2006 (4) TMI 113 - HC - Income Tax

Tax assessments barred by limitation under Income-tax Act, 1961 upheld by High Court

The High Court affirmed the Tribunal's decision that the assessments for the years 1979-80 to 1982-83 were barred by limitation under the Income-tax Act, ... Delay in service of order of assessment on assessee – SCN issued requiring the assessee to the show cause as to why penalty should not be levied on him for non-payment of the assessed tax – it is clear that SCN was showing date of hearing prior to date of service of assessment order – hence Tribunal was justified in holding that the assessments are barred by limitation - reference is answered in favour of the assessee Issues:1. Whether the assessments were barred by limitation under the Income-tax Act, 1961.Analysis:The case involved a reference under section 256(1) of the Income-tax Act, 1961, regarding assessments for the years 1979-80, 1980-81, 1981-82, and 1982-83. The Assessing Officer had issued notices under section 148 of the Act based on a Departmental survey. The assessee filed returns, claiming they were under the amnesty scheme. Subsequently, assessments were made, but the orders were not served promptly. The assessee received show cause notices for penalties due to non-payment of assessed tax. The Deputy Commissioner of Income-tax (Appeals) dismissed the appeals filed by the assessee, leading to a second appeal before the Tribunal.The Tribunal, in its order, held that the assessments were barred by limitation. This decision was challenged by the Commissioner of Income-tax, leading to a reference to the High Court. The primary contention was whether the assessments were completed within the prescribed period. The Department argued that the assessments were not barred by limitation as the assessment orders were dated November 30, 1987. However, the assessee contended that the assessments were not completed by that date, as evident from the delayed service of assessment orders and demand notices.The Tribunal's decision was based on factual findings, concluding that the assessments were indeed barred by limitation. The High Court reiterated the principle that in a reference under section 256, it cannot disturb the Tribunal's findings of fact unless there is no evidence to support them or a misdirection in law. Citing relevant case law, the High Court emphasized that it cannot interfere with the Tribunal's factual conclusions unless specifically challenged in the reference. Therefore, the High Court upheld the Tribunal's decision that the assessments were barred by limitation, ruling in favor of the assessee.In conclusion, the High Court affirmed the Tribunal's decision that the assessments were barred by limitation under the Income-tax Act, 1961. The judgment highlighted the importance of factual findings by the Tribunal in such cases and the limited scope for the High Court to intervene in matters of fact. The reference was answered in the affirmative and in favor of the assessee, emphasizing the significance of timely completion of assessments within the prescribed period to avoid being barred by limitation.