2007 (4) TMI 313 - AT - Income Tax

Summary

Issues Involved:
1. Whether the Hon'ble High Court's order is a direction for reopening of the assessment.
2. Applicability of the time-limit prescribed u/s 149 for issuing notice u/s 148.

Summary:

Issue 1: Whether the Hon'ble High Court's order is a direction for reopening of the assessment.

The revenue contended that the Hon'ble High Court's order constituted a direction to issue a fresh notice u/s 148. The High Court had stated, "We make it clear that the said order shall not preclude the authority from issuing a fresh notice assigning reasons." The Assessing Officer treated this as a direction and issued a fresh notice. However, the CIT(A) concluded that the High Court did not issue a direction but merely enabled the Assessing Officer to issue a fresh notice if permissible by law. The Tribunal agreed, noting that a direction implies an order requiring positive compliance, which was not present in this case. The Tribunal cited the Supreme Court's decision in Rajinder Nath v. CIT, where it was held that an observation allowing the authority to take action does not constitute a direction.

Issue 2: Applicability of the time-limit prescribed u/s 149 for issuing notice u/s 148.

The CIT(A) and the Tribunal both held that the notice issued u/s 148 was barred by limitation as it was issued after six years from the end of the relevant assessment year. The Tribunal emphasized that the statutory requirement for issuing a reassessment notice within six years was not met. The Tribunal also distinguished the present case from other cases cited by the revenue, such as Grindlays Bank Ltd. v. ITO and L. Alagusundaram Chettiar v. CIT, noting that those cases involved different factual circumstances and specific statutory provisions for exclusion of time during which proceedings were stayed.

Conclusion:

The Tribunal upheld the CIT(A)'s decision, confirming that the notice issued u/s 148 was invalid due to the lapse of the statutory time limit and that the High Court's order did not constitute a direction to reopen the assessment. The appeals of the revenue were dismissed.