1980 (4) TMI 9 - HC - Income Tax

Issues Involved:
1. Period of limitation for the completion of reassessment proceedings under sections 147(b)/148 of the I.T. Act, 1961.
2. Whether reassessment proceedings were barred by limitation as provided in section 153(2)(b) of the Act.
3. Whether the court should consider the question of limitation or leave it to the Income Tax Officer (ITO).
4. Applicability of sections 153(2A) and 153(3) in this case.
5. Grounds and prayers regarding limitation.
6. Merits of the reopening of the assessment under section 147(b) of the Act.

Detailed Analysis:

1. Period of Limitation for Completion of Reassessment Proceedings:
The court examined the period of limitation for reassessment proceedings initiated under section 147(b)/148 of the Act. It was noted that no order for reassessment under section 147(b) could be made after the expiry of four years from the end of the relevant assessment year or one year from the date of service of the notice under section 148, whichever is later. In this case, the impugned notices were served on July 22, 1974, relating to the assessment years 1970-71, 1971-72, and 1972-73. Therefore, the four-year period expired on March 31, 1975, March 31, 1976, and March 31, 1977, respectively. The one-year period expired on July 21, 1975. Thus, the last date for completion of reassessment proceedings was March 31, 1977.

2. Whether Reassessment Proceedings were Barred by Limitation:
The court found that the reassessment proceedings were clearly barred by limitation as the notice under section 142(1) of the Act was issued on October 17, 1978, indicating that reassessment proceedings under section 147(b) had not been completed by the last permissible date, March 31, 1977. Consequently, any further proceedings pursuant to the impugned notices were deemed illegal, unwarranted, without jurisdiction, and void ab initio.

3. Whether the Court Should Consider the Question of Limitation:
The court referred to the judgment of a Division Bench in CIT v. Punam Chand Banthia [1978] 112 ITR 727, where the court went into the question of limitation in writ proceedings and upheld the finding that the assessment proceedings were barred by limitation. The court also considered the Supreme Court's decisions in Lalji Haridas v. ITO [1961] 43 ITR 387 and Lalji Haridas v. R. H. Bhatt [1965] 55 ITR 415, which suggested that the question of limitation should be raised before the ITO and not in writ proceedings. However, the court concluded that the reassessment proceedings were barred by limitation, rendering further consideration unnecessary.

4. Applicability of Sections 153(2A) and 153(3):
The court did not find it necessary to delve into the applicability of sections 153(2A) and 153(3) as the reassessment proceedings were already determined to be barred by limitation.

5. Grounds and Prayers Regarding Limitation:
Specific grounds and prayers regarding the point of limitation were taken in the petition, and the court acknowledged these contentions.

6. Merits of the Reopening of the Assessment:
The court reviewed the recorded reasons for reopening the assessment for the relevant years, which were based on the alleged unexplained investment in house property construction. The petitioner argued that the reopening could only be justified under section 147(b) and not section 147(a) of the Act. The court noted various decisions, including those of the Supreme Court and High Courts, on the interpretation of "information" under section 147(b). However, the court refrained from making a pronouncement on this aspect due to the finding on the question of limitation.

Conclusion:
The application succeeded, and the rule was made absolute. A writ of mandamus was issued directing the respondents to recall, cancel, and withdraw the impugned notices dated July 12, 1974, for the assessment years 1970-71, 1971-72, and 1972-73, and to forbear from giving effect thereto. No order as to costs was made.

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