Appellate Direction for Separate Assessments Allowed Despite Limitation Where It Falls Within the Statutory Exception

Section 153(3) of the Income-tax Act, 1961 operates as an exception to the limitation in section 153(1) where an assessment, reassessment or recomputation is made to give effect to a finding or direction in an appellate order. On that basis, an appellate authority may direct the Income-tax Officer to make separate assessments for different periods despite the ordinary time limit, if the direction falls within the statutory exception. The text notes that such a direction was treated as valid and the issue was answered in favour of the Revenue.

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Issues: Whether the appellate authority could direct the Income-tax Officer to make two separate assessments for different periods, notwithstanding the time limit under section 153(1) of the Income-tax Act, 1961.

Analysis: Section 153(3) of the Income-tax Act, 1961 carves out an exception to the limitation prescribed in section 153(1) where an assessment, reassessment or recomputation is made to give effect to any finding or direction contained in an appellate order. The direction to make separate assessments for the two periods fell within that statutory exception, so the limitation bar did not apply.

Conclusion: The appellate authority had the power to direct two separate assessments, and the question was answered in favour of the Revenue.

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