Law:

Section:

Section 153 of the Income-tax Act, 1961 [Corresponding to section 34(3) of the Indian Income-tax Act, 1922] - Assessment - Time limit for completion of - Assessment year 1954-55 - Whether for purpose of limitation under section 34(3) of 1922 Act, date of communication of assessment order cannot be date of making order but it is date on which order is passed - Held, yes - Whether, therefore, where ITO passed assessment order under section 34(3) of 1922 Act with in four years after end of assessment year in question but communicated same after expiry of four years, said order could not be termed as barred by limitation - Held, yes FACTS The ITO completed the assessment for the year 1954-55 on 26-3-1959. Thereafter, a notice of demand under section 29 of 1922 Act demanding the tax due on the amount assessed was served on the assessee on 1-4-1959. The assessee challenged before AAC and the Tribunal the validity of the assessment under section 23(3) of 1922 Act on the ground that the order of assessment, not having been communicated to the assessee within 4 years after the end of the assessment year as provided under section 34(3) of 1922 Act, was barred by limitation and, as such, invalid in law. The assessee's appeals were, however, dismissed. On reference : HELD Notice under section 29 of the 1922 Act presupposes an order of assessment under section 23(1) or 23(3) of 1922 Act. Notice under section 29 of 1922 Act can only be served after an order of assessment is made. Thus, the making or passing of an assessment order, the issue of notice under section 29 of 1922 Act, and service of notice or communication of the assessment order are different stages or steps before an assessee pays the assessed tax. In other words, the date of making the order, the date of issue of notice and the date when the order is communicated need not necessarily be the same date. Admittedly, in the instant case, the order of assessment was made on 26-3-1959, which was a date within 4 years after the end of the assessment year. It is true that the order of assessment has been communicated to the assessee on 1-4-1959, which date fell 4 years after the end of the assessment year. But the…

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