2016 (7) TMI 517 - HC - Income Tax

Assessment u/s 153 - time barred or not - Held that - The assessing officer had 60 days to complete the assessment from 25th November, 2002, that would give him time till 25th January, 2003 whereas the assessment was completed on 31st March, 2003. Therefore, the assessment was hopelessly barred by limitation and that is the view taken by the learned Tribunal. Mr.Nizamuddin, learned advocate appearing on behalf of the revenue has not been able to find any fault with the view taken by the learned Tribunal. - Decided in favour of the assessee.

Summary

Issues:
Challenge to judgment and order dated 16th September, 2004 by the Income Tax Appellate Tribunal, Kolkata regarding assessment year 1988-89.

Analysis:
The judgment in question pertains to an appeal challenging the order of the Income Tax Appellate Tribunal, Kolkata, regarding the assessment year 1988-89. The timeline of events leading to the assessment process is crucial in this case. The assessing officer issued a letter on 14th March, 1991, for a special audit under section 142(2A), which was challenged by the assessee leading to stay orders by the Calcutta High Court. Despite subsequent developments, the assessment was completed on 31st March, 2003, which was beyond the permissible timeline. The High Court noted that the exclusion available to the assessing officer was for 17 days under section 153, and the assessment should have been completed by 26th September, 2002, following the quashing of the special audit order on 9th September, 2002.

Moreover, the High Court considered the provision under section 153(4) of the Income Tax Act, which extends the period of limitation to sixty days if the remaining period available to the assessing officer is less than sixty days after exclusion. Even with this extension, the assessment should have been completed by 25th January, 2003, but it was finalized on 31st March, 2003. Therefore, the High Court concluded that the assessment was time-barred and upheld the view taken by the Tribunal. The revenue raised a question regarding the interpretation of Explanation 1 below section 153(3) of the Income Tax Act, 1961, but the High Court ruled against them, dismissing the appeal and directing parties to bear their own costs.

In conclusion, the judgment highlights the importance of adhering to statutory timelines in completing assessments and the consequences of exceeding such limits. The Court's interpretation of relevant provisions and its application to the facts of the case resulted in the dismissal of the appeal due to the assessment being deemed time-barred.