2004 (6) TMI 242 - AT - Income Tax

Tribunal Upholds Income Tax Assessment, Rejects Time-Barred Claim

SHARMA & CO. Versus ASSISTANT COMMISSIONER OF INCOME TAX.

SHARMA & CO. Versus ASSISTANT COMMISSIONER OF INCOME TAX. - TTJ 085, 001, Issues Involved:1. Time-barred assessment.2. Validity of notice under sections 143(2) and 142(1).3. Application of section 292B of the IT Act, 1961.Detailed Analysis:1. Time-barred Assessment:The primary issue raised by the assessee was that the assessment framed was time-barred and hence void ab initio. The assessee filed the income tax return in response to a notice under section 148 on 26th March 1998. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1) on 9th August 1999, after the expiry of twelve months from the end of the month in which the return was furnished. According to section 148, the provisions of the Act apply to the return filed under section 148 as if it were a return required to be furnished under section 139. The proviso to section 143(2) states that no notice under section 143(2) shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. Thus, the assessee argued that the assessment framed was time-barred and should be quashed.2. Validity of Notice Under Sections 143(2) and 142(1):The CIT(A) rejected the assessee's plea, stating that the return of income was duly processed under section 143(1)(a) and later selected for scrutiny. The assessment was initially framed on 26th December 1995. However, it was later noticed that the appellant had received income-tax refunds and interest on the refundable amount, which had not been included in the total income. Consequently, a notice under section 148 was issued on 27th February 1998, and the return was filed on 26th March 1998. The AO accepted the declared income and passed an order under section 143(3) on 28th October 1999. The CIT(A) held that the assessment framed under section 143(3) was in order despite the notice under section 143(2) being issued late, citing section 292B of the IT Act, 1961.3. Application of Section 292B of the IT Act, 1961:The assessee contended that section 292B does not prescribe any time-limit and cannot validate an otherwise time-barred assessment. The Departmental Representative argued that the assessment and reassessment under sections 139 and 148 are on different footings. While the return filed in response to a notice under section 148 is treated as a return under section 139 for limited purposes, the time-limit for issuing a notice under section 143(2) does not apply to reassessment proceedings. The Tribunal considered the phrase 'so far as may be, apply' in section 148(1) and referred to various judicial interpretations, including Supreme Court rulings, which clarified that this phrase means 'to the extent necessary and practical.' Thus, the entire provision of section 143(2) cannot be applied to reassessment proceedings.The Tribunal concluded that the provision of section 143(2) in its entirety cannot be made applicable to assessments under section 147, which relate to income escaping assessments. The provision can only be applied to the extent necessary and practical for giving an opportunity to the assessee. Therefore, the plea of the assessee that the assessment was time-barred was rejected.Conclusion on Merits:On the merits of the case, the Tribunal found no new material or evidence presented by the assessee. The interest on the refundable amount is chargeable to tax, and the CIT(A) had appropriately considered all the pleas and arrived at the correct conclusion. Therefore, the Tribunal agreed with the findings and conclusions of the CIT(A) and dismissed the appeal of the assessee.Final Judgment:The appeal was dismissed, upholding the assessment framed by the AO and confirmed by the CIT(A).