PARIKH A B Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) EARLIER notice pending admission was issued in this matter. We find that on such notice being served, respondent has entered appearance through his standing counsel and an affidavit-in-reply has also been presented to the Court meeting out the points raised in this Special Civil Application. Considering the nature and scope of the points involved in this Special Civil Application, we deem it fit and proper to dispose of as Special Civil Application today itself, after hearing both the sides. Learned counsel on both the sides made their submission in full.

(2.) IN this Special Civil Application, the petitioner questions the notice under s. 148 of IT Act, 1961, hereinafter referred to as the Act for the alleged escaped assessment for the asst. yr. 1981-82. The impugned notice is dt. 12th Nov., 1992. Two points are being urged by Mr. J.P. Shah, learned counsel for the petitioner coveting interference at our hands. The first point is that the impugned notice is time barred, when we take note of the provisions under s. 149 of the Act under which the maximum time limit could be 10 years from the end of the relevant assessment year, namely, 31st March, 1982. The second point urged is that the conditions precedent for exercising jurisdiction for any alleged escaped assessment have not at all been fulfilled and, hence, the impugned notice is without jurisdiction. We will first take up for consideration the point relating to bar of limitation. IN answer to the first point, Mr. M.R. Bhatt, learned counsel for the respondent submits that s. 150(1) of the Act specifically contemplates that notice under s. 148 may be issued, notwithstanding anything contained in s. 149, at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference, revision or by a Court in any proceeding under any other law. Learned counsel for the respondent submits that in the instant case there was an appeal by the firm in which the petitioner was a partner before the Tribunal for the asst. yr. 1981-82 and there, the findings have been rendered holding that the transactions in respect of which, the present proceedings have been initiated are only those of the petitioner and not that of the firm, of which he was a partner, and in view of that finding, the matter could be brought within the ambit of s. 150(1) so as to enable the authority to initiate action for escaped assessment by issuance of the notice under s. 148 at any time without any limitation. Sec. 147 speaks about income escaping assessment. The power to initiate action for escaped assessment is subject to the provisions of ss. 148 to 153. Sec. 148 provides for issuance of notice where income has escaped assessment. Sec. 149 prescribes the time-limit for issuance of notice under s. 148. Then we come to s. 150, on which learned counsel for the respondent relies on, to escape the scathe of limitation, which otherwise applies, as contended by the learned counsel for the petitioner. Sec. 150(1) which alone is relevant reads as under :

(3.) OF the three clauses, cl. (ii) alone may be relevant for the purpose of our case. The language of cl. (ii) of sub-s. (3) of s. 153 is in pari materia with s. 150(1) of the Act. It is only in this context we have to understand the scope and purpose of Explanation 3 to s. 153 which portently speaks on the subject. The said explanation reads as follows : "Explanation 3. Where, by an order referred to in cl. (ii) of sub-s. (3), any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of s. 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed."