2008 (3) TMI 20 - SC - Income Tax

Assessment made without issuance of notice u/s 143(2) of the Act within one year HC held that assessment order is not by way of scrutiny Sec. 143(2) is not applicable so matter not entertainable u/s 260-A - no finding based on the law has been recorded - matter remanded to HC for fresh decision

Summary

Issues involved:
Assessment under Section 145 of the Income Tax Act, 1961 without notice under Section 143(2) within one year; Legality of assessment; Maintainability of petition under Section 154 of the Act; Applicability of Section 143(2) of the Act; Remittal of matter to the High Court for fresh decision.

Analysis:
The appeal stemmed from the issuance of a notice under Section 148 of the Income Tax Act, 1961, by the Assessing Officer to the assessee for filing the income return for the assessment year 1997-1998. Subsequently, an assessment was made estimating the income of the petitioner from the business under Section 145 of the Act. The Commissioner and the Commissioner of Income Tax (Appeals) upheld the assessment, while the Tribunal remitted the matter back to the Assessing Officer for reconsideration. A fresh assessment was then made under Sections 143(3)/254 of the Act. The assessee filed a miscellaneous application before the Tribunal, which was dismissed on the grounds of being sub-judice before the Orissa High Court. The Orissa High Court held that as the assessment order did not come about by way of scrutiny, Section 143(2) was not applicable, leading to the current appeal before the Supreme Court.

The parties relied on various judgments concerning Sections 139 and 143 of the Act. The appellant contended that Section 143(2) should apply to the assessment, supported by a compilation of relevant cases. The department's counsel, on the other hand, referenced judgments of the lower courts. The Supreme Court noted that despite the raised issues regarding the applicability of Section 143(2), no definitive finding based on the law was recorded. Consequently, the Court decided to remit the matter to the High Court for a fresh decision in line with the arguments presented by both parties. The order dated 14th August, 2006, was set aside, and the High Court was directed to re-examine the case under Section 260(A) of the Act. No costs were awarded in this regard.