1989 (5) TMI 135 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the application under Section 146 of the Income-tax Act, 1961.
2. The effect of non-disposal of the application under Section 146 within the stipulated time.
3. Applicability of the limitation period under Sections 153(2A) and 153(3)(i) for making a fresh assessment.

Detailed Analysis:

1. Validity of the Application under Section 146:
The assessee contended that an application under Section 146 was filed on 20-2-1982 to reopen the assessment made under Section 144. The Income-tax Officer (ITO) did not dispose of this application, and the Commissioner of Income-tax (Appeals) [CIT(A)] did not mention this in his order. The assessee argued that the application should be deemed to have been allowed as per the decision in Third ITO v. Mohammedbhai Hasanally [1984] 9 ITD 57 (Mad.).

2. Effect of Non-disposal of the Application under Section 146:
The Tribunal affirmed that the application under Section 146, filed on 20-2-1982, should have been disposed of within 90 days, i.e., by 20-5-1982. Since this was not done, following the precedent set in Mohammedbhai Hasanally's case, the application is deemed to have been allowed in the assessee's favor.

3. Applicability of Limitation Period under Sections 153(2A) and 153(3)(i):
The central issue was whether the reassessment was barred by the limitation period under Section 153(2A). The assessee argued that the reassessment should have been completed by 31-3-1985, two years from the end of the financial year in which the application under Section 146 was deemed to have been allowed. The Tribunal, however, noted that Section 153(3)(i) allows a reassessment at any time if an application under Section 146 is allowed. The Tribunal concluded that the provisions of Section 153(2A) apply only to cases where a written order under Section 146 is passed, not where the application is deemed to have been allowed due to inaction by the ITO.

Conclusion:
1. Deemed Allowance of Application: The application filed by the assessee under Section 146 on 20-2-1982 is deemed to have been allowed on 20-5-1982 due to non-disposal within the 90-day period.
2. Limitation Period: The reassessment is not barred by the limitation period under Section 153(2A) because this provision applies only when a written order is passed under Section 146. Instead, Section 153(3)(i) applies, allowing the reassessment to be made at any time.
3. Reassessment Validity: The CIT(A) did not err in directing a reassessment, as the limitation had not set in by the time of his order.

Final Judgment:
The appeal is allowed in part, affirming that the application under Section 146 is deemed to have been allowed and that the reassessment can be made at any time under Section 153(3)(i).