Law: Income Tax Act, 1961

Section: 153

Income-tax-----Assessment---Limitation---Extension of period---Search of premises of firm and partners of firm---Assessment order stayed---Clarification by High Court that stay order operated in case of firm also---Limitation for passing assessment order on firm was also extended. In April 1971, the business premises of the firm and the residential premises of the partners were searched by the Officers of the Income-tax Department and records and documents were seized. The partners and the general manager filed separate writ petitions in the Delhi High Court to impugn the raid and seizure of books and documents and initially obtained an order staying final decision by the Income-tax Authorities on the basis of information gathered during the raid. The Income-tax Department filed an application for clarification and the Delhi High Court on March 5, 1973, passed an order stating that the stay order would operate for the assessment of the firm as well as the partners. When the Income-tax Authorities took up the matter to finalise the assessments, the assessee-firm contended that there was no extension of limitation with regard to its assessments. The Tribunal negatived the contention. On a reference: Held, that a reading of the order of the High Court, dated March 5, 1973, clearly showed that the stay order operated in favour of the firm as well. Since the Income-tax Authorities could not frame the assessment in view of the stay order, the Tribunal was right in law in coming to the conclusion that limitation under section 153(3) of the Indian Income-tax Act, 1961, was extended in the firm's case also. JUDGMENT GOKAL CHAND MITAL, J.--Auto and Metal Engineer, Faridabad, the assessee, was a partnership concern consisting of Smt. Sunanda Rani Jain having 2/3rd share and Smt. Karuna Rani Jain having 1/3rd share. Both are sisters. V.K. Jain, husband of Sunanda Rani Jain, was the general manager of the firm. On April 24, 1971, the business premises of the firm and the residential premises of the partners were searched by the Officers of the Income-tax Department and records and documents were seized. The partners and the general manager filed separate writ petitions in…

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