Punjab-Haryana High Court
Sonepat Iron And Steel Rolling Mills vs Commissioner Of Income-Tax on 5 April, 1989
Equivalent citations: [1989]179ITR596(P&H)
JUDGMENT Gokal Chand Mital, J.
1. The main point involved in this reference is whether the limitation of eight years contained in Section 153(1)(b) of the Income-tax Act, 1961 (for short "the Act"), would be applicable. The case relates to the assessment year 1972-73.
2. On September 26, 1974, the premises of the assessee were searched and documents, registers and account books were taken into possession. The deduction of salary paid to its workers as shown in the attendance/ wages register was claimed in the return by way of expenses for running the business.
3. The Income-tax Officer doubted the genuineness of the revenue stamps in the register and sent them to the Government Printing Press, Nasik, and on March 4, 1975, a report was received that the revenue stamps fixed on the said register were printed on May 8, 1972, and issued on May 22, 1972. On the basis of this report, the Income-tax Officer formed a tentative opinion that the revenue stamps were not in existence in the financial year 1971-72. The register was fabricated and a false claim for deduction was made in the return. He brought this fact to the notice of the assessee by letters dated January 7, 1975, January 10, 1975, February 28, 1975, and March 10, 1975. The assessee did not come forward to furnish any explanation. There were certain other matters also which needed probe as it was apparent to the Income-tax Officer that the assessee had concealed its true income and had understated its income in the return filed under Section 139(4) of the Act. Finally, on September 16, 1976, the Income-tax Officer framed the assessment after disallowing certain cash credits and the expenses claimed on account of wages paid to the employees as shown in the attendance and salary register. The assessee's stand before the Income-tax Officer was that the period of limitation of two years under Section 153(1)(a)(iii) of the Act expired on March 31, 1975, and, therefore, the assessment could not be framed. The alternative stand of the assessee was that since it had filed another return on March 20, 1975, in view of Section 153(1)(c) of the Act, the assessment could be framed up to March 20, 1976, and there was no limitation on the date the assessment was framed. On this basis, he appealed to the Appellate Assistant Commissioner.
4. Some additions were set aside but by maintaining the remaining additions, it concluded that before the income-tax Officer, there was material in the nature of the report received from Nasik that the wages register was forged and there was concealment of income and Section 271(1)(c) of the Act was applicable and the extended limit of eight years contained in Section 153(1)(b) of the Act applied and on the date the Income-tax Officer framed the assessment, it was within the limitation of eight years.
5. On further appeal by the assessee before the Tribunal, the order of the Appellate Assistant Commissioner was upheld. At the instance of the assessee, the Income-tax Appellate Tribunal has referred the following question for opinion :
"Whether, on the facts and in the circumstances of the case and in law the Income-tax Appellate Tribunal was justified in holding that the extended time limit for completion of the assessment was available to the assessing authority in terms of the provisions of Section 153(1)(b) of the Income-tax Act, 1961 ?"
6. The finding of fact recorded by the Tribunal is to the effect that the Income-tax Officer suspected the genuineness of the attendance/wages register within the limitation of two years and the report from the Nasik Government Printing Press confirmed the suspicion. It came on March 4, 1975, within the period of limitation. This was an endeavour to make a false claim of deduction to defraud the Revenue. Not only this, the material was brought to the notice of the assessee by four letters written within limitation. This clearly shows that there was application of mind by the Income-tax Officer on the point that the assessee had concealed his income and the evidence which proved that was brought to its notice. Hence, in view of S. Kanwal Tej Singh v. ITO [1966] 60 ITR 23 (P & H), the limitation of eight years contained in Section 153(1)(b) of the Act would clearly apply to the case.
7. On behalf of the assessee, reliance was placed on certain observations in M. B. Mercantile Co. v. CIT [1988] 169 ITR 201 (Cal) and CIT v. Surajpal Singh [ 1977 ] 108 ITR 746 (All). There is a slight over-statement of law in these two cases. The facts of the case are such that, even on the basis of these judgments, he cannot succeed.
8. On the other hand, counsel for the Revenue had relied on T. B. Hanumantharaj v. CIT [1978] 111 ITR 414 (Mad). There appears to be a slight understatement of law. Be that as it may, the facts of the case are such that we are of the view that the Tribunal was justified in holding that the extended limitation provided in Section 153(1)(b) of the Act was applicable and the referred question is answered in the affirmative, in favour of the Revenue. No costs.