- (1.) THE petitioner Spences Hotels (P) Ltd., has filed this petition on the following facts : The petitioner, a limited Company is assessed with tax by the respondent in terms of the Indian Income Tax Act (hereinafter referred to as 'the Act') The petitioner was assessed for the assessment year 1976 -77 under section 143(3) of the Act vide order dated 3 -5 -1979. In March 1975, the petitioner entered into an agreement with the Indian Hotels Company Limited under which it along with other Shareholders in M/s. Fonseca Private Limited agreed to transfer the shares. The issue relates to the liability to tax in respect of the consideration payable under this agreement. Payments were made in instalments over a period of time. The implementation of the agreement was the subject matter of a dispute and it was finally resolved through arbitration. Arbitration which was concluded in the previous year relevant for the assessment year 1980 -81. The amount payable to the petitioner in terms of the award was sought to be taxed to capital gains in the assessment year 1980 -81. The matter reached the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal'). The Tribunal passed an order and in the said order, the Tribunal notices the. fact that the transaction by way of agreement was within the knowledge of the assessing officer while concluding the assessment for the assessment year 1976 -77 and inasmuch as the amount arising from the agreement of Rs. 2 lakhs which was received during the calendar year 1975 was offered to tax for the assessment year 1976 -77.
(2.) PURPORTING to act upon the above decision of the Tribunal, the respondent issued a notice dated 17 -11 -1998 for the assessment year 1976 -77 under section 148 of the Act in terms of Annexure B. In the notice, it is stated that the department has reason to believe that the income chargeable to tax for the assessment year 1976 -77 as escaping tax within the meaning of section 148 of the Act. On receipt of the notice, the petitioner submitted a detailed reply objecting to the said notice. The petitioner also raised a question of limitation with regard to the issuance of the notice. The petitioner states in the petition that the initiation of escaped assessment proceedings is beyond the period of limitation prescribed in law and any issuance of notice is contrary to the provisions of the Act. Respondents have entered appearance and they have filed a very detailed objection statement. They justify their stand in terms of section 150 of the Income Tax Act. According to them, a limitation prescribed under section 149A of the Act is not applicable to the circumstances of the case. The exemption granted in section 150 of the Act would be applicable to the facts and circumstances of the case. They justify their stand. They have filed statement of objection and additional statement of objection.
(3.) SRI Prasad, learned senior counsel took me through the pleadings to contend that notices issued in the case on hand requires to be set aside solely on the ground of limitation. According to the learned counsel, the Tribunal disposed of the appeal on 26 -6 -1988 and the same was served on 22 -7 -1988 on the department. The assessment order that is being reopened is of assessment year 1976 -77. A period of 4 years is already over in the year 1991 and therefore according to the learned counsel, no proceedings could be initiated. He states that the limitation under section 149(1)(a)(iii) for reopening is over on 31 -3 -1987. By 31 -10 -1989, such action had become barred by limitation. He has referred to me the following case laws : CIT v. G. Viswanathan : [1988]172ITR401(AP) , Mysore Cements Ltd. v. ITO : [1987]167ITR370(KAR) , Ganga Saran & Sons (P) Ltd. v. ITO (1981) 130 ITR 13 , Praveen Kumari v. CIT .;