2015 (11) TMI 805 - HC - Income Tax

Validity of assessment - period of limitation - whether extended period of limitation to complete the assessment is provided under Section 153 of the Income Tax Act? - Held that - when the writ court while dismissing the writ petition by a judgment dated 13th January, 2000 directed the petitioner to reconsider the matter with regard to auditing the books of accounts under Section 142 (2A) of the Income Tax Act, no assessment proceeding could be completed without complying with the order of the Court. The Commissioner passed the order on 25th May, 2000. We are, therefore, of the opinion that the time taken by the Commissioner to decide the matter from 13th January, 2000 to 25th May, 2000 stood excluded while computing the period of limitation. The period of two months 6 days as calculated by the appellant consequently, would start from the date when the Commissioner passed the order, namely, 25th May, 2000. The assessment was completed on 16th June, 2000 within the extended period of 2 months 6 days. We are, consequently, of the opinion that assessment order was passed during the extended period of limitation as provided under Section 153(3) Explanation (1) (ii) of the Income Tax Act. - Decided in favour of the department.

Summary

Issues:
Assessment year 1983-84 - Assessment order validity - Barred by limitation under Section 153(3) Explanation (1)(ii) of the Income Tax Act - Computation of period of limitation - Orders by the High Court and Commissioner impacting assessment proceedings.

Analysis:

The case pertains to the assessment year 1983-84 where the Inspecting Assistant Commissioner directed the assessee to get accounts audited under Section 142(2A) of the Income Tax Act. The assessee filed a writ petition against this order and obtained an interim stay, but the petition was eventually dismissed. Subsequently, another writ petition was filed, leading to a similar interim stay, which was also dismissed later. The High Court directed the Commissioner to reconsider the matter, resulting in an order on 25th May, 2000, accepting the assessee's contention to consider the audited books of accounts instead of re-auditing. The assessment order was then passed on 16th June, 2000 under Section 143(3) of the Income Tax Act.

The appellant contended that the assessment order was barred by limitation under Section 153(3) Explanation (1)(ii) of the Income Tax Act, as the assessment was completed after the extended period. However, the court found that the time taken by the Commissioner to decide the matter post the High Court's direction was to be excluded while computing the period of limitation. Therefore, the extended period of two months and six days started from the date of the Commissioner's order, i.e., 25th May, 2000. As the assessment was completed on 16th June, 2000, within this extended period, the court held that the assessment order was passed within the extended period of limitation as provided under Section 153(3) Explanation (1)(ii) of the Income Tax Act.

In conclusion, the court answered the substantial questions of law against the appellant and in favor of the department, dismissing the appeal as the assessment order was deemed to be within the extended period of limitation as per the relevant legal provisions.