2013 (7) TMI 651 - HC - Income Tax

Notice for reassessment u/s 148 - Bar of limitation u/s 149 - The two notices have been challenged on the ground that they have been issued after the period prescribed under Section 149 of the Act for taking proceedings under Section 147 and 148 of the Act has expired and the notices are barred by limitation - the order dated 19.12.2003 was passed by the CIT (Appeals) and the order dated 11.1.2005 passed by the CIT - the period of limitation for making assessment/reassessment for the assessment year 1992-93 to 1996-97 had already expired long back on 31.3.2003 - in any event the department cannot take shelter behind the provision of Section 150 (1) - which conclusion therefore is irresistible and the notices issued for the A.Y.1992-93 to 96-97 are beyond the period of limitation petition decided in favour of assessee

Summary

Issues:
- Validity of notices issued under Section 142(1) and 148 of the Income Tax Act, 1961
- Barred by limitation under Section 149 of the Act
- Justification of notices under Section 150(1) of the Act

Analysis:
The petitioner sought to quash notices issued under Section 142(1) and 148 of the Income Tax Act, claiming they were beyond the prescribed period under Section 149. The petitioner, a senior citizen, received compensation and interest from the State Government, which was distributed among family members. The assessment for the year 1997-98 was disputed, leading to appeals and subsequent notices for other years. The respondent justified the notices under Section 150(1) based on prior orders. The Court examined the limitation period under Section 149, which allows notices within four to six years unless income exceeding a threshold is involved. Section 150(1) permits notices based on findings or directions in previous orders. The Court noted that no such directions were given for the relevant years in this case.

The Court analyzed the orders from the Commissioner of Income Tax, which did not empower the respondent to lift the limitation bar under Section 150(1). The orders merely directed proper investigation and did not pertain to the interest income in question. As the limitation period had already expired by the time of these orders, the Court concluded that the notices were beyond the limit and quashed them. The judgment highlighted that the department could not rely on Section 150(1) in this scenario. Consequently, the writ petition was allowed, and each party was directed to bear their own costs.