Law: Income Tax Act, 1961

Section: 153,271,271(1)(c)

(a) Income-tax--Assessment---Limitation---Extension of period of limitation---Extension of limitation if Assessing Officer is satisfied on materials on record that S.271(1)(c) is applicable---No satisfactory explanation regarding deposits in assessee's name---Limitation for completion of assessment could be extended---Indian Income Tax Act, 1961, Ss. 153 & 271(1)(c). The Assessing Officer is armed with the jurisdiction to prolong the assessment on fulfilment of the conditions set out in clause (b) to subsection (1) of section 153 of the Income Tax Act, 1961. The power is not arbitrary. The Assessing Officer can stretch the period of limitation on being satisfied, on the material on record, about the necessity of invoking section 271(1)(c). In the course of assessment for the assessment year 1985-86, the Assessing Officer asked the assessee to explain certain bank deposits, bank accounts, fixed deposits and investments in respect of properties which stood in his name and in the name of his wife and children. He was also required to produce the names of the creditors from whom he had taken loans. Summons were issued to the creditors some of whom were examined by the Assessing Officer on March 8, 1988. Under the normal course, the assessment was to be completed on or before March 31, 1988, in terms of section 153(l)(a)(iii) of the Act. The Assessing Officer, however, held the opinion that the assessee was at fault for the concealment of his income thereby making him liable under section 271(l)(c) of the Act. The Assessing Officer completed the assessment on March 31, 1989, after making additions of various amounts under the head "Other sources". The assessment was assailed in appeal on the ground that the assessment was barred by limitation. The Appellate Tribunal held that the assessment was not barred by limitation and that the provisions of section 153(1)(b) read with section 271(1)(c) of the Act were applicable to the case. In a reference, it was submitted that it was incumbent on the part of the authority to inform the assessee about the discovery of concealment of income within the normal period of limitation and the said fact being evident from the…

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