Allahabad High Court
Manish Kumar Son Of Sri R.K. Gupta vs Income Tax Officer And Union Of India ... on 12 April, 2007
Author: R.K. Agrawal
Bench: R.K. Agrawal, Bharati Sapru
JUDGMENT R.K. Agrawal, J.
1. By means of the present writ petition filed under Article 226 of the Constitution of India, the petitioner, Manish Kumar, has challenged the notice dated 24.7.2000, filed as Annexure 4 to the writ petition, issued by the Income Tax Officer, Ward 1(6), Agra, respondent No. 1, in respect of the assessment year 1993-94. The reason for issuance of the notice dated 24.7.2000, as per the order sheet, a copy of which has been filed as Annexure 5 to the writ petition, is that the petitioner had claimed Rs. 24,776- as expenses, which is approximately 40% of the total incentive bonus of Rs. 61,941/-, in his return of income, which has been allowed. The said amount has escaped assessment as no expenses is allowable against incentive bonus shown by the petitioner.
2. We have heard Sri Rakesh Ranjan Agrawal. learned Counsel for the petitioner, and Sn A.N. Mahajan. learned Standing Counsel, appearing for the respondents.
3. Sri Rakesh Ranjan Agrawal, learned Counsel, submitted that in the intimation send under Section 143(1A) of the Income 'Fax Act, 1961 (hereinafter referred to as "the Act"), the return filed by the petitioner was accepted and a sum of Rs. 5,900 - alongwith interest was refunded. However, on account of some audit objection, the respondent No. 1 passed an order under Section 154 of the Act bringing to tax the amount of deduction claimed against incentive bonus, which order was set aside by the Commissioner of Income Fax (Appeals) on the ground that the issue was debatable. Fie, therefore, submitted that in view of decision of the Commissioner of Income Tax (Appeals), the respondent No. 1 did not have any material so as to form a reasonable belief that the income has escaped assessment to tax warranting proceeding under Sections 147/148 of the Act. He further submitted that during the relevant period the limitation for taking proceeding under Sections 147, 148 of the Act was four years and. in the event, the income chargeable to tax has escaped assessment was Rs. 25,000 - or more, the limitation would be seven years in view of Clause (b) of Sub-section (1) of Section 149 of the Act, as it stood during the relevant period. According to him, as, admittedly, in the present case the income which has escaped assessment to tax has been found to be Rs. 24,776/- which is less than Rs. 25,000 -, the proceeding for reassessment could have been taken within four years from the end of the assessment year, i.e., on or before 31.3.1998, the assessment year being 1993-94 and not on 24.7.2000 when the notice under Section 148 has been issued, which is beyond the period of four years.
4. Sri A.N. Mahajan, learned Standing Counsel, however, submitted that, from the computation sheet, it appears that the incentive bonus of Rs. 61,941/- was earlier deducted and thereafter only a sum of Rs. 37,165'- was added, which shows that the income which has escaped assessment to tax is more than Rs. 25.000 - and, therefore, the reassessment proceeding could have been taken within a period of seven years.
5. The submission made by Sri Mahajan is misconceived.
6. Sub-section (1) of Section 149 of the Act. as it stood during the relevant period, is reproduced below:
149. Time limit for notice.
(1) No notice under Section 148 shall be issued for the relevant assessment year,-
(a) in a case where an assessment under Sub-section (3) of Section 143 or Section 147 has been made for such assessment year,-
(i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under Sub-clause (ii) or Sub-clause (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty-thousand or more for that year;
(iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees one lakh or more for that year;
(b) in any other case,-
(i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under Sub-clause (ii) or Sub-clause (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupee twenty-five thousand or more for that year;
(iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year.
Explanation. - In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of Section 147 shall apply as they apply for the purposes of that section.
7. From a perusal of the aforesaid provision, we find that if the assessment has not been made under Sub-section (3) of Section 143 or Section 147 of the Act, then the period of limitation would be governed by Clause (b). Sub-clause (i) provides a normal period of four years unless the case falls under Sub-clause (ii) or Sub-clause (iii). I under Sub-clause (ii) of Clause (b), the limitation is seven years where the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 25,000- or more for that year; and under Sub-clause (iii) of Clause (b) it is ten years where the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs.50,000/- or more for that year. In the present case, the income which has escaped assessment to tax is only Rs. 24,776/-, it being less than Rs. 25,000/-, the case would be covered by Sub-clause (i) of Clause (b) of Sub-section (1) of Section 149 of the Act and, therefore, the normal period of four years would be applicable. Admittedly, in the present case, the notice under Section 148 of the Act has been issued on 24.7.2000, which is much after the expiry of four years from the end of the assessment year 1993-94. The notice being barred by limitation, cannot be allowed to stand and, therefore, is set aside. The entire proceeding taken in pursuance thereof is also set aside.
8. The writ petition succeeds and is allowed.