1979 (5) TMI 32 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the original assessment under Section 144.
2. Validity of the fresh assessment under Section 143(3)/146.
3. Jurisdiction of the AAC to adjudicate the legality of the original assessment.
4. Limitation period for making an assessment under Section 144.
5. Requirement of communication of the assessment order to the assessee.

Detailed Analysis:

1. Legality of the Original Assessment under Section 144:
The original assessment was made by the Income Tax Officer (ITO) on 29th March 1973 under Section 144 of the Income Tax Act, 1961. The assessee contended that the original assessment was barred by limitation and thus invalid. The Appellate Assistant Commissioner (AAC) agreed with the assessee, stating, "Even then it is quite clear that until the issue of the demand notice the assessment was not complete and hence the assessment was hit by limitation imposed under s. 153 of the IT Act."

2. Validity of the Fresh Assessment under Section 143(3)/146:
The assessee argued that the fresh assessment made under Section 143(3)/146 was invalid because it was a result of the original assessment, which was barred by limitation. The AAC annulled the fresh assessment, stating, "The assessment order under appeal is annulled and the appeal is, therefore, allowed."

3. Jurisdiction of the AAC to Adjudicate the Legality of the Original Assessment:
The Revenue contended that the AAC had no jurisdiction to hear and adjudicate upon the subject matter of the legality of the previous assessment made under Section 144 in the present appeal. The Revenue argued, "That the AAC had no jurisdiction to hear and adjudicate upon the subject matter of legality of the previous assessment made under s. 144 of the Act in the present appeal which was before him."

4. Limitation Period for Making an Assessment under Section 144:
The Revenue argued that the assessment was made within the statutory period, asserting that the assessment was made on 29th March 1973, while the limitation was to expire on 31st March 1973. The Tribunal held, "The assessment was valid, legal and binding on the assessee and it was not barred by time within the meaning of s. 153 of the Act."

5. Requirement of Communication of the Assessment Order to the Assessee:
The assessee contended that the assessment order must be communicated to the assessee to be considered "made." The Tribunal disagreed, stating, "The limitation as provided for making of assessment etc., and making of assessment in no case can be interpreted as communication of it to the assessee also, because this process of communication has since been provided for, separately, in s. 156 of the Act."

Conclusion:
The Tribunal concluded that the original assessment made on 29th March 1973 was valid and within the limitation period. Consequently, the fresh assessment made under Section 143(3)/146 was also valid. The Tribunal set aside the order of the AAC, stating, "In the result, the appeal of the Revenue succeeds and is accepted."