1993 (10) TMI 2 - SC - Income Tax

Reassessment - in pursuance of notice assessee filed a return for disclosing further losses - appellants approached the High Court by way of a writ petition for issuance of mandamus to the Income-tax Officer to pass orders in pursuance of the aforesaid notice - writ petition was rightly dismissed observing that no mandamus can be issued compelling the Income-tax Officer to make an order of assessment beyond the period of limitation prescribed by section 153(2)

Summary

Issues:
1. Validity of a notice under section 148 of the Income-tax Act, 1961.
2. Interpretation of statutory provisions regarding reassessment timelines.
3. Authority of High Court to direct the Income-tax Officer to pass orders beyond prescribed limitation periods.

Analysis:

The appeal in question was filed against a decision of the Madhya Pradesh High Court concerning the reassessment proceedings for the assessment year 1971-72. The appellant, a limited company, had initially filed a return which led to an assessment order accepting certain losses. Subsequently, a notice under section 148 of the Income-tax Act, 1961, was issued in 1976 for disclosing further losses. However, no orders were passed until about September 1981, leading the appellants to approach the High Court through a writ petition seeking mandamus to compel the Income-tax Officer to pass orders based on the notice. The High Court dismissed the writ petition, stating that no mandamus could be issued beyond the prescribed limitation period under section 153(2).

The central argument in the appeal was whether the High Court could direct the Income-tax Officer to make a reassessment order beyond the limitation period prescribed by the statute. The appellant contended that clause (ii) of sub-section (3) of section 153 empowered the High Court to issue such a direction. However, the Supreme Court disagreed, emphasizing that a writ of mandamus cannot compel an authority to act in violation of a statutory provision. The Income-tax Officer lacked the power to reassess beyond the prescribed period unless specific provisions allowed for an extension, none of which were applicable in this case.

The Court examined clause (ii) of sub-section (3) of section 153, which allows assessments or reassessments in specific circumstances, such as to give effect to findings in certain orders or court directions. The Court clarified that this provision did not empower the High Court to direct the authority to disregard the statutory limitation period. The appellant relied on a decision of the Allahabad High Court, but the Supreme Court distinguished it, stating that it was specific to the facts of that case and did not establish a general principle of extending limitation periods for reassessment orders.

Ultimately, the Supreme Court dismissed the appeal, upholding the High Court's decision and emphasizing that the authority cannot be directed to make orders beyond the statutory limitation period. The appeal was dismissed with no costs awarded.

In conclusion, the judgment clarifies the limitations on the authority of the High Court to direct the Income-tax Officer to pass reassessment orders beyond prescribed timelines and underscores the importance of adhering to statutory provisions in tax assessment matters.