INCOME TAX OFFICER Vs. A M ZAINALABDEEN MUSALIAR
LAWS(IT)-1989-2-18
INCOME TAX APPELLATE TRIBUNAL
Decided on February 15,1989

Appellant
VERSUS
Respondents

JUDGEMENT

R.N. Purl, Accountant Member - (1.)THE question to be decided in this appeal filed by the Department is whether the CIT(A) was justified to annul the assessment on the ground that it was barred by limitation. THE CIT(A) was of the view that the case of the assessee did not fall within Clause (c) of Sub-section (1) of Section 271 and as such the provisions of Section 153(1)(6) which, for the completion of the assessment, provided for the time limit of eight years from the end of the year in which income was first assessable, did not become applicable in the case of the assessee.
(2.)The proceedings relate to assessment year 1979-80. The assessee is an individual. The main business of the assessee is the export of cashew kernels. The previous year relevant to the assessment year under consideration was the financial year ended on 31-3-1979. The assessee filed his return of income for the assessment year under consideration on 4-11-1981. The ITO completed the assessment on 30-7-1983. The assessee went in appeal against the order of assessment, before the CIT(A). Amongst the various grounds taken up by the assessee in his appeal before the CIT(A), one ground was that the assessment was bad in law as it had been made after the expiry of the period prescribed for the making of the assessment. The CIT(A) accepted the contention of the assessee that the assessment was barred by limitation. He, hence, struck down the assessment as being bad in law. The Department has felt aggrieved by the decision of the CIT(A) and has come up in appeal before us. The contention of the Department is that it was a case which fell within Clause (c) of Sub-section (1) of Section 271 and as such the provisions of Section 153(1)(6) were applicable.
Section 153 lays down the time limits for completion of assessments and reassessments. This section, as far as it is relevant for our purpose, is as under :

Section 153(1): No order of assessment shall be made under Section 143 or Section 144 at any time after--

(a) the expiry of--

JUDGEMENT_8394_TLIT0_19890.htm

(iii) two years from the end of the assessment year in which the income was first assessable, where such assessment year is an assessment year commencing on or after the 1st day of April, 1969 ; or

(b) the expiry of eight years from the end of the assessment year in which the income was first assessable, in a case falling within Clause (c) of Sub-section (1) of Section 271; or

(c) the expiry of one year from the date of the filing of a return or a revised return under Sub-section (4) or Sub-section (5) of Section 139, whichever is latest.

It is only in cases of concealment of income that the time limit for the completion of assessment is eight years from the end of the assessment year in which the income was first assessable. In cases where there is no concealment, in respect of an assessment year commencing on or after 1-4-1969, the assessment must be made within two years from the end of the assessment year in which the income was first assessable, as per Sub-clause (iii) of Clause (a) of Sub-section (1) of Section 153. But, this period can be extended maximum by one year from the date of the filing of a return or a revised return, as laid, down in Clause (c). In the case under consideration, the return for the assessment year 1979-80 was filed on 4-11-1981. Hence, until and unless the case fell within Clause (c) of Sub-section (1) of Section 271 and the provisions of Clause (&) of Sub-section (1) of Section 153 became applicable, the assessment was required to be completed by 3-11-1982. The assessment was completed on 30-7-1983. Hence, the point to be decided is whether the case was of concealment of income and as such the extended time limit for the completion of assessment was available to the Department. If it were so, then, the assessment which had been completed on 30-7-1983 would not be barred by time.

(3.)WHEN the ITO scrutinised the case of the assessee for assessment, he found that the assessee had suppressed the value of closing stock of raw cashew nuts and had thus understated his income substantially. The assessee is an exporter of cashew nuts. The assessee had shown closing stock of 1825 bags of raw nuts. He had declared that he had 267 bags of local raw nuts and 1558 bags of African raw nuts, in the closing stock. The method of valuation of closing stock was at cost price. The assessee had valued his closing stock as under :
JUDGEMENT_8394_TLIT0_19891.htm



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