Reassessment under Section 147: Application of Section 144B for additions exceeding Rs.1 lakh

The court held that section 144B is applicable in reassessment proceedings initiated under section 147(b), as reopening an assessment under section 147 restarts the proceedings de novo, necessitating compliance with section 143(3) and potential application of section 144B for additions exceeding Rs. 1 lakh. The reassessment completed on September 20, 1979, was deemed within the extended period allowed by law and not time-barred under section 153, confirming its validity and favoring the Revenue over the assessee.

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Issues Involved:
1. Applicability of section 144B of the Income-tax Act in reassessment proceedings initiated under section 147(b).
2. Whether the reassessment completed on September 20, 1979, is barred by limitation.

Summary:

1. Applicability of Section 144B in Reassessment Proceedings u/s 147(b):
The assessee argued that section 144B can only be invoked in assessments made u/s 143(3) and not in reassessments initiated u/s 147. The Revenue contended that once section 147 is invoked, the assessment proceedings start afresh, and any assessment can be made u/s 143(3) or 144, making section 144B applicable. The court held that reopening an assessment u/s 147 results in the proceedings starting de novo, thereby attracting section 143(3) and necessitating a reference u/s 144B if the intended addition exceeds Rs. 1 lakh. The Tribunal's decision that section 144B was applicable was upheld.

2. Limitation for Reassessment:
The assessee claimed the reassessment was time-barred as it should have been completed by March 31, 1979, under section 153(2)(b). However, the court noted that if section 144B is applicable, the reassessment completed on September 20, 1979, falls within the extended period allowed by clause (iv) of Explanation I to section 153. Consequently, the reassessment was deemed to be within the time allowed by law and not barred by limitation.

Conclusion:
The court answered the referred question in the affirmative, against the assessee and in favor of the Revenue, confirming that the reassessment completed on September 20, 1979, was valid and within the prescribed time limit.

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