2009 (7) TMI 147 - HC - Income Tax

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the reference made under section 144B of the Income-tax Act, 1961, was bad in law and is barred by limitation. - In respect of the assessment year 1981-82, the assessee filed return on May 23, 1981. The assessment was completed on August 8, 1984, under section 143(3)/144B(4) - Tribunal held that the order of the Assessing Officer was barred by limitation - Revenue submits that identical question has been adjudicated upon by this court in CIT v. Gheru Lal Bal Chand 2008 - TMI - 16797 - PUNJAB AND HARYANA High Court and after referring to Explanation 1, clause (iv) below section 153, it was held that the period up to 180 days from the date on which the draft assessment order is forwarded by the Income-tax Officer to the assessee up to the date on which directions are received is to be excluded - In the present case, the draft assessment order was prepared on March 10, 1984, and permission was received from the Inspecting Assistant Commissioner on August 3,1984, as noticed in the order of assessment. If this period is excluded, the period taken in obtaining permission being more than the period by which period intervened between the last date by which assessment was to be made and the date on which assessment was made. Accordingly, the assessment had to be treated within time.

Issues:
1. Interpretation of section 144B of the Income-tax Act, 1961 regarding the validity and limitation of a reference made.
2. Determination of whether the assessment order was barred by limitation for the assessment year 1981-82.

Analysis:
1. The court was tasked with interpreting the validity and limitation of a reference made under section 144B of the Income-tax Act, 1961. The Tribunal had referred a question of law regarding the validity of the reference made under section 144B for the assessment year 1981-82. The court deliberated on whether the Tribunal was correct in holding the reference as bad in law and barred by limitation. The court examined the timeline of events related to the assessment and the provisions of the Act to reach a conclusion.

2. For the assessment year 1981-82, the assessee filed the return on May 23, 1981, and the assessment was completed on August 8, 1984, under section 143(3) of the Income-tax Act, 1961. The Tribunal found that the assessment order was beyond the stipulated period of two years from the end of the financial year, which was March 31, 1984, as per section 153 of the Act. However, the Revenue argued that as per Explanation 1, clause (iv) below section 153, a certain period was to be excluded in determining the limitation period. The draft assessment order was prepared on March 10, 1984, and permission was received on August 3, 1984. By excluding this period, the assessment was deemed to be within the time limit prescribed by the Act.

3. The court referred to a previous judgment in CIT v. Gheru Lal Bal Chand [1998]233 ITR 82 (P&H) where a similar issue was adjudicated. It was held that the period between the date of the draft assessment order and the receipt of directions should be excluded in calculating the limitation period. Applying this interpretation to the present case, the court concluded that the assessment was made within the prescribed time limit. Consequently, the court ruled in favor of the Revenue and against the assessee.

4. Based on the above analysis and interpretation of relevant provisions, the court answered the question in favor of the Revenue, affirming that the assessment was not barred by limitation. The reference made under section 144B was deemed valid, and the decision was made in favor of the Revenue.

5. The court disposed of the reference accordingly, providing a clear resolution to the issue at hand regarding the validity and limitation of the reference made under section 144B for the assessment year 1981-82.

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