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2014 (1) TMI 989 - HC - Income Tax


Issues:
Challenge to order by Income Tax Appellate Tribunal regarding assessment year 2001-02.
Validity of reopening the case for alleged escapement of income chargeable to tax.
Demand of interest under Section 234-B of the Act.

Analysis:
The appellant challenged the order passed by the Income Tax Appellate Tribunal regarding the assessment year 2001-02. The appellant filed a return of income showing short-term capital gains on the sale of certain buildings to a company but did not disclose any capital gains on the sale of land to the same entity. The assessing officer believed there was an escapement of income chargeable to tax due to this discrepancy. Despite the appellant's explanation and subsequent return filing, the assessing officer computed capital gains on the entire transaction. The Commissioner of Income Tax (Appeals) upheld this decision, which led the appellant to appeal to the Tribunal.

The appellant raised two substantial questions of law before the Tribunal. Firstly, questioning the validity of the reopening of the case without a statutory notice under Section 143(2) of the Act. Secondly, disputing the demand for interest under Section 234-B of the Act. The appellant argued that the notice under Section 143(2) was issued beyond the time limit specified in the Act, which could vitiate further proceedings against the assessee. The appellant contended that this issue was not adequately considered by the lower authorities despite being raised in the appeal memoranda.

Upon reviewing the Tribunal's order, the Court found no legal question involved as the decisions were based on factual evidence. However, the Court acknowledged that if the question of limitation favored the appellant, it could invalidate the entire proceedings. Emphasizing that the issue of limitation was crucial and should be addressed by the Tribunal, the Court allowed the Writ Appeal, setting aside the impugned order. The Tribunal was directed to reconsider the matter in light of the observations made regarding the time limit specified under Section 143(2)(ii) of the Act.

 

 

 

 

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