TMI Blog2007 (5) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... limit as per IT Act, 1961, therefore, reassessment order dt. 13th March, 2006 is not tenable in law. In the instant case, initiation of reassessment proceedings was barred by other provision of the Act on 10th June, 2004 when the appellate order for asst. yr. 1998-99 was passed. It is observed that the asst. yr. 1997-98 has ended on 31st March, 1998. Reopening of the assessment for asst. yr. 1997-98 was permissible under the IT Act upto 31st March, 2004. However, the appellate order, on the basis of which reassessment was initiated, has been passed on 10th June, 2004. On the said date initiation of reassessment for asst. yr. 1997-98 was prohibited by law, and hence reassessment proceeding initiated after 31st March, 2004 is clearly bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reassessment/initiation of proceeding vide notice under s. 148 of the Act, dt. 16th Nov., 2004 and its continuance and culmination vide order under s. 143(3)/147 dt. 13th March, 2006 is bad in law as per facts and circumstances of the case. 3. That the learned CIT(A), Bareilly erred on facts and in law in confirming the addition of Rs. 1,50,000 under s. 69 of the IT Act which is not correct as per facts and circumstances of the case. 3. Firstly I will decide whether the assessment framed by the AO under s. 143(3) r/w s. 147 of the IT Act, 1961 dt. 13th March, 2006 was within limitation. The assessee is an individual and the assessment year involved is 1997-98. In this case, the assessment for asst. yr. 1998-99 was completed under s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in asst. yr. 1998-99 as the appellant has received gift through bank draft in financial year 1996-97 relevant for asst. yr. 1997-98. 6. In view of the above the AO is not justified in making addition of Rs. 1,50,000 towards unexplained investment in asst. yr. 1998-99. The AO is directed to delete the addition of Rs. 1,50,000. The AO is free to take action in asst. yr. 1997-98. 4. Subsequently, the AO issued notice under s. 148 and reassessed the unexplained investment for asst. yr. 1997-98. 5. Aggrieved by the order of the AO passed under s. 143(3)/147 of the Act dt. 13th March, 2006, the assessee went in appeal before the CIT(A). Before the CIT(A), the assessee contended that the reassessment proceedings are barred by limitation. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant paras i.e. paras 5 and 6 of the CIT(A)'s order dt. 10th June, 2004 relevant to asst. yr. 1998-99. In my opinion, the observation made by CIT(A) vide paras 5 and 6 of the order dt. 10th June, 2004 could not be described as a direction. The learned CIT(A) has observed vide para 6 of the order for asst. yr. 1998-99 the AO is however free to take action in asst. yr. 1997-98. In my considered view, the above observation of the CIT(A) could not be held as a direction. A similar issue has been decided by the Hon'ble Supreme Court in the case of Rajinder Nath vs. CIT (1979) 12 CTR (SC) 201 : (1979) 120 ITR 14 (SC). The Hon'ble Supreme Court, at p. 15, held as under: 'That the observation that the ITO was free to take action to assess the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10th June, 2004 was against the provisions of s. 150(2) of the Act. In the case of Spences Hotels (P) Ltd. vs. Dy. CIT (2003) 183 CTR (Kar) 508 : (2003) 263 ITR 263 (Kar), the Hon'ble Karnataka High Court has held that now, according to sub-s. (2) of s. 150, the initiation of reassessment proceedings would be vague, even when they initiated in consequence of or to give effect to any finding or direction contained in the appellate order, if such initiation of reassessment proceedings is barred by any other provision of the Act on the date of the order which was the subject-matter of appeal. In the instant case, initiation of reassessment proceedings was barred by other provision of the Act on 10th June, 2004 when the appellate order for asst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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