1987 (1) TMI 114 - AT - Income Tax

Assessment order ruled invalid due to time-barred issue, assessee wins appeal on technicality.

The Tribunal ruled in favor of the assessee, finding that the assessment order framed on 19th Sept., 1984 was invalid due to being time-barred under s. ... - Issues:Dispute over disallowances made by IT authorities, Additional ground on limitation under s. 153 (1) (a) (iii) raised by assessee.Analysis:The appeal involved the assessee disputing certain disallowances made by the IT authorities. The assessee, a company engaged in manufacturing woollen and woollen fabrics, raised an additional ground during the hearing regarding the limitation under s. 153 (1) (a) (iii). The assessee argued that the assessment made on 19th Sept., 1984 was barred by limitation and should be void. The key contention was whether the time limit for passing the assessment order under s. 143(3) would be up to 31st March 1984 or could be extended up to 30th Sept., 1984 under the Expln. 1 to s. 153 of the Act.The time limitation for passing the assessment order was crucial, as per the provisions of s. 153 of the Act. The assessee's counsel argued that the provisions of s. 144B of the Act were not applicable in this case, making the assessment invalid due to being framed after 31st March 1984. The counsel relied on various tribunal orders to support the argument that the assessment was time-barred. On the other hand, the Revenue representative contended that the facts of this case differed from the precedent relied upon by the assessee. The representative highlighted the absence of directions or guidance given by the IAC to the ITO before the assessment order was framed.The dispute over whether the IAC had given directions or guidance to the ITO in framing the assessment order led to a request for inspection of relevant records. The assessee provided correspondence indicating that the IAC had indeed provided guidance to the ITO, supporting their argument. The Tribunal found that the assessee's case aligned with the precedent set in the Saraya Sugar Mills (P) Ltd. case, where the assessment was annulled due to similar circumstances. Consequently, the Tribunal agreed with the assessee's submission that the assessment framed on 19th Sept., 1984 was invalid due to being time-barred.Given the decision on the limitation issue, the Tribunal refrained from providing a decision on the merits of the various disallowances made by the IT authorities. This was to avoid complications in implementing the order and potential difficulties in making further applications under the Act. Ultimately, the appeal was allowed in favor of the assessee, annulling the assessment framed under s. 143(4)/144B of the Act on 19th Sept., 1984.