2016 (6) TMI 1432 - AT - Income Tax

Reopening of assessment post annulling proceeding under Section 153C - time limit for completion of the assessment - period of limitation - Argument of the assessee was that time limit for making the reassessments expired on 31.12.2011. Assessments having been completed after the said date, contention of the assessee was that assessments were barred by lapse of time and invalid - HELD THAT - There is no dispute that first notice u/s.148 of the Act, was issued and served on the assessee on 25.03.2011. However it is also not disputed by the assessee that one more notice u/s.148 of the Act, was served on the assessee on 06.04.2011 for very same assessment years. Both the notices were dated 22.03.2011. There is nothing in law which would bar an AO from issuing two notices u/s.148 of the Act. If both the notices are dated even the second notice can only be considered as a replica of the original notice. Hence in our opinion, the time limit for completion of the assessments can be reckoned only from the date of service of notice on 06.04.2011. If we reckon one year period from the end of the financial year in which the notice was served, the last date would be 31.03.2013. Limitation under second proviso will not apply since the notice was served on 06.04.2011. Impugned assessment orders were passed on 28.03.2013 before such last date. Hence we cannot say that the assessment orders were time barred - No infirmity in the finding of CIT (A) in this regard. As find that CIT (A) had not adjudicated on the grounds taken by the assessee on merits assailing the additions made for unexplained investment. Appeals are remitted back to the file of CIT (A) for considering the grounds of assessee on merits of the additions made. Appeals are partly allowed for statistical purpose.

Summary

Issues:
Validity of reopening assessments and time limit for completion of assessments under section 148 of the Income-tax Act 1961.

Analysis:

Validity of Reopening Assessments:
The appeals filed by the assessee were against the consolidated order of CIT (A)-2, Bengaluru for the impugned assessment years. The assessee had been issued notices under section 148 of the Act for the relevant assessment years. Previous assessments made under section 143(3) r.w.s.153C of the Act were annulled by CIT (A) due to jurisdictional conditions not being fulfilled. The Assessing Officer (AO) then issued notices under section 148 of the Act based on reasons to believe that income had escaped assessments. Assessments were completed under section 143(3) r.w.s.147 of the Act, and additions were made for unexplained investments in land for both years.

Time Limit for Completion of Assessments:
The assessee challenged the validity of the reopening and subsequent assessments on the grounds that the reassessments were time-barred. The contention was that the time limit for making reassessments had expired before the assessments were completed. CIT (A) rejected this argument, stating that two notices were issued under section 148 of the Act, and the assessments were completed within the time limit if the second notice date was considered. The Tribunal agreed, noting that there is no legal bar on issuing multiple notices under section 148. The time limit for completion of assessments was calculated from the date of service of the second notice, which was within the prescribed period.

Conclusion:
The Tribunal found that the assessments were not time-barred and upheld the findings of CIT (A) on this issue. However, the Tribunal noted that CIT (A) had not addressed the grounds raised by the assessee regarding the merits of the additions made for unexplained investments. Therefore, the appeals were partly allowed for statistical purposes, and the case was remitted back to CIT (A) to consider the grounds raised by the assessee on the merits of the additions.