1970 (3) TMI 18 - HC - Income Tax

Notice u/s 148 of the Income-tax Act, 1961 - original assessment order was made under Indian Income-tax Act, 1922 - period of limitation for reassessment under Indian Income-tax Act, 1922 was eight years - since original assessment order was made under Indian Income-tax Act, 1922 on 29-07-1953, notice issued on 26-07-1965 under s. 148 of Income-tax Act, 1961 is not valid

Summary

Issues:
1. Jurisdiction under the Indian Income-tax Act, 1922 vs. the Income-tax Act, 1961.
2. Period of limitation for reassessment proceedings.
3. Concealed income exceeding Rs. 1,00,000.
4. Availability of alternative remedy by way of appeal.

Jurisdiction under the Indian Income-tax Act, 1922 vs. the Income-tax Act, 1961:
The petitioner, a partnership firm, challenged an assessment order dated March 10, 1969, made under section 147 of the Income-tax Act, 1961, following a notice served in 1965. The petitioner contended that the assessment should have been under the Indian Income-tax Act, 1922, not the Act of 1961. The respondents argued that as per the reasons recorded, the concealed income exceeded Rs. 1,00,000, allowing for reassessment under the Act of 1961. The court referred to precedents and determined that the Income-tax Officer lacked jurisdiction under the Act of 1961 due to the expired period of limitation under the Act of 1922.

Period of limitation for reassessment proceedings:
The court analyzed the period of limitation for reassessment proceedings, emphasizing that under section 297(2)(a)(ii) of the Income-tax Act, 1961, the Act applies only if the limitation under the Act of 1922 has not expired. The court examined the original record of the income-tax assessment proceeding and found that the Income-tax Officer had no jurisdiction to reassess the income under the Act of 1961 due to the expired limitation period.

Concealed income exceeding Rs. 1,00,000:
The court reviewed the reasons recorded by the Income-tax Officer, noting two items of concealed income totaling Rs. 59,000. Despite the respondents' argument that the concealed income exceeded Rs. 1,00,000, the court found that the Income-tax Officer lacked jurisdiction under the Act of 1961, as the concealed income did not surpass the threshold.

Availability of alternative remedy by way of appeal:
The respondents argued that the petitioner had an alternative remedy through an appeal, which was pending. However, the court held that in cases where the Income-tax Officer lacked jurisdiction, the petitioner should not be compelled to pursue an alternative remedy. The court overruled the objection, allowing the petition and quashing the assessment order dated March 10, 1969.

In conclusion, the court allowed the petition, quashed the assessment order, and awarded costs to the petitioner, emphasizing that the Income-tax Officer lacked jurisdiction under the Act of 1961 due to the expired period of limitation and the concealed income not exceeding the threshold for reassessment under the new Act.