- (1.) ON an application filed under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the present assessment proceedings should be considered to be barred by law because of the intervening irregularities and the consequent delay ?"
(2.) THE assessee filed a return declaring an income of Rs. 43,820. THE relevant assessment year is 1975-76. Initially the assessment order was passed on August 16, 1977. In appeal, the Appellate Assistant Commissioner set aside that assessment order and directed to make fresh assessment. Fresh assessment order was passed under Section 144 on May 25, 1978. That assessment order was recalled under Section 146 on November 20, 1978. THEreafter a draft assessment order was prepared and that draft order was sent to the Inspecting Assistant Commissioner on November 28, 1979. THE Inspecting Assistant Commissioner later on found that draft assessment order cannot be passed under Section 144B of the Act. A fresh order thereafter was passed again under Section 144 of the Income-tax Act, 1961, on April 19, 1984. THE Income-tax Officer sent the notice of demand after calculating the tax on the income assessed and challan was prepared on April 23, 1984. The assessee before the Commissioner of Income-tax (Appeals) raised an issue that notice of demand was sent on April 23, 1984, while the assessment had been Completed on November 28, 1979, therefore, the same is time barred and no demand can be raised on the basis of time barred assessment, but the same was not accepted by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) dismissed the appeal of the assessee. In appeal before the Tribunal, the Tribunal also considered the issue as to whether the assessment in question is time barred or not. The Tribunal considered the provision of Section 292B of the Income-tax Act, 1961, and held that by mistake the Income-tax Officer sent the draft assessment order for assessment under Section 144B and rime has been taken by the Inspecting Assistant Commissioner, therefore, the Income-tax Officer could not issue the demand of tax in time and that is a mistake, which can be cured under Section 292B of the Income-tax Act, 1961. Mr. Ranka, learned counsel for the assessee, submits that the assessment is not completed unless tax is determined and admittedly tax was determined on April 23, 1984, i.e., after two years from the date of the order passed in appeal by the Inspecting Assistant Commissioner (Assessment). He further submits that the delay cannot be condoned under Section 292B of the Income-tax Act, 1961, particularly when the assessment has not been completed in time. In support of his contentions, he placed reliance on the decisions reported in CIT v. Balkrishna Malhotra [1971] 81 ITR 759 (SC) ; Kalyankumar Ray v. CIT [1991] 191 ITR 634 (SC) and Kilasho Devi Burman (Smt.) v. CIT [1996] 219 ITR 214 (SC). Mr. Singhi, learned counsel for the Revenue, submits that if the tax is determined separately after completion of the assessment, that is an irregularity and which can be cured under Section 292B of the Income-tax Act, 1961. In support of his contentions, he placed reliance on the decision reported in Kalyankumar Ray v. CIT [1991] 191 ITR 634 (SC).
(3.) WHEN the fresh assessment is made under Section 146 or under Section 250 or under Section 254 or under Section 263 or under Section 264, that should be made before the expiry of two years from the end of the financial year in which the order under Section 146 cancelling the assessment is passed by the Income-tax Officer or order under Section 250 or under Section 254 is received by the Commissioner or, as the case may be, the order under Section 263 or under Section 264 is passed by the Commissioner. This has been provided in Sub-section (2A) of Section 153 of the Act. Before we go for the limitation, we would like to discuss the issue as to when the assessment is completed. Sub-section (3) of Section 143 reads as under : "On the day specified in the notice issued under Sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Income-tax Officer may require on specified points, and after taking into account all relevant material which he has gathered,-- (a) in a case where no assessment has been made under Sub-section (1), the Income-tax Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment ; (b) in a case where an assessment has been made under Sub-section (1), if either such assessment has been objected to by the assessee by an application under Clause (a) of Sub-section (2) or the Income-tax Officer is of opinion that such assessment is incorrect, inadequate or incomplete in any material respect, the Income-tax Officer shall, by an order in writing, make a fresh assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment." Clause (b) of Sub-section (3) of Section 143 provides that in case where the assessment has been made under Sub-section (1) and if the assessment has been objected to either by the assessee or by the Income-tax Officer, being of the opinion that such assessment is incorrect, inadequate or incomplete in any material respect, the Income-tax Officer shall, by an order in writing, make a fresh assessment of the total income of the assessee or loss of the assessee and determine the sum payable by him or refundable to him on the basis of such assessment. Therefore, for the purpose of assessment, assessment of income as well as determination of the tax both are necessary for completion of the assessment order. Similar provision has been made in Section 144, which requires assessment of income as well as determination of sum, payable by the assessee on that income. ;