- (1.) THE main point involved in this reference is whether the limitation of eight years contained in Section 153 (1) (b) of the Income-tax Act, 1961 (for short "the Act"), would be applicable. The case relates to the assessment year 1972-73.
(2.) ON September 26, 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.
(3.) THE Income-tax Officer doubted the genuineness of the revenue stamps in the register and sent them to the Government Printing Press, Nasik, and on March 4, 1975, a report was received that the revenue stamps fixed on the said register were printed on May 8, 1972, and issued on May 22, 1972. On the basis of this report, the Income-tax Officer 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 dated January 7, 1975, January 10, 1975, February 28, 1975, and March 10, 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 Income-tax Officer that the assessee had concealed its true income and had understated its income in the return filed under Section 139 (4) of the Act. Finally, on September 16, 1976, the Income-tax Officer 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 Income-tax Officer was that the period of limitation of two years under Section 153 (1) (a) (iii) of the Act expired on March 31, 1975, and, therefore, the assessment could not be framed. The alternative stand of the assessee was that since it had filed another return on March 20, 1975, in view of Section 153 (1) (c) of the Act, the assessment could be framed up to March 20, 1976, and there was no limitation on the date the assessment was framed. On this basis, he appealed to the Appellate Assistant Commissioner.;