1982 (5) TMI 48 - AT - Income Tax

Summary

Issues:
- Assessment of income for asst. yrs. 1973-74 & 1974-75
- Time-limit for completion of assessments
- Validity of assessment orders passed by the ITO
- Interpretation of s. 153(2) of the IT Act, 1961

Analysis:
The judgment pertains to appeals and cross objections related to the assessment of income for the assessment years 1973-74 & 1974-75. The Assessing Officer (AO) noticed that the assessee firm had paid salaries to partners but failed to file returns as required under section 139(1) of the IT Act, 1961. Subsequently, notices under section 147(a)/148 were issued and served on the assessee. The AO completed the assessments beyond the statutory time-limit, leading to a challenge before the ld. AAC by the appellant, contending that the assessments were void due to being completed after the time-limit.

The ld. AAC held that the assessments were completed beyond the statutory time-limit, rendering them ab initio void, and subsequently canceled both assessment orders. The Revenue contended before the Tribunal that the ld. AAC's finding was unsupported by the material on record and contrary to the provisions of s. 153(2) of the IT Act, 1961. The Tribunal considered the arguments and the relevant legal provisions, focusing on whether the assessment orders were barred by time or not.

The Tribunal observed that the assessee had failed to file returns under section 139(1) for both years, and assessments were initiated under section 147(a)/148 due to income escapement. It analyzed the provisions of s. 153(2) regarding the time-limit for completion of assessments under section 147, emphasizing that assessments under section 147(a) must be made within four years from the end of the financial year in which the notice under section 148 was served. The Tribunal concluded that the assessments were completed within the prescribed time-limit, contrary to the ld. AAC's decision.

The Tribunal clarified the distinction between the time-limits for issuing notices under section 148 and completing assessments under section 147, highlighting the obligations of the assessee to file returns and the implications of failure to do so. Ultimately, the Tribunal set aside the ld. AAC's order, directing a review on merits, and dismissed the cross objections as infructuous. The judgment reaffirmed the importance of adhering to statutory time-limits in assessment proceedings under the IT Act, 1961.