2006 (1) TMI 110 - HC - Income Tax

Reopening of the assessment u/s 148 r.w.s. 150 limitation - held that the plain language of sub-section (2) of section 150 clearly restricts the application of sub-section (1) to enable the authorities to reopen assessments which have not already become final on the expiry of the period of limitation prescribed under section 149 - held that the provisions of section 150(1) as amended with effect from April 1 1989 did not enable the authorities to reopen assessments which had become final due to the bar of limitation prior to April 1 1989 - proceedings which had attained finality under existing law due to bar of limitation cannot be held to be reopened for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings which had already concluded and attained finality.

Summary

Issues:
1. Interpretation of the period of limitation for reopening assessments under section 150 of the Income-tax Act.

Analysis:
The High Court of Madras heard appeals by the Revenue against the Appellate Tribunal's orders regarding the reopening of assessments for an electricity distribution company taken over by the Government of Tamil Nadu. The Supreme Court had earlier granted compensation and interest to the company. The main issue was whether the period of limitation for reopening assessments applies to orders passed by the Assessing Officer under section 150 of the Income-tax Act. The Tribunal, citing a Supreme Court decision in K. M. Sharma v. ITO, clarified that sub-section (2) of section 150 restricts the reopening of assessments that have already become final due to the expiry of the limitation period under section 149. The Supreme Court emphasized that the amended provisions from April 1, 1989, do not allow authorities to reopen assessments finalized before that date due to the limitation bar. The Court concluded that proceedings final under the law cannot be reopened unless the amended provision explicitly allows retrospective operation to upset concluded proceedings.

The judgment favored the assessee and upheld the Tribunal's decision based on the Supreme Court's interpretation of section 150. The Court dismissed the Revenue's appeals, affirming that the Tribunal's adherence to the Supreme Court's ruling required no interference. Consequently, the connected C. M. Ps were also dismissed.