1981 (6) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Whether the assessment was completed within the period of limitation prescribed u/s 153(1)(a) of the Income-tax Act, 1961.
2. Whether the finding of the Tribunal that the assessment form determining the tax liability was also signed on March 27, 1969, is based on any material and/or evidence and whether the said finding is perverse.
3. Whether an assessment made by the Income-tax Officer without communicating the said order of assessment and the demand notice within time can be treated as a valid assessment made within the period of limitation prescribed u/s 153(1)(a) of the Income-tax Act, 1961.

Summary:

Issue 1: Completion of Assessment within Limitation Period u/s 153(1)(a)
The Tribunal found that the assessment order was signed by the Income-tax Officer on March 26, 1969, and the demand notice was dated March 27, 1969. Despite the demand notice served on June 3, 1969, the Tribunal concluded that the assessment was completed within the time limit, thus not time-barred. The High Court, however, found no independent evidence supporting the Tribunal's conclusion that the assessment was completed before March 31, 1969, and held the assessment as time-barred.

Issue 2: Basis of Tribunal's Finding on Assessment Form
The Tribunal's finding that the assessment form determining the tax liability was signed on March 27, 1969, was challenged as being based on no material or evidence. The High Court observed that there was no acknowledgment receipt or postal evidence indicating the dispatch of the demand notice before March 31, 1969. The High Court concluded that the Tribunal's finding was perverse and not supported by any material evidence.

Issue 3: Validity of Assessment without Timely Communication
The High Court examined whether an assessment made without timely communication of the assessment order and demand notice could be valid. It was noted that the assessment must include both the computation of total income and the determination of tax payable. The High Court referred to the Supreme Court's interpretation in CIT v. Balkrishna Malhotra, which emphasized that the assessment order must be completed within the statutory period, including the determination of tax. The High Court held that the assessment order in this case was barred by limitation.

Conclusion:
The High Court answered the first question in the negative, favoring the assessee, and held that the Tribunal's finding was perverse. The second question was answered in favor of the Revenue, but deemed academic. The third question was answered in favor of the assessee, concluding that the assessment was barred by limitation. Both parties were directed to bear their own costs.

Separate Judgment:
SUDHINDRA MOHAN GUHA J. concurred with the judgment.