Assessment/reassessment u/s.147, Income Tax Act 1961. - Income Tax - 1243/CBDT

INSTRUCTION NO. 1243/CBDT Dated : March 30, 1979 Section(s) Referred: 147 Statute: Income - Tax Act, 1961 It has come to the notice of the Board that some benches of the ITAT and CsIT(Appeals) have held that the provisions of sec.144B of the I.T.Act are not applicable to assessment/reassessment to be made u/s.147 and consequently the period(not exceeding 180 days) as referred to in clause (iv) of Explanation I to sec.153 is not to be excluded from the period of limitation prescribed in sub-sec(2) of the said section. The assessments completed after the time limit prescribed in section 153(2) but within the time allowed as per clause (iv) of Explanation(1) have been held to be invalid being barred by limitation. 2. The ITAT Nagpur Bench in the case of V.D.Saraf(HUF) Vs. ITO (IIA Nos.214/300/100/135 of 1977-78) has held that the assessment u/s.147 is different from the one made u/s.143(3). Therefore, the provisions of section 144B are not applicable and the period as provided in clause(iv) of explanation 1 to sec.153 will not be excluded in computing the period of limitation. The decision of the Tribunal has not been accepted and a reference application has been filed. 3.This question has been examined in consultation with the Ministry of Law. The Board have been advised that the combined effect of the provisions of sec.148(1) read together with sec.143(3) is that even the assessment or re-assessment to be made u/s.147(a)/(b) falls within the purview of sec.144B. Sub-section (1) of sec.144B opens with a non-obstante clause giving it overriding effect on any other provisions of the act. There is nothing in the context which could reasonably justify placing a limited construction on the word "assessment" in sec.144B(1) since u/s.2(8) the term "assessment" include "re-assessment". Further the fiction created u/s.148(1) to treat the notice as if issued u/s139(2) and the applicability of other provisions of the I.T.Act has to be given full effect to. Separate mention of the order u/s.147 in the sections 246 and 263 is only relevant for the purposes of these sections and the same cannot be carried further so as to affect the proper interpretation of section 144B. 4. Thus if an ITO while finalising an assessment or re-assessment reopened u/s.147(a)/(b) proposes to make a variation in the income or the loss returned in excess of the amount fixed by the Board under the sub-sec.(6) of the said section(Rs.1 lakh as per F.No.201/121/75-ITA.II) he has to forward a draft of the proposed order of assessment to the assessee of u/s.144B(1) and to the IAC under sub-section (4), if required. 5. In view of the opinion of the Ministry of Law that the assessment or re-assessment u/s.147 falls within the scope of the provisions of sec.144B and in view of the fact that the decisions of the ITAT and the CIT(Appeals) have not been accepted, the Board desire that the adverse decisions of the CIT(Appeals) and ITAT in this behalf may not be accepted. But as appellate authorities are holding a view contrary to that of the Board it is desired that in cases where assessments or re-assessments are to be made u/s.147 references to IAC u/s.144B may be made well in time so as to enable the ITO to complete the assessments within the time laid down in sub-section (2) of section 153 without excluding the period referred to in clause (iv) of Explanation 1 to the said section. It means that the entire proceedings should be completed within the normal time available to the ITO for completion of the assessments u/s.147 so that the assessments are not held as void by the appellate authorities being barred by limitation. The IACs in turn may also be asked to finalise their directions u/s.144b(4) expeditiously so that the ITO gets sufficient time to complete the assessment or re-assessment u/s.147 well within the normal time of completion of the assessment.