1979 (3) TMI 16 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order dated March 24, 1969, under section 144 read with section 147(a) of the I.T. Act, 1961.
2. Jurisdiction of the Income Tax Officer (ITO) to make the assessment.
3. Whether the assessment was barred by the law of limitation.
4. The Tribunal's refusal to consider the limitation issue.
5. Petitioner's entitlement to raise the limitation issue before the Appellate Assistant Commissioner (AAC).

Detailed Analysis:

1. Validity of the Assessment Order:
The petitioner challenged the assessment order dated March 24, 1969, for the assessment year 1956-57, completed under section 144 of the I.T. Act, 1961. The initial assessment was made under section 23(3) of the Indian I.T. Act, 1922. The ITO issued a notice under section 148 on February 25, 1964, but the petitioner did not comply with the notices. Consequently, the assessment was completed ex parte under section 144. The petitioner's application under section 146 to reopen the assessment was rejected on February 24, 1970.

2. Jurisdiction of the ITO:
The petitioner contended that the ITO lacked jurisdiction to make the assessment on March 24, 1969, arguing that it was barred by limitation. However, this issue was not raised before the AAC or the ITO initially. The Tribunal found that determining the jurisdiction involved investigating facts, such as the date of service of the notice under section 148, which were not part of the record before the Tribunal.

3. Limitation Issue:
The petitioner argued that the assessment was time-barred, a point raised for the first time before the Tribunal. The Tribunal declined to entertain this contention, stating it required factual investigation. The court held that whether an assessment is time-barred is a mixed question of fact and law, necessitating an investigation into facts, including the date of service of the notice. The Tribunal did not err in refusing to consider this issue at that stage.

4. Tribunal's Refusal to Consider Limitation Issue:
The Tribunal's refusal was based on the absence of material evidence before it to ascertain the correctness of the petitioner's claim regarding the service of notice. The court supported the Tribunal's decision, noting that the petitioner did not suffer prejudice as the appeal was allowed, and the matter was remanded to the AAC for fresh consideration.

5. Petitioner's Entitlement to Raise Limitation Issue Before AAC:
The court clarified that the petitioner could still raise the limitation issue before the AAC upon remand. The court emphasized that the statutory remedy provided under the I.T. Act does not bar the petitioner from agitating the limitation issue before the appropriate appellate authority.

Conclusion:
The application was dismissed, and the rule was discharged. The court did not delve into whether the assessment order was without jurisdiction due to being time-barred. The petitioner retains the right to raise the limitation issue before the AAC, irrespective of whether it was previously raised or the grounds for remand. The interim order, if any, was vacated, and no costs were awarded.