a)The Tribunal had deleted addition made under section 68 of the Income-tax Act, 1961 (herein after referred to as ‘Act’) by the Assessing Officer (AO) on the grounds that relevant credit entries were relating to the earlier year.
b)AO initiated re-assessment proceedings for the said earlier year after a lapse of 7 years by issue of notice under section 148 and passed an order making addition.
c)The CIT(A) held that the notice under section 148 for the relevant assessment year was belatedly issued after a lapse of 7 years and, therefore, was beyond the time-limit prescribed under section 149.
d)On appeal, the Tribunal held that AO lacked jurisdiction to re-open assessment.
e)Aggrieved by the order of Tribunal, Revenue filed the instant appeal before the High Court.
The High Court held in favour of revenue as under:
1)Section 150 of the Act which reads as under, clearly states that:
“Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or re-computation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law”.
2)Similarly, as per section 153(3)(ii) of the Act, there is no time-limit for completion of assessments, reassessments and re-computations if such assessment, reassessment or re-computation is made in consequence of or to give effect to any finding or direction contained in an order under sections 250, 254, 260, 262, 263, or 264 or in an order of any Court in a proceeding otherwise than by way of appeal or reference under this Act.
3)Further, Explanation 2 to Section 153 of the Act makes it clear that even where any income is excluded from the total income of the assessee from a particular assessment year, then an assessment of such income for another assessment year shall, for the purpose of Section 150 as also of Section 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order.
4)From combined reading of the above provisions, it is abundantly clear that where ITAT by its order excluded any income from the total income of the assessee from a particular assessment year, then an assessment of such income for another assessment year could be made without any time-limit.
5)Hence, it was noticeable that the appellate authorities did not refer to section 150 and Explanation 2 to section 153 and therefore, they erred in setting aside the order passed by AO- CIT V. PP ENGINEERING WORK 49 taxmann.com 321 (Delhi)