Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessment order passed by the ITO on August 23, 1978, was barred by limitation?

Counsel Appeared

R.C. Mukhati, for the Revenue : None, for the Petitioner

SOHANI, J. :

By this reference under s. 256(1) of the IT Act, 1961 (hereinafter referred to as “the Act”), the Tribunal, Indore Bench, has referred the following question of law to this Court for its opinion :

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessment order passed by the ITO on August 23, 1978, was barred by limitation?”

The material facts giving rise to this reference briefly are as follows :

The assessee is a firm owning agricultural land. Prior to the asst. yr. 1973-74, no return of income in respect of its income was filed by the assessee. However, for the asst. yr. 1974-75, the assessee filed a voluntary return on 4th March, 1977, declaring net agricultural income of Rs. 1,23,830. The ITO, after scrutiny, came to the conclusion that the net agricultural income of the assessee could only be to the extent of Rs. 25,000 and he, therefore, completed the assessment on August 23, 1978, after working out the income from undisclosed sources at Rs. 1,11,829 and referred the case to the IAC, as provided by s. 144B of the Act. In the appeal preferred by the assessee before the CIT (A.), the CIT held that the net income of the assessee from the land was Rs. 36,000 as against Rs. 25,000 worked out by the ITO. On further appeal before the Tribunal, it was contended on behalf of the assessee that the order of assessment passed by the ITO on August 23, 1978, was void as it was barred by limitation. The Tribunal upheld this contention and allowed the appeal. Aggrieved by the order passed by the Tribunal, the Department sought a reference and it is at the instance of the Department that the aforesaid question of law has been referred to this Court for its opinion.

Having heard learned counsel for the Department, we have come to the conclusion that the reference deserves to be answered in the affirmative and against the Department. From the facts set out in the statement of the case, it is clear that in the return of income filed by the assessee on 4th March, 1977, total income of Rs. 1,23,830 was declared. In the order of assessment passed by the ITO on August 23, 1978, assessment was made on the total income of Rs. 1,36,829 inclusive of agricultural income of Rs. 25,000. It may be that with regard to the particulars of agricultural income, there was a variation exceeding the amount of Rs. 1,00,000. But in order that the provisions of s. 144B(1) of the Act may be attracted, it is necessary that variation in income or loss return should exceed the amount fixed by the Board. The Tribunal was, therefore, justified in holding that the provisions of s. 144B of the Act were not attracted and hence the extended period of limitation provided by cl. (iv) of Expln. 1 to s. 153 of the Act was not available. As the assessment in the instant case was not completed before the expiry of one year from the date of filing of the return, the Tribunal was right in holding that the order of assessment was hit by the bar of limitation by virtue of the provisions of cl. (c) of sub-s. (1) of s. 153 of the Act.

For all these reasons, our answer to the question referred to this Court is in the affirmative and against the Department. As none appeared for the assessee, parties shall bear their own costs of this reference.

[Citation : 141 ITR 928]