2014 (3) TMI 577 - HC - Income Tax

Time-barred order u/s 144 r.w.s. 251 of the Act Cancellation of assessment order - Whether the Tribunal was correct in upholding that the assessment order for the year 1977-78 passed u/s 144 r.w. Section 251 of the Act on 30.03.1987 was time-barred and cancelling the same Held that -Tribunal was of the view that no notice under Section 143(2) was ever issued to the assessee - Issuance of a notice under Section 143(2) is mandatory - Even the requirement of notice of hearing before making the best judgment assessment under Section 144 of the Act has not been complied with - both the appellate Commissioner as well as the Tribunal came to the conclusion that the assessment order dated 30.03.1987 was really not made on that day and obviously the same has been made subsequent to that date - One also should not lose sight of the fact that the order dated 30.03.1987 came to be dispatched on 08.05.1987 and received by the assessee on 10.09.1987, after the assessee filed the letter before the Tribunal pointing out the time for passing assessment order expired - there is no error apparent on the face of the record and the Tribunal came to the right conclusion that the assessment order was not really made 30.03.1987 and the same was made subsequent to that date thus, there is no question of law which arises from the order of the Tribunal as conclusions reached by the Tribunal are based on appreciation of pure questions of fact thus, there is no reason to interfere in the findings of the Tribunal Decided against Revenue.

Summary

Issues:
1. Interpretation of assessment order time-barred under Section 144 read with Section 251 of the Income-tax Act, 1961 for the assessment year 1977-78.
2. Validity of canceling the assessment order under Section 144 read with Section 251 of the Act for the assessment year 1977-78.

Analysis:
1. The case involved questions regarding the time-barred assessment order for the assessment year 1977-78. The assessee was initially assessed under Section 143(3) of the Income-tax Act, 1961, which was set aside by the Commissioner under Section 263 of the Act for fresh assessment. The assessee appealed against this decision, but later withdrew the appeal citing the expiration of the assessment time limit. Subsequently, an assessment order dated 30.03.1987 was received by the assessee on 10.09.1987, leading to a dispute over the timing of the order. The Commissioner found discrepancies in the order and canceled it. The Revenue challenged this cancellation before the Income-tax Appellate Tribunal, which dismissed the appeal based on the factual findings that the order was anti-dated and not made on the stated date.

2. The Department argued that the delay in receiving the order should not invalidate its date of issuance. They contended that Section 144 of the Act does not specify a time limit for order service, and the focus should be on the order's creation rather than its delivery. However, the Tribunal found crucial errors in the absence of a notice under Section 143(2) and non-compliance with the mandatory hearing requirements under Section 144. The Tribunal's decision was based on factual analysis, concluding that the assessment order was not made on 30.03.1987 as claimed but was created after that date. The Court upheld the Tribunal's decision, emphasizing that the conclusions were factual and not legal issues, thereby ruling in favor of the assessee and against the Revenue.

In conclusion, the High Court dismissed the Revenue's appeal, affirming the Tribunal's decision that the assessment order for the assessment year 1977-78 was not made on the specified date. The Court highlighted the importance of procedural compliance under Sections 143(2) and 144 of the Act, emphasizing that the assessment process must adhere to legal requirements. The judgment focused on factual analysis rather than legal interpretation, leading to the rejection of the Revenue's arguments and upholding the assessee's position in the case.