Time limit for completion of assessments and reassessments. - Income Tax - 381/CBDT

INSTRUCTION NO. 381/CBDT Dated: February 10, 1972 Section(s) Referred: 153 Statute: Income - Tax Act, 1961 Attention is invited to the Supreme Court ruling in the case of CIT Vs. Balkrishna Malhotra (81 ITR 759) holding that the word 'assessment' appearing in the first proviso to Section 34(3) of the Income-tax Act, 1922 means not merely the computation of the income of the assessee but also the determination of the tax payable by him. On this basis, the Supreme Court held that even if the assessment order was passed within the statutory time-limit, if the demand notice and challan demanding the tax were issued and served on the assessee beyond the statutory time-limit, the assessment would be barred by limitation. 2. Though the Supreme Court have observed towards the end of the judgment in this very case that the provisions of Section 153 of the Income-tax Act, 1961 are materially different from the provisions of Section 34(3) of the Income-tax Act, 1922, the Board have decided that as a precautionary measure the ruling should be treated as applicable in determining the time-limit for completion of assessments and re-assessments under Section 153 of the new Act as well-if , on a closer consideration of the ruling, in consultation with the Ministry of Law, the Board come to have a different view later, they would revise this Instruction. 3. The Board desire that immediate action should be taken to impress upon the Income-tax Officers in the charge that they must not only pass the assessment orders within the prescribed statutory time-limit but also determine the amount of tax due from the assessee within the statutory time-limit. Any failure in this respect will render the assessment void. 4. As the assessments for three assessment years would be reaching limitation on 31-3-72, which is a holiday, and March 26 and 27 also are holidays, it is imperative that all tax calculations in limitation cases must be completed on the assessees by 25-3-1972 at the latest. 5. Please acknowledge the receipt of this letter and intimate the Board whether effective action for bringing this Instruction to the notice of Income-tax Officers has been taken.