1975 (1) TMI 10 - HC - Income Tax

Appellate Authority Assessment Proceedings Assessment Year Income Tax Act Reassessment Proceedings Recovery Proceedings

Summary

Issues Involved:
1. Validity of the notice issued under section 147(b) of the Income-tax Act, 1961.
2. Applicability of the limitation period under section 149.
3. Entitlement to refund of the amount recovered under section 226(3).

Detailed Analysis:

1. Validity of the Notice Issued under Section 147(b)
The petitioner challenged the notice issued under section 148 of the Income-tax Act, 1961, on January 10, 1967, for reopening the assessment for the assessment year 1959-60. The initial assessment had included cash credits of Rs. 3,36,000, which was later reduced to Rs. 86,000 by the Appellate Assistant Commissioner. The Income-tax Officer issued a notice under section 147(a) for the assessment year 1958-59, which resulted in the inclusion of Rs. 2,25,000 as income. This was again contested, and the Appellate Assistant Commissioner deleted the amount. The Income-tax Officer then issued the impugned notice under section 147(b) for the assessment year 1959-60. The Tribunal set aside the assessment order, stating the petitioner was not given adequate opportunity to rebut the Income-tax Officer's proposal. The court held that the notice under section 147(b) was valid as it was based on the Appellate Assistant Commissioner's finding that the income should be assessed in the year 1959-60.

2. Applicability of the Limitation Period under Section 149
The petitioner argued that the notice under section 147(b) was beyond the four-year limitation period prescribed under section 149. The court, however, clarified that sections 150 and 153 of the Act provide exceptions to this limitation. Section 150(1) allows for the issuance of a notice at any time to give effect to any finding or direction from an appellate order. Section 153(3) excludes certain assessments from the bar of limitation, including those made in consequence of an appellate order. Explanation 2 to section 153(3) deems assessments made in consequence of an appellate order to be without limitation. The court concluded that the limitation period under section 149 did not apply due to the provisions of sections 150 and 153, making the notice valid.

3. Entitlement to Refund of the Amount Recovered under Section 226(3)
The petitioner also sought a refund of Rs. 1,76,000 recovered under section 226(3) from Hindustan Steel Limited. Since the Tribunal had set aside the assessment order, the court held that no tax liability subsisted based on the assessment order dated September 3, 1970. Consequently, the petitioner was entitled to a refund of the entire amount recovered, including the Rs. 70,000 held in fixed deposit.

Conclusion:
The court partially allowed the petition, affirming the validity of the notice under section 147(b) but granting the petitioner a refund of the amount recovered. There was no order as to costs.