1989 (5) TMI 111 - AT - Income Tax

Summary

Issues:
Challenge to order made after limitation period.

Analysis:
The case involves a challenge to an assessment order for the assessment year 1976-77 made by the Income Tax Officer (ITO) after the expiry of the limitation period. The assessee contended that the order was passed beyond the prescribed time limit under sec. 153(1)(c) of the Income-tax Act. The assessee had voluntarily filed a return of income under sec. 139(4) on 30-3-1979, before the notice under sec. 148 was served. The crux of the issue was whether the ITO had jurisdiction to assess the income of the assessee after the notice under sec. 148 was issued. The assessee argued that the notice under sec. 148 was invalid as a return had already been filed within the stipulated time. The Departmental Representative, on the other hand, contended that once the notice under sec. 148 was issued, the ITO had the jurisdiction to proceed with the assessment. The Department relied on the Supreme Court judgment in R.K. Upadhyaya v. Shanabhai P. Patel to support their argument.

The Tribunal analyzed the legal position and held that once a notice under sec. 148 is issued within the limitation period, jurisdiction vests in the ITO to proceed with the assessment. The Tribunal referred to the Supreme Court decision in R.K. Upadhyaya, emphasizing that the notice under sec. 148 was valid and invested the ITO with the power to assess the income. The Tribunal further explained that the ITO's jurisdiction could only be divested once an order was made, and subsequent events like the filing of a return by the assessee would not affect the ITO's jurisdiction. The Tribunal distinguished the case of Kundan Lal Behari Lal and upheld the validity of the assessment order passed by the ITO.

The Tribunal also referred to the Supreme Court's decision in Banarsi Debi v. ITO and other relevant cases to support its conclusion. It clarified that the ITO had the authority to pass the assessment order up to 31-3-1984, as per sec. 153(2)(a) of the Income-tax Act. The Tribunal held that the assessment order passed by the ITO on 28-2-1983 was within the prescribed time limit and dismissed the appeal, affirming the validity of the assessment.

In conclusion, the Tribunal upheld the jurisdiction of the ITO to pass the assessment order within the statutory time limit, rejecting the assessee's challenge based on the expiry of the limitation period. The Tribunal's decision was based on a thorough analysis of relevant legal provisions and precedents, emphasizing the importance of the notice under sec. 148 in conferring jurisdiction on the ITO to assess the income of the assessee.