COMMISSIONER OF INCOME TAX vs PIONEER SPORTS WORKS (P) LTD.

N. K. AGRAWAL, J. :

The following question has been referred at the instance of Department under s. 256(1) of the IT Act, 1961 (for short, "the Act") :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the reference made under s. 144B of the IT Act, 1961, was bad in law and is barred by limitation ?"

The assessee, a private limited company, derived income from the manufacture and sale of sports goods. Return was filed for the asst. yr. 1981-82 declaring a loss of Rs. 55,34,260, including a brought forward loss of Rs. 25,37,570. The ITO, during the course of assessment proceedings, proposed variation in the assessees income/loss exceeding Rs. 1,00,000. He, therefore, proceeded under s. 144B of the Act and sent a draft of the proposed assessment order to the assessee inviting objections. After receipt of objections from the assessee, the ITO forwarded the same along with the draft assessment order to the IAC for directions. After receipt of directions from the IAC, vide letter dt. 6th July, 1984, assessment was made on an income of Rs. 14,22,037 on 30th August, 1984.

The assessee went in appeal and the CIT(A) partly allowed assessees appeal.

Both the assessee and the Department filed appeals before the Tribunal. The assessee raised an additional ground before the Tribunal that the assessment order was barred by time and was a nullity. It was argued by the assessee that the last day of the normal period of limitation under s. 153(1)(a)(iii) of the Act was 31st March, 1984, whereas the assessment was framed on 30th August, 1984. The ITO had claimed that assessment had been completed within the extended period of limitation which was available under cl. (iv) of Expln. 1 below s. 153 of the Act. Since procedure laid down in s. 144B of the Act had been followed, the extended period of limitation, not exceeding 180 days, was available for completing the assessment. It was a case where the ITO together with the IAC had concurrent jurisdiction under s. 125A of the Act. The Tribunal took the view in the light of its earlier order in a similar case that, keeping in view sub-s. (7) of s. 144B, the ITO having concurrent jurisdiction together with the IAC, was not required to follow the procedure laid down in s. 144B of the Act and, therefore, extended period of limitation was not available.

A similar question has been examined by this Court in IT Ref. No. 63 of 1985 - Commissioner of Income Tax Vs. Gheru Lal Bal Chand, and it has been held that sub-s. (7) of s. 144B was not attracted and the procedure, laid down in that section, was rightly followed as the ITO, having concurrent jurisdiction with the IAC under s. 125A of the Act, proposed to make variation in the income of the assessee exceeding Rs. 1,00,000. Following the said view, the question is answered in the negative, i.e., in favour of the Department and against the assessee.