1989 (11) TMI 76 - AT - Income Tax

Summary

Issues:
Limitation period for completing an assessment order under sec. 153(1) for the assessment year 1979-80.

Analysis:
The appeal was against the order of the CIT(A) for the assessment year 1979-80. The issue raised was regarding the limitation period for completing the assessment order. The ITO sent a draft order to the assessee on 30-3-1982, a day before the normal 2-year limit from the end of the assessment year. The IAC issued directions on 27-7-1982, received by the assessee on 5-8-1982 and by the ITO on 30-7-1982. The final order was made on 12-8-1982. The CIT(A) held that the assessment was within the time limit as the time taken in section 144B proceedings was 180 days, and the order was made before 30th September, 1982.

The assessee argued that the period of exclusion under sec. 153(1) should be from 30th March, 1982, to 30th July, 1982, making 31st July, 1982, the last day for completing the assessment. However, the Departmental Representative contended that the limitation should be counted from 31st March, 1982, and the assessment made before 30th September, 1982, was not barred by limitation.

The Tribunal analyzed sec. 153 and held that the normal time limit for completing the assessment was 31st March, 1982. The period from the forwarding of the draft order to the assessee till the ITO received directions from the IAC was to be excluded. The draft order was sent on 30-3-1982, and the directions were received on 30-7-1982. The ITO had two days left after receiving the directions to complete the assessment, making the latest completion date as 1st August, 1982. Since the assessment was made on 12-8-1982, it was held to be barred by limitation.

The Tribunal distinguished previous cases cited by the Departmental Representative where the exclusion period was correctly calculated. The CBDT's instructions also supported the Tribunal's interpretation of the exclusion period. Consequently, the assessment made on 12-8-1982 was deemed to be barred by limitation and was directed to be cancelled. The appeal was allowed.