1994 (11) TMI 159 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the notice issued under section 148.
2. Classification of the return filed on 30-3-1989 as a return under section 148 or section 139(4).
3. Whether the reassessment completed on 22-8-1990 is barred by limitation.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued Under Section 148:

The Tribunal examined whether the notice issued under section 148 on 25-10-1988 was valid. According to section 148(1), a notice must be issued before making assessments, reassessments, and recomputations of income. In this case, the notice was issued on 25-10-1988, and the assessment was completed on 22-8-1990, thus satisfying the condition of being issued before the assessment was made. Additionally, section 149(1) stipulates that no notice under section 148 shall be issued if eight years have elapsed from the end of the relevant assessment year. For the assessment year 1987-88, eight years would elapse in 1996, making the notice issued on 25-10-1988 well within the prescribed time limit. The Tribunal concluded that the notice under section 148 was valid in all respects, as no return was filed before its issuance, and there was no provision in the Act to invalidate such a notice by furnishing a return afterward.

2. Classification of the Return Filed on 30-3-1989:

The Tribunal then addressed whether the return filed on 30-3-1989 should be treated as a return under section 148 or section 139(4). The return was filed in response to the notice under section 148, which is treated as a notice under section 139(2). The Tribunal noted that section 139(4) allows a person who has not furnished a return within the time allowed under section 139(1) or (2) to file a return before the assessment is made. However, since the return in this case was filed in response to a notice under section 148, it could not be treated as a return under section 139(4). The Tribunal held that the return filed on 30-3-1989 was a return furnished under section 139(2)/148, supported by the Calcutta High Court decisions in Iqbal Singh Atwal v. CIT and Balish Singh & Co. v. CIT.

3. Whether the Reassessment Completed on 22-8-1990 is Barred by Limitation:

The Tribunal considered the contention that the assessment was barred by limitation because the return filed on 30-3-1989 should have been completed by 31-3-1990. However, since the return was treated as a return under section 148/139(2), the limitation for making the assessment is governed by section 153(2). According to section 153(2)(a), no assessment, reassessment, or recomputation shall be made after the expiry of four years from the end of the assessment year in which the notice under section 148 was served. In this case, the notice was served on 26-10-1988, making the limitation period expire on 31-3-1993. The assessment completed on 22-8-1990 was therefore within the prescribed time limits. The Tribunal concluded that the assessment was not barred by limitation and was a valid assessment.

Conclusion:

The Tribunal upheld the order of the CIT(A), concluding that:
1. The notice issued under section 148 was valid.
2. The return filed on 30-3-1989 was to be treated as a return under section 139(2)/148.
3. The reassessment completed on 22-8-1990 was within the limitations and thus valid.