1994 (6) TMI 32 - AT - Income Tax

Assessing Officer, Assessment Order, Financial Year, Time Limit For Completion, Tribunal s Order

Summary

Issues:
1. Assessment barred by limitation under section 153(2A) of the Income-tax Act, 1961.
2. Merits of the addition made under the head "Other sources."

Analysis:

Issue 1: Assessment Barred by Limitation under Section 153(2A)
The case involved an appeal by the assessee challenging the assessment on the grounds of limitation and merits of the addition made. The assessment was initially completed on 28-3-1981 under section 144 of the Income-tax Act, 1961, with an addition of Rs. 1 lakh under "Other sources." Subsequently, the CIT(A) set aside the assessment on 31-5-1983, and the Tribunal confirmed this order on 31-1-1985. However, the fresh assessment completed on 31-3-1987, adding the same amount, was challenged by the assessee on the basis of limitation prescribed by section 153(2A). The CIT(A) rejected the limitation argument, stating that the period started from the Tribunal's order. The ITAT, however, upheld the assessee's plea, citing that the limitation period should be calculated from the first order setting aside the assessment, i.e., the CIT(A)'s order on 31-5-1983. The ITAT also referred to a similar decision by the Delhi Bench of the Tribunal, concurring with their interpretation.

Issue 2: Merits of the Addition under "Other sources"
The second ground of appeal pertained to the merits of the addition under "Other sources." However, since the ITAT ruled in favor of the assessee on the limitation issue, it deemed it unnecessary to delve into the merits of the addition. The ITAT highlighted that due to the assessment being barred by limitation, they refrained from expressing any opinion on the genuineness of the loan claimed by the assessee from M/s. B.M. Trading Co., Nepal. Consequently, the ITAT allowed the appeal, solely based on the limitation aspect, without addressing the substantive issue of the addition made under "Other sources."

In conclusion, the ITAT ruled in favor of the assessee, holding that the assessment completed on 31-3-1987 was indeed barred by limitation under section 153(2A) of the Income-tax Act, 1961. As a result, the ITAT allowed the appeal without delving into the merits of the addition made under "Other sources."