1987 (11) TMI 63 - HC - Income Tax

Summary

Issues involved: Determination of whether additions made by the Inspecting Assistant Commissioner u/s 144A are barred by limitation.

Summary:
The High Court of Kerala addressed the issue of the time limitation for additions made by the Inspecting Assistant Commissioner u/s 144A. The case involved the assessment year 1974-75, where the Income-tax Officer proposed variations in the income returned by the assessee. The Inspecting Assistant Commissioner recomputed certain items after considering objections raised by the assessee. The Tribunal accepted the assessee's contentions, ruling that the additions made by the Inspecting Assistant Commissioner were time-barred u/s 144A after the normal assessment period had expired.

Revenue's Argument:
The Revenue argued that the period of limitation for assessment is extended when a valid reference is made u/s 144B, allowing the Inspecting Assistant Commissioner to exercise power u/s 144A even after the normal assessment period has expired. They contended that the recomputation of amounts by the Inspecting Assistant Commissioner was within his authority and not barred by limitation.

Assessee's Argument:
The assessee's counsel argued that the period of limitation prescribed u/s 153(1)(a)(iii) is only extended for making a reference u/s 144B and cannot be used for other purposes. They maintained that the Inspecting Assistant Commissioner's recomputation was not valid as there was no reference made for the items in question.

Court's Decision:
The High Court ruled in favor of the Revenue, stating that the period for assessment is extended once a draft order is forwarded to the assessee u/s 144B. The Court held that the Inspecting Assistant Commissioner's exercise of power u/s 144A, even without a specific reference, was valid within the extended period of limitation. The Court directed the parties to bear their respective costs in the case.

Note: The Court did not express a view on the quantum of the additions made on the items in question, as it was not addressed by the Tribunal.