2016 (1) TMI 376 - HC - Income Tax

Reopening of assessment - period of limitation - invoking the provision of Section 150(1) Held that - n the instant case, the Tribunal has given a categorical finding that the assessee had disclosed all the material facts necessary for making the assessment and there was no failure on his part. We find that this finding of the Tribunal is perfectly correct and, as we have observed, the Assessing Officer in his original assessment proceedings had considered each and every document and the explanation given by the assessee on the seized documents. Therefore, it was not a case where the assessee failed to disclose fully or truly all material facts necessary for making the assessment. The notice, in our view, issued under Section 148 of the Act was invalid. In so far as the period of limitation is concerned, the present dispute relates to the assessment year 1992-93 and as per the then existing provision of limitation specified under Section 149 of the Act, the period of limitation was 10 years. Accordingly, the reassessment notice could be issued on or before 31.05.2001 whereas in the instant case reassessment notice under Section 148 of the Act was issued on 11.04.2001, which was within the period of limitation. Consequently, we are of the opinion that the notice issued under Section 148 of the Act was issued within the period of limitation. The question of invoking the provision of Section 150(1) of the Act does not arise and it is not necessary for us to dwell on this aspect of the matter. We may however, observe that Section 150 of the Act provides that the power to issue a notice under Section 148 of the Act in consequence of or giving effect to any finding or direction of the Appellate or Revisional Authority or the Court is subject to the provisions contained in Section 150(2) of the Act. Section 150(2) of the Act provides that the direction issued under Section 150(1) of the Act cannot be given by the Appellate or Revisional Authority or by the Court if on the date on which the order in appeal or revision was passed, the reassessment proceeding had become barred by time. Under Section 150(2) of the Act the Appellate or the Revisional Authority or the Court could give direction for reassessment only in respect of that assessment year. In respect of reassessment, proceedings could be initiated on the date of passing of the order in appeal. Since we have held that the notice was issued within the period of limitation, the provision of Section 150(1) of the Act is not applicable in the instant case - Decided in favour of assessee

Issues Involved:
1. Validity of the assessment under Section 148 of the Income Tax Act, 1961.
2. Limitation period for issuing notice under Section 148.
3. Applicability of Section 150(1) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of the assessment under Section 148 of the Income Tax Act, 1961:
The Department appealed against the Tribunal's order which set aside the assessment made under Section 148 of the Income Tax Act, 1961. The Tribunal held that the proceedings initiated under Section 148 were invalid as there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for making an assessment. The original assessment order dated 31.03.1994 had considered all the seized documents, and the explanation given by the assessee was also considered. Therefore, it was concluded that there was no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The Tribunal's finding that the assessee had disclosed all material facts necessary for making the assessment was upheld, and the notice issued under Section 148 was declared invalid.

2. Limitation period for issuing notice under Section 148:
The Tribunal quashed the assessment completed under Section 143(3)/148 by observing that the issue of notice under Section 148 was beyond the period of four years from the end of the relevant assessment year. However, the Department argued that there was no bar of limitation for issuing notice under Section 148 in consequence of the directions given by the Appellate Authority as per the provisions of Section 150(1) of the Act. The Court observed that the reassessment notice could be issued on or before 31.05.2001, and in this case, the notice was issued on 11.04.2001, which was within the period of limitation. Therefore, the notice issued under Section 148 was within the period of limitation.

3. Applicability of Section 150(1) of the Income Tax Act, 1961:
The Department contended that the Tribunal erred in not considering the provision of Section 150(1) of the Act, which provides that there is no bar of limitation for issuing notice under Section 148 in consequence of or to give effect to directions of the appellate authorities. However, the Court held that since the notice was issued within the period of limitation, the question of invoking the provision of Section 150(1) did not arise. Section 150(2) of the Act specifies that directions for reassessment cannot be given if the reassessment proceeding had become barred by time on the date of passing the order in appeal. Since the notice was issued within the limitation period, Section 150(1) was not applicable in this case.

Conclusion:
The appeal was dismissed, and the questions of law were answered accordingly. The Tribunal's order was upheld, confirming that the reassessment proceedings under Section 148 were invalid due to the full and true disclosure of material facts by the assessee and the notice being issued within the limitation period. The applicability of Section 150(1) was not relevant in this case.

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