Law:

Section:

Section 153(1)(b) of the Income-tax Act, 1961 - Reassessment - Time limit for completion of - Assessment year 1977-78 - Whether for availing extended period of limitation under section 153(1)(b), ITO is required to be satisfied about concealment within normal period of limitation for assessment - Held, yes - Whether in case no material is brought to notice of fact-finding authorities to come to a definite conclusion about date of satisfaction by ITO, Tribunal will be justified in coming to conclusion that date of initiation of penalty proceeding for concealment is date on which ITO was satisfied in respect of concealment - Held, yes FACTS For the assessment year 1977-78, the ITO was not satisfied with the returned figure submitted by the assessee and he forwarded a draft of the proposed assessment order to the assessee. The assessee raised objection to the draft assessment order and it was sent to the IAC for approval. After the approval, the assessment was completed on 13-10-1980. On appeal before the AAC, the assessee challenged the order of assessment on merits as well as on grounds of limitation. The AAC did not accept the challenge of the assessee on the ground of limitation but the Tribunal accepted it and annulled the assessment. On reference, it was contended by the assessee that the ITO was required to be satisfied about the concealment within the normal period of assessment. HELD In the instant case, the assessment being for the year 1977-78, it was normally to be completed on or before 31-3-1980. It was not disputed that in view of Explanation 1 of section 153 assessment ought to have been completed on or before 27-9-1980. On a bare perusal of section 153 in its totality, there could be no doubt that the ITO is required to be satisfied about the concealment within the normal period of assessment. Proceeding for penalty may be initiated on a later date which would not affect the assessment order in case satisfy- action of concealment is much earlier within the normal period of limitation. In case, no material is brought to the notice of the fact-finding authorities to come to a definite conclusion about the date of satisfaction by the ITO, the…

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