Law: Income Tax Act, 1961

Section: 147a

(a) Income-tax-----Reference---Appeal to Appellate Tribunal ---Reassessment---Limitation--¬Powers of Tribunal---Reassessment proceedings under S.147(a) to disallow deduction---Appeal against reassessment proceedings and disallowance ---CIT (Appeals) holding that disallowance was not valid and not considering objection to reassessment---No cross-appeal or cross-objection on further appeal by Revenue to Tribunal---Tribunal holding that reassessment was permissible only under S.147(b) and that it was time-barred---Order of Tribunal was valid---No question of law arose from it---Indian Income Tax Act, 1961, Ss. 147 & 256---Indian Income-tax Appellate Tribunal Rules, 1963, R.27 Even though limitation is not specifically set up as a defence, a barred proceeding has to be dismissed. Rule 27 of the Income-tax Appellate Tribunal Rules, 1963, enacts that the respondent may support the order, though he may not have appealed, on any of the grounds decided against him. The assessee was a public limited company. As a result of the probe by its internal auditor in April, 1980, into its wage account it discovered defalcation of sizable amounts by one of its clerks, who was in charge of the preparation of the wage bill. It claimed trading loss in the assessment year 1981-82. On the basis the assessee claimed similar trading loss in the assessment years 1976-77 to 1979-80 and 1980-81 also, in view of the position that the assessment for the year 1980-81 was open at the relevant time. The Assessing Officer disallowed this claim for trading loss for the year 1981-82 and initiated reassessment proceedings in respect of the assessment years 1976-77 to 1979-80 pursuant to the assessee's admission that the clerk had committed defalcation of funds. The reassessment was initiated under section 147(a) of the Income Tax Act, 1961. Before the Appellate Authority, objection was taken with regard to the initiation of the reassessment under section 147(a) of the Act. Additionally on the merits also with regard to the disallowance, the order of the Assessing Authority was challenged. The contention with regard to the objection of the initiation of reassessment under section 147(a) was not…

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