1981 (1) TMI 97 - AT - Income Tax

Summary

Issues:
1. Whether the assessment was made beyond the period of limitation under section 153.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT CALCUTTA involved a dispute regarding the assessment year 1972-73, where the assessee contended that the assessment was made beyond the period of limitation fixed under section 153. The normal date of limitation for completion of assessment was 31st March, 1975. The assessment was re-opened under section 146 on 31st March, 1975, and a fresh assessment had to be completed normally before 31st March, 1977. The ITO prepared a draft assessment order, which was forwarded to the assessee on 28th Feb., 1977, and served on 28th March, 1977. The final assessment order was passed on 24th Aug., 1977. The assessee argued that the assessment order served on 28th March, 1977, limited the ITO's time to complete the assessment, while the CIT (A) relied on Explanation I, sub-clause (iv) to Section 153 to exclude the period between forwarding the draft order and receiving directions from the IAC. The CIT (A) held that the period of limitation was 31 days from the date of receipt of directions from the IAC, and the assessee appealed this decision.

The assessee's counsel referred to legal precedents, including the Supreme Court and High Court decisions, emphasizing that a notice is not considered issued unless served. The argument was made that the word 'forward' in Explanation I Act, sub-clause (iv) to Section 153 should be equated with 'issue' to prevent arbitrary extension of the limitation period by the ITO. The counsel contended that the word 'forward' should be interpreted favorably to the assessee, highlighting the importance of the assessee receiving the draft order for it to be considered forwarded. The Departmental Representative relied on the CIT (A)'s order.

The Tribunal acknowledged that the word 'forward' had not been judicially interpreted in income-tax proceedings. However, it noted that 'forward' is distinct from 'issued and served,' with its dictionary meaning indicating sending or dispatching a document. The Tribunal concluded that when the ITO signs the forwarding letter, the draft assessment order is considered forwarded, initiating the process of service on the assessee. The Tribunal upheld the CIT (A)'s decision, dismissing the appeal by the assessee.