Patna High Court
Commissioner Of Income-Tax vs Mohammad Quddus And Sons on 30 July, 1984
Equivalent citations: [1986]157ITR11(PATNA)
JUDGMENT
1. Pursuant to the direction of this court, a reference under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), has been made by the Income-tax Appellate Tribunal, Patna Bench, Patna, for the opinion of this court on the following question :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the proceeding under Section 147(a) of the I.T. Act, 1961, was barred by limitation ?"
2. The relevant facts can very well be culled out from the statement of the case as submitted by the Tribunal. The assessee, an unregistered firm, derives income from colliery contract. The previous year of the assessee ended on March 31, 1967. The original assessment was completed on June 15, 1968, on a total income of Rs. 5,720 by applying a net profit rate of 12.5% on the total gross receipt of Rs. 45,777. Subsequently, the Tata Sijua Colliery of Tata Iron and Steel Co. disclosed that the assessee was paid during the accounting year under consideration a gross amount of Rs. 4,55,030. The Income-tax Officer found that the assessee had not disclosed the material truly and fully at the time of the original assessment and, consequently, he took action under Section 147(a) of the Act. Previous approval of the Commissioner of Income-tax was obtained. A notice under Section 148 of the Act dated March 19, 1976, addressed to the assessee was sent through registered post on March 29, 1976. The notice was served on the assessee on April 3, 1976. The assessee filed a written reply dated May 24, 1976. A request was made for treating the return originally filed under Section 139 of the Act to be the return in response to the notice under Section 148 of the Act. The Income-tax Officer perused the various clauses of the partnership deed and ultimately held that the assessee did not maintain books of account or had not produced them even though specifically required to do so. He further observed that the assessee-firm was evidenced by a written deed of partnership and yet it seemed that no application for the registration of the firm had been filed. He, accordingly, took steps to treat the assessee as an unregistered firm. He further exercised his discretion under Section 144 read with Section 185(5) of the Act. The assessee's stand before the Income-tax Officer was that he failed to record his reasons for the initiation of the proceedings and the Commissioner's satisfaction had not been obtained on the reasons recorded by the Income-tax Officer. It was further contended that there had been no omission or failure on the part of the assessee as it had itself disclosed the gross receipt in the original return correctly at Rs. 4,55,030. The legal submission made was that the proceedings have become bad as the notice under Section 148 issued on March 19, 1976, was inoperative. That was delivered through postal registered A/D letter on April 2/3, 1976. As the Assessing Officer did not find favour with the submission made on behalf of the assessee, steps were taken under Sections 148 and 149 of the Act. The order of the Income-tax Officer has been made annexure A to the statement of the case.
3. On appeal, the Appellate Assistant Commissioner held that the assessment was properly reopened and it was not barred by limitation. A copy of the aforesaid order has been marked annexure B to the statement of the case.
4. The Tribunal on further appeal by the assessee held that since the service of notice was beyond time as prescribed in the Act, the proceedings were barred by limitation.
5. The Tribunal held that the proceedings were barred by limitation under Section 149 of the Act. A copy of the said order has been marked annexure C to the statement of the case.
6. The learned standing counsel for the Revenue relied upon two decisions, namely, Jai Hanuman Trading Co. Ltd. v. CIT [1977] 110 ITR 36, a Full Bench judgment of the Punjab and Haryana High Court and New Bank of India Ltd. v. ITO [1982] 136 ITR 679, a Bench decision of the Delhi High Court. These decisions, can hardly be pressed into service on behalf of the Revenue in the instant case.
7. Having gone through the appellate order of the Tribunal (annexure C), we are not satisfied that there is any illegality or perversity in the order. In the circumstances, we answer the question referred for our opinion in the affirmative and hold that the Tribunal was justified in holding that the proceeding under Section 147(a) of the Act was barred by limitation. There will be no order as to costs.