1986 (6) TMI 90 - AT - Income Tax

Summary

Issues:
1. Whether the order dated 12-4-1983 constitutes an assessment order under section 143, subject to the period of limitation under section 153?

Analysis:
The judgment involves five appeals by the revenue against orders of the AAC canceling assessments made by the ITO for the assessment year 1980-81. The assessees, partners in a firm, objected to the assessments made under section 143(1) by filing applications under section 143(2)(a) in March 1983. The ITO rejected these objections on 12-4-1983, leading to the AAC annulling the order. The main issue was whether the order dated 12-4-1983 constituted an assessment order under section 143 subject to the limitation under section 153.

The revenue contended that the order dated 12-4-1983 was not an assessment order subject to the limitation under section 153, as it merely rejected the assessee's application under section 143(2)(a). The revenue argued that a fresh assessment is required only when the ITO deems the initial assessment incorrect, inadequate, or incomplete. On the other hand, the assessee argued that the initial assessment under section 143(1) was nullified when objections were raised, necessitating a fresh assessment under section 143(3)(b). The assessee also cited relevant case law and provisions of section 153 to support their argument that the order dated 12-4-1983 was time-barred.

The Tribunal analyzed the provisions of section 143, emphasizing that when an assessee objects to an assessment under section 143(1), it is mandatory for the ITO to issue a notice under section 143(2) and make a fresh assessment under section 143(3)(b). The Tribunal concluded that in cases where objections are raised by the assessee, a fresh assessment is compulsory, subject to the limitation under section 153. The Tribunal also highlighted an amendment in section 153(1) introduced in 1984 to address practical difficulties in making fresh assessments within the time limit.

Ultimately, the Tribunal upheld the decision of the AAC, ruling that the orders passed on 12-4-1983 were indeed assessment orders under section 143 subject to the limitation under section 153. The Tribunal dismissed the revenue's appeals, affirming the annulment of the orders by the AAC.