2004 (1) TMI 290 - AT - Income Tax

Summary

Issues Involved:
1. Limitation of assessment order under Section 153(2A) of the Income-tax Act, 1961.
2. Validity of additions made by the Assessing Officer.
3. Directions of the ITAT and Settlement Commission.
4. Authority of the Assessing Officer to re-examine issues not covered by the Settlement Commission.

Detailed Analysis:

1. Limitation of Assessment Order under Section 153(2A):

The primary issue was whether the assessment order dated 11-3-2002 was barred by limitation as per Section 153(2A) of the Income-tax Act. The assessee argued that the order should have been passed by March 1997, as the ITAT order was served before 31-3-1995. The Tribunal analyzed the statutory provisions and concluded that Section 153(2A) prescribes a time limit for fresh assessments following an order that sets aside or cancels an assessment. However, the Tribunal noted that the ITAT's direction to the Assessing Officer was to follow the Settlement Commission's directions, which falls under Section 153(3)(ii). This provision allows assessments to be completed at any time if they are to give effect to a finding or direction from an appellate order. Consequently, the Tribunal held that the assessment order was not barred by limitation.

2. Validity of Additions Made by the Assessing Officer:

The assessee contended that the CIT(A) erred in confirming the additions of unexplained deposits in bank accounts (Rs. 1,80,000) and extra profit due to low G.P. (Rs. 3,34,314). The Tribunal noted that these additions were part of the original assessment order and were not deleted by any authority. The CIT(A) confirmed that the Assessing Officer had no authority to delete these additions without any pending proceedings or directions. The Tribunal upheld this view, stating that the additions made in the original assessment order would survive unless deleted by a superior authority.

3. Directions of the ITAT and Settlement Commission:

The Tribunal's order dated 17-11-1994 directed the Assessing Officer to follow the Settlement Commission's directions. The Settlement Commission passed its order on 20-4-2000. The Tribunal clarified that the ITAT's direction was specific and empowered by law, falling within the purview of Section 254(1). The Tribunal emphasized that the Assessing Officer was bound to follow these directions and that the provisions of Section 153(2A) did not apply to situations where specific directions were given by the appellate authority.

4. Authority of the Assessing Officer to Re-examine Issues Not Covered by the Settlement Commission:

The CIT(A) held that the Assessing Officer had no authority to re-examine issues not covered by the Settlement Commission. The Tribunal agreed, stating that the Assessing Officer could not delete or reconsider additions made in the original assessment order without specific directions or pending proceedings. The Tribunal emphasized that the additions would remain unless deleted by a superior authority.

Conclusion:

The Tribunal concluded that the assessment order was not barred by limitation and upheld the validity of the additions made by the Assessing Officer. However, the Tribunal agreed with the alternative submission of the assessee and set aside the impugned order, restoring the matter to the Assessing Officer for fresh consideration in accordance with the ITAT's directions. The appeals were allowed for statistical purposes.