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Issues:
Time limit for completion of assessment and reassessment under section 153(1)(b) of the Income-tax Act, 1961 for the assessment year 1985-86. Analysis: The judgment dealt with a reference under section 256(1) of the Income-tax Act, 1961, regarding the time limit for completion of assessment and reassessment for the assessment year 1985-86. The Assessing Officer had asked the assessee to explain various financial transactions, including bank deposits, fixed deposits, and investments. The assessment was initially supposed to be completed by March 31, 1988, but was completed on March 31, 1989, with additions under "Other sources." The issue raised was whether the assessment was barred by limitation under section 153(1)(a)(iii) of the Act. The Appellate Tribunal held that the assessment was not time-barred and that section 153(1)(b) along with section 271(1)(c) applied. The Tribunal found that the Assessing Officer had valid reasons to extend the limitation period based on the lack of explanations from the assessee regarding the financial transactions. The assessee contended that the assessment was indeed barred by limitation as the Assessing Officer did not have sufficient material to extend the period under section 153(1)(b). The Revenue argued that the Assessing Officer acted within the law by extending the period based on the lack of explanations provided by the assessee. The High Court analyzed the provisions of section 153 of the Income-tax Act, 1961, emphasizing the importance of timely completion of assessments and reassessments. The court noted that in cases of concealment of income, a longer time limit is prescribed for assessment to allow for a thorough investigation. The High Court upheld the Tribunal's decision, stating that the Assessing Officer had provided the assessee with opportunities to explain the financial transactions. The court found that the extension of the limitation period was justified based on the Assessing Officer's satisfaction with the explanations provided. The judgment distinguished previous cases cited by the assessee, emphasizing the specific circumstances of the current case. The court also discussed the limitations of raising new questions not considered by the Tribunal, citing relevant Supreme Court decisions. Ultimately, the High Court ruled in favor of the Revenue, stating that the assessment made on March 31, 1989, was not barred by limitation under section 153(1)(a)(iii) of the Act. The court highlighted the importance of following the statutory provisions for assessment timelines and dismissed the assessee's arguments regarding the extension of the limitation period.
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