9911796707
TMI Blog1984 (3) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... al, elaborate grounds of appeal were taken dealing with the reopening as well as quantum of reassessment. An additional ground was raised that the conditions necessary for the issue of a notice under action 15 of the Excess Profits Tax Act, 1940 ('the EPT Act') were absent in the assessee's case. The notice was issued after a lapse of about 35 years from the relevant accounting year. The income-tax reassessment having been completed by about 15-2-1954 and no proceedings for excess profit tax reassessment having been started for more than two decades, the reopening was illegal and inequitable. After hearing the objections of the learned counsel for the department, the additional ground was admitted. The additional ground went to the root of the matter and factual submissions of the department with regard to this ground were necessary to mete out justice. It was found that the question of long delay was taken up even before the EPTO. 3. Both the original income-tax assessment under section 23(3) of the Indian Income-tax Act, 1922 ('the 1922 Act') and the excess profits tax assessment under section 14(1) of the Act were made on 31-7-1945. On 25-3-1949 the income-tax assessment was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the excess profit tax records, it appears that for the assessment year 1944-45, income-tax assessment was reopened under section 34 of the Indian Income-tax Act, 1922, which ultimately resulted in all addition of Rs. 6,35,938 being rate difference disallowed by the ITO. This addition was deleted (upheld) by the AAC but finally the ITAT restored the ITO's order and confirmed the addition. The reassessment proceedings were initiated after the income-tax order became final in view of the ITAT confirming the addition in income-tax assessments. Probably, this was the reason for delay in reopening the assessment. Further, it is submitted that the concerned Officer Shri T.L. Nilakantan is no longer available for giving his comments as he has retired from the Government service. " It was pointed out that the delay was due to reasons beyond the control of the concerned officials. 5. The parties were heard on the appeal. The learned counsel for the department pointed out that the income-tax order was reopened and a reassessment was made. An addition made on account of a rate difference unexplained by the assessee was upheld by the first appellate authority and was confirmed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere no limitation is provided would, according to the learned counsel, be unjustified. Reference is made to Ram Kishan Baldeo Prasad v. CIT [1967] 65 ITR 491 (All.), CIT v. Rupsa Rice Mills [1964] 54 ITR 328 (Ori.) and Swastik Oil Mills Ltd. v. H.P. Munshi [1968] 21 STC 383. In Lalta Prasad Goenka v. CIT [1980] 122 ITR 399, the Bombay High Court held that an order of penalty is not vulnerable merely on account of delay. 7. For the assessee the assessment is challenged both on the question of law and on the ground of inequity. That even in cases where no limitation is provided, inordinate delay results in illegality finds support from the decisions of the Allahabad High Court in Mohd. Atiq v. ITO [1962] 46 ITR 452, Bisheshwar Lal v. ITO [1970] 75 ITR 698 (All.) and ITO v. Bisheshwar Lal [1970] 76 ITR 653 (All.). The Bombay High Court in Chimanram Moti Lal (P.) Ltd. v. CIT [1983] 140 ITR 809, considered all the cases and held that unexplained delay would invalidate a levy. Though that decision related to penalty, the rates would apply to the present situation as well. On merit, it is pointed out that the mere absence of a limitation period would not justify making a reassessment at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is not an acceptable explanation. If a single ITO's retirement disables the department from giving a reason for the delay, how much, prejudice should the disappearance of all its employees cause to the assessee ? Over 22 years and even 16 years the entire shareholders' financial position, staff members, etc., of the company undergo a great change. It is also settled that where a delay is to be explained, every component of the period of delay should be explained. A general explanation as to departmental difficulties and the harm done to the State by inadvertent defaults of its officers would not be sufficient explanation for the delay. We have, therefore, no hesitation in holding that the delay in making the assessment proceedings is inordinate and there is no satisfactory explanation for it from the revenue. The reasons given could at best explain a few months, if not days of the period. 9. We also hold that apart from the strict legal validity or otherwise of the reassessment, the delay has caused substantial prejudice to the assessee and injustice to him. There is authority for the proposition--Indian Woollen Textile Mills v. CEPT [1960] 39 ITR 289 (Punj.) that excess prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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