Commissioner of Income Tax, Bangalore vs Micron International Ltd.

N. Kumar, J.—The Revenue has preferred this appeal against the order passed by the Tribunal upholding the order of the Commissioner of Income-tax (Appeals) that, the issuance of notice under Section 148 of the Act was beyond the period of limitation prescribed in the statute. Both the Appellate Authority and the Tribunal proceeded on the footing that the assessee has filed the returns disclosing all material facts necessary for assessment and therefore, as the reassessment was initiated beyond four years, the impugned reassessment order passed is barred by limitation. Both the authorities have not applied their mind and found out under what circumstances the re-assessing was done. In his order, the Assessing Authority has categorically mentioned as under:--

"The company was formed on 26.6.1998 and there was no production activity during the first year. In the previous year relating to assessment year 1995-96 the company commenced its production after taking over the company by the erstwhile firm M/s. Microcon Instruments & Systems Ltd. This fact was obtained from the Notes forming part of the accounts for the year ending 31.3.1995 at SI No. 3. The material fact reveal that the assessee is a new entity which commenced its manufacturing activity using the assets of M/s. Microcon Instruments & Systems Ltd."

On this ground the assessment was re-opened and notice issued under Section 148 of the Act by the Commissioner for Income-tax III. The material fact reveal that the assessee company commenced its business using the assets of M/s. Microcon Instruments & Systems Ltd., which was not available among material filed with the returns of the Income for the assessment year 1996-1997 or during the assessment proceedings. It was only the subsequent perusal of the finding against assessment of an earlier assessment order that brought out this fact. It constitutes material information for the assessing Officer to believe that the income as described in the assessment in the relevant assessment year was without taking note of these facts. Under these circumstances, we are of the view, the orders of both the authorities cannot be sustained. The appeal is allowed. The proper course would be to set aside the order of both the authorities and remand the matter back to the Commissioner of Income-tax (Appeals) to consider the case in the light of the material on record and then pass appropriate orders afresh in the light of the observations made above. Ordered accordingly.