1993 (1) TMI 19 - HC - Income Tax

Summary

Issues Involved:
1. Whether the notice u/s 148 of the Income-tax Act, 1961, for the assessment year 1981-82 is time-barred.
2. Whether the conditions precedent for exercising jurisdiction for alleged escaped assessment were fulfilled.

Summary of Judgment:

Issue 1: Time Barred Notice
The petitioner challenged the notice u/s 148 of the Income-tax Act, 1961, dated November 12, 1992, for the alleged escaped assessment for the assessment year 1981-82, claiming it was time-barred as per the provisions u/s 149 of the Act, which prescribes a maximum time limit of ten years from the end of the relevant assessment year, i.e., March 31, 1982.

In response, the respondent argued that u/s 150(1) of the Act, the notice u/s 148 could be issued at any time for making an assessment or reassessment in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference, revision, or by a court in any proceeding under any other law. The respondent contended that the Income-tax Appellate Tribunal had found that the transactions in question were those of the petitioner and not the firm, thus bringing the case within the ambit of section 150(1).

The court examined section 150(1) and Explanation 3 to section 153 of the Act, which states that an assessment on another person shall be deemed to be made in consequence of or to give effect to any finding or direction contained in an order, provided such other person was given an opportunity of being heard before the order was passed. The court found that the petitioner was not given an opportunity of being heard before the Income-tax Appellate Tribunal passed its order, thus failing to satisfy the conditions of Explanation 3 to section 153.

Issue 2: Conditions Precedent for Exercising Jurisdiction
Since the court sustained the first point relating to the bar of limitation, it did not address the second point regarding the conditions precedent for exercising jurisdiction for the alleged escaped assessment.

Conclusion:
The court allowed the special civil application, quashing the impugned show-cause notice as per annexure A, and made no order as to costs.