2009 (11) TMI 1008 - HC - Income Tax

Summary

Issues involved: Assessment appeal u/s 132 of the I.T. Act for the year 1992-93, estimation of net profit, time-barred income escaping assessment u/s 147.

The judgment of the Kerala High Court in 2009 (11) TMI 1008 dealt with an assessment appeal filed by the appellant against the Tribunal's order regarding the assessment for the year 1992-93. The appellant, who was the Managing Partner of two firms, did not file a return, leading to a search u/s 132 of the I.T. Act. It was discovered that business transactions of the firms were conducted through the appellant's bank account. The assessing officer estimated the net profit at Rs. 75,000, later reduced to Rs. 50,000 by the Tribunal. The appellant's argument of the income escaping assessment being time-barred u/s 147 was not raised before the Tribunal, hence not considered by the High Court. The Court emphasized that an appeal is maintainable only on substantial questions of law arising from the Tribunal's order. As no such issue was found, the appeal was dismissed, granting the appellant the option to approach the Tribunal if there is a case for time-barred assessment.

In this case, the key issue revolved around the estimation of the net profit from the business of the appellant, who was the Managing Partner of two firms. The Tribunal initially estimated the net profit at Rs. 75,000, which was later reduced to Rs. 50,000. The appellant's counsel contended that the income escaping assessment completed u/s 147 was time-barred. However, the High Court noted that this contention was not raised before the Tribunal during the decision-making process. As per legal principles, an appeal is maintainable before the High Court only on substantial questions of law arising from the Tribunal's order. Since the time-barred assessment issue was not addressed by the Tribunal, the High Court declined to consider it in the appeal.

Regarding the refixation of income, the High Court found no question of law arising from the Tribunal's order. The Court emphasized that an appeal can only be entertained on substantial questions of law arising from the Tribunal's decision. As the issue of refixation of income did not present any such legal question, the appeal was dismissed. However, the appellant was granted the freedom to approach the Tribunal if there are grounds to argue that the assessment is time-barred.