C.I.T.JDR. vs. M/S J.M.P.MANUFACTURING CO.

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ITR/238/1995HC Punjab & HaryanaPHHC01032299199507 July 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court answered the question of law in favour of the revenue and against the assessee. The Court reasoned that the ITAT's finding that the assessment was barred by limitation was incorrect. Following the precedent set in Commissioner of Income Tax Vs. Gheru Lal Bal Chand [1998] 233 ITR 82 (P&H), the Court held that the period of 180 days from the date of forwarding the draft assessment order to the assessee until the receipt of directions from the Inspecting Assistant Commissioner (IAC) should be excluded for calculating the limitation period under Section 153 of the Act. In this case, the draft assessment order was prepared on March 10, 1984, and permission was received from the IAC on August 3, 1984. The Court found that this excluded period, when considered, meant the assessment was completed within the statutory time limits. Therefore, the reference made under Section 144B was not bad in law and was not barred by limitation.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) referred a question of law to the High Court of Punjab and Haryana concerning the assessment year 1981-82. The assessee, M/s J.M.P. Manufacturing Co., filed its return on May 23, 1981. The assessment was completed on August 8, 1984, under Section 143(3)/144B(4) of the Income Tax Act, 1961. The Assessing Officer's order was passed beyond the two-year period stipulated under Section 153 of the Act from the end of the financial year (March 31, 1984). The ITAT had held that the assessment order was barred by limitation.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the reference made under Section 144B of the Income Tax Act, 1961 was bad in law and is barred by limitation? Assessee's contention: The ITAT held that the assessment order was barred by limitation as it was passed beyond the period stipulated under Section 153 of the Act. Revenue's contention: The revenue argued that the assessment was within time. They relied on this Court's decision in Commissioner of Income Tax Vs. Gheru Lal Bal Chand [1998] 233 ITR 82 (P&H). This decision, referring to Explanation 1, clause (iv) below Section 153, held that the period up to 180 days from the date of forwarding the draft assessment order to the assessee until the date of receiving directions should be excluded. The revenue contended that in the present case, the draft assessment order was prepared on March 10, 1984, and permission was received from the IAC on August 3, 1984. Excluding this period would render the assessment within the prescribed time limits.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 153

AI-generated summary — verify with the full judgment below

(1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: 7.7.2009 The Commissioner of Income Tax, Jalandhar ..........Applicant Versus M/s J.M.P. Manufacturing Co., Preet Nagar, ..........Respondent Jalandhar CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. Vivek Sethi, Advocate for the applicant. Mr. Rajan Verma, Advocate for the respondent. **** ADARSH KUMAR GOEL, J. (Oral)

1.

Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, has referred following question of law for opinion of this Court, arising out of its common order dated 9.3.1994 in ITA Nos. 221 & 381 (ASR)/1985 in respect of assessment year 1981-82:- “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the reference made under Section 144B of the Income Tax Act, 1961 was bad in law and is barred by limitation.:

2.

In respect of assessment year 1981-82, the assessee filed return on 23.5.1981. The assessment was completed on 8.8.1984 under Section 143 (3)/144B(4) of the Income Tax Act, 1961 (for short, “the Act”), (2) which was beyond a period of two years from the end of financial year in question stipulated under Section 153 of the Act i.e. 31.3.1984. The Tribunal held that the order of the Assessing Officer was barred by limitation.

3.

Learned counsel for the revenue submits that identical question has been adjudicated upon by this Court in Commissioner of Income Tax Vs. Gheru Lal Bal Chand [1998] 233 ITR 82 (P&H) and after referring to Explanation 1, clause (iv) below Section 153, it was held that period upto 180 days from the date on which the draft assessment order is forwarded by the Income Tax Officer to the assessee upto the date on which directions are received is to be excluded. In the present case, the draft assessment order was prepared on 10.3.1984 and permission was received from the IAC on 3.8.1984, as noticed in the order of assessment. If this period is excluded, the period taken in obtaining permission being more than the period by which period intervened between the last date by which assessment was to be made and the date on which assessment was made. Accordingly, the assessment had to be treated within time.

4.

In view of the above, the question is answered in favour of the revenue and against the assessee.

5.

Reference is disposed of accordingly. (ADARSH KUMAR GOEL) JUDGE July 07, 2009

(DAYA CHAUDHARY) pooja JUDGE Note:-Whether this case is to be referred to the Reporter .......Yes/No

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