5, 1980, and after receiving objections on March 12, 1980, forwarded it to the Inspecting Assistant Commissioner due to a change in office. The Inspecting Assistant Commissioner sought to ascertain if the assessee required a hearing by the successor Income-tax Officer, which was requested by the assessee on August 13, 1980. The rehearing took place on September 15, 1980, and the assessment order was passed on September 30, 1980, served on October 15, 1980.

The key legal provision in question was section 129 of the Income-tax Act, which allowed for a change of incumbent in an office during proceedings. The provision stated that the assessee could demand to be reheard before the proceeding continued with a new officer. The court analyzed the sequence of events and held that the assessee, by requesting and availing the opportunity of being heard by the successor Income-tax Officer, could not later dispute the necessity or impact of that opportunity. The court emphasized that once the assessee elected to avail the opportunity under section 129, they could not subsequently argue against its relevance or effect on the assessment timeline.

The court dismissed the contention of the assessee that the time taken for rehearing should not be considered in determining the assessment's timeliness. It ruled that the time required for affording an opportunity of being heard to the assessee, as per the proviso to section 129 of the Income-tax Act, should be excluded in calculating the assessment completion time limit under section 153. The court distinguished the case cited by the assessee, stating that the circumstances and conduct of the assessee in this case were different and warranted a separate legal interpretation.

Ultimately, the court upheld the decisions of the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal, ruling in favor of the Revenue. The court answered the question of law referred to it in the affirmative, against the assessee, and directed the assessee to pay the costs of the Revenue. The judgment was deemed valid and in accordance with the law, with a copy to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, as required.