1981 (4) TMI 65 - HC - Income Tax

Summary

Issues:
- Interpretation of provisions of the Companies (Profits) Surtax Act, 1964 regarding limitation for assessment.
- Applicability of section 8(b) of the Act in determining the limitation period for assessment.
- Consideration of whether the assessment should have been made within a reasonable time.
- Comparison with relevant legal precedents regarding the limitation period for assessment.

Analysis:
The case involved a reference under section 256(1) of the Income Tax Act, 1961, where the main question was whether the assessment for the year 1966-67 was barred by limitation. The assessee argued that the assessment was beyond the prescribed period under section 8(b) of the Companies (Profits) Surtax Act, 1964. The Tribunal rejected this argument, leading to the reference to the High Court for opinion.

The High Court examined the relevant provisions of the Companies (Profits) Surtax Act, particularly section 8(b), which deals with profits escaping assessment. It was noted that the Act did not specify a limitation period for completing assessments or issuing notices under section 6. The Court emphasized that the provisions of section 8(b) were not applicable in this case since the return had been filed, and the assessment was pending, thus not constituting profits escaping assessment as per legal interpretation.

Furthermore, the Court addressed the argument that the assessment should have been made within a reasonable time to avoid being barred by limitation. However, this contention was dismissed as it was not raised before the Tribunal and the Act did not prescribe any specific time limit for assessments. The Court cited legal precedents to support the view that introducing a limitation period for assessments where none was specified in the Act would not be permissible.

In conclusion, the High Court held that the assessment was not barred by limitation based on the absence of a prescribed time limit in the Act and the inapplicability of section 8(b) in the given circumstances. The Court's opinion favored the revenue, and each party was directed to bear their own costs related to the reference.