1984 (2) TMI 136 - AT - Income Tax

Summary

Issues:
1. Assessment barred by limitation under section 153(3) of the Income-tax Act, 1961.
2. Rejection of books of account and estimation of income under section 145(1) without specifying the provision.

Analysis:

Issue 1: Assessment barred by limitation under section 153(3)
The appellant contended that the assessment was beyond the limitation period as the IAC took more than 180 days to provide directions to the ITO. However, the Commissioner (Appeals) found that the ITO completed the assessment well before the time limit, with an additional 52 days available even after receiving the IAC's instructions. The Tribunal agreed with the Commissioner (Appeals) that the ITO's actions were within the prescribed time limit under section 153, emphasizing that the maximum period of 180 days should be excluded for computing the limitation period. The Tribunal held that as long as the assessment was completed within the stipulated time frame, the IAC's extended duration did not affect the validity of the assessment.

Issue 2: Rejection of books of account and income estimation under section 145(1)
The appellant challenged the rejection of book results without a specific mention of the provision under which it was done. The ITO estimated the net profit from contracts based on various factors, including low profits disclosed by the assessee and inadequate withdrawals for domestic expenses. The Commissioner (Appeals) upheld the ITO's decision without detailed discussion. The Tribunal noted that the Commissioner (Appeals) failed to address the specific grounds raised by the appellant regarding the application of section 145(1) and the rejection of book results. It was observed that the ITO did not clearly specify whether section 145(1) or 145(2) was applicable. The Tribunal concluded that the matter required further investigation and verification of facts to determine the correct application of the provisions. Therefore, the Tribunal set aside the Commissioner (Appeals) order and remanded the case for a fresh hearing to consider the specific grounds raised by the appellant.

In conclusion, the Tribunal upheld the assessment's validity based on the limitation period under section 153(3) but directed a reevaluation of the rejection of book results and income estimation under section 145(1) by remanding the case to the Commissioner (Appeals) for a detailed examination of the specific grounds raised by the appellant.