2004 (5) TMI 253 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order.
2. Barred by limitation.
3. Service of notice under section 271(1)(c).
4. Merits of the case.

Detailed Analysis:

1. Validity of the Assessment Order:
The primary issue raised by the assessee was the validity of the assessment order. The assessee argued that the assessment was barred by limitation and made beyond the time available under section 153(1)(b). The return of loss was filed on 31-10-1985, beyond the extended due date of 30-9-1985, making it invalid under sections 139(1) and 139(2). The assessee contended that the return was invalid and should not have been considered for assessment.

2. Barred by Limitation:
The assessee argued that the assessment was barred by limitation. The Assessing Officer (AO) issued a notice under section 143(2) on 10-4-1986 and subsequent notices, with the final assessment completed on 31-3-1989. The AO claimed that the assessment was within the extended time limit under section 153(1)(b) due to the initiation of penalty proceedings under section 271(1)(c). The assessee contended that the notice under section 271(1)(c) was served on 10-3-1989, not on 17-3-1988, and the assessment was barred by limitation.

3. Service of Notice under Section 271(1)(c):
The AO claimed that the notice under section 271(1)(c) was served on 17-3-1988, while the assessee argued it was served on 10-3-1989. The AO mentioned that the notice was served on Shri S.K. Khandelwal on 17-3-1988, but the assessee provided affidavits stating that Khandelwal was at Udaipur on that date. The AO's affidavits and order sheets were scrutinized, revealing discrepancies and lack of concrete evidence of service on 17-3-1988. The Tribunal found the assessee's affidavits credible, indicating that the notice was served on 10-3-1989, making the assessment barred by limitation.

4. Merits of the Case:
The Tribunal did not delve into the merits of the case, as the primary issue of the assessment being barred by limitation was decided in favor of the assessee. The Tribunal concluded that the assessment framed on 31-3-1989 was barred by limitation, rendering any decision on the merits inconsequential.

Conclusion:
The Tribunal allowed the appeals, holding that the assessment was barred by limitation. The AO's actions, including the issuance of show-cause notices and affidavits, were scrutinized, and the Tribunal found the assessee's contentions credible. The assessment order dated 31-3-1989 was declared invalid due to being barred by limitation.