Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case and in law the 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 s. 153(1)(b) of the IT Act,1961 ?

Sections 143, 153(1)(b)

Asst. Year 1972-73

Counsel Appeared

B.S. Gupta with Sanjay Bansal, for the Assessee : Ashok Bhan with Ajay Mittal, for the Revenue

GOKAL CHAND MITAL, J.:

The main point involved in this reference is whether the limitation of eight years contained in s. 153(1)(b) of the IT Act, 1961 (for short “the Act”), would be applicable.

The case relates to the asst. yr. 1972-73.

2. On 26th Sept., 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. The ITO doubted the genuineness of the revenue stamps in the register and sent them to the Government Printing Press, Nasik, and on 4th March, 1975, a report was received that the revenue stamps fixed on the said register were printed on 8th May, 1972, and issued on 22nd May, 1972. On the basis of this report, the ITO 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 dt. 7th Jan., 1975, 10th Jan., 1975, 28th Feb.,

1975, and 10th March, 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 ITO that the assessee had concealed its true income and had understated its income in the return filed under s. 139(4) of the Act. Finally, on 16th Sept., 1976, the ITO 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 ITO was that the period of limitation of two years under s. 153(1)(a)(iii) of the Act expired on 31st March, 1975, and, therefore, the assessment could not be framed. The alternative stand of the assessee was that since it had filed another return on 20th March, 1975, in view of s. 153(1)(c) of the Act, the assessment could be framed up to 20th March, 1976, and there was no limitation on the date the assessment was framed. On this basis, he appealed to the AAC. Some additions were set aside but by maintaining the remaining additions, it concluded that before the ITO, 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 s. 271(1)(c) of the Act was applicable and the extended limit of eight years contained in s. 153(1)(b) of the Act applied and on the date the ITO framed the assessment, it was within the limitation of eight years.

3. On further appeal by the assessee before the Tribunal, the order of the AAC was upheld. At the instance of the assessee, the Tribunal has referred the following question for opinion :

“Whether, on the facts and in the circumstances of the case and in law the 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 s. 153(1)(b) of the IT Act,1961 ?”

4. The finding of fact recorded by the Tribunal is to the effect that the ITO 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 4th March, 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 ITO 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 Tei Singh vs. ITO ( 1966) 60 ITR 23 (P&H) : TC11R.668, the limitation of eight years contained in s. 153(1)(b) of the Act would clearly apply to the case.

5. On behalf of the assessee, reliance was placed on certain observations in M. B. Mercantile Co. vs. CIT (1987) 66 CTR (Cal) 115 : (1988) 169 ITR 201 (Cal) : TC11R.674 and CIT vs. Surajpal Singh 1975 CTR (All) 295 : (1977) 108 ITR 746 (All) : TC11R.700. There is a slight overstatement of law in these two cases. The facts of the case are such that, even on the basis of these judgments, he cannot succeed. On the other hand, counsel for the Revenue had relied on T. B. Hanumantharaj vs. CIT (1978) 111 ITR 414 (Mad) : TC11R.665. 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 s. 153(1)(b) of the Act was applicable and the referred question is answered in the affirmative, in favour of the Revenue. No costs.

[Citation : 179 ITR 596]