2006 (12) TMI 104 - HC - Income Tax

Time limit for completion of assessment and reassessment u/s 153 - Fresh Order passed in remand proceedings - HELD THAT - From the aspect of law which has engaged our attention, we are of the view that section 153(2A) is not attracted in the facts of the present case; no period of limitation is prescribed as per the provisions of section 153(3)(ii). It is trite that Parliament is continuously concerned with the evils or undesirability of the proverbial sword hanging over the head of an assessee. Parliament has, therefore, set down the parameters within which an assessment must be completed, and over the years has shortened the span of time in this regard. It has, however, carved out an exception to the rule where a specific, limited or restricted direction is passed by an appellate authority which is of the opinion that it would not be possible to decide the appeal before it without a clarification on this point. The appellate authority has also the power to set aside the assessment order and direct a de novo enquiry, in which case every aspect, computation and dimension is open for consideration. This partakes of the nature of an assessment which is akin to the original assessment and, therefore, the period of limitation applicable to the original assessment must apply to the fresh assessment. It is manifestly clear that in substance the entire assessment had not been set aside. The assessee's contention was that section 40A(3) had not been violated in its spirit since no expenditure exceeding rupees twenty thousand had been incurred in cash; these were incurred by effecting entries in the books of account and, hence, were as undisputable as payments made by account payee cheques or account payee bank draft. It was only on this restricted aspect of the assessment that the Tribunal had remanded the case to the Assessing Officer. The entire assessment exercise, therefore, had not been undertaken de novo, thereby rendering section 153(2A) of the Income-tax Act inapplicable to the case. We conclude by holding that a writ petition under articles 226 and 227 of the Constitution is always maintainable if the High Courts find that any authority is acting contrary to the powers bestowed upon it. Writ petitions, therefore, cannot be dismissed per se. The objection on this score cannot be appreciated; the Revenue would be justified in contending that in the facts of the case invoking the extraordinary jurisdiction of this court was not called for. Considerable time of this court has been needlessly spent on adjudicating on this preliminary objection. However, we dismiss the writ petitions as meritless since, in the facts and circumstances of the case, it cannot be argued that section 153(2A) is attracted and constitutes an absolute bar on assessment proceedings. This is obviously the manner in which all the authorised representatives of the petitioners understood the law since they chose to address the Assessing Officer on the merits of the case. Writ petitions are dismissed.

Issues Involved:
1. Maintainability of the writ petition.
2. Application of Section 153(2A) of the Income-tax Act.
3. Interpretation of the Income-tax Appellate Tribunal's order.
4. Limitation period for the reassessment.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The court examined whether the writ petition should be entertained despite the availability of an alternative remedy of appeal. The judgment referenced several precedents, including *National Institute of Immunology v. Municipal Corporation of Delhi* and *Chemical Sales Corporation v. New Delhi Municipal Council*, which established that declining to entertain a writ petition due to the availability of an alternative remedy is a self-imposed restriction by the High Courts. The court concluded that a writ petition under Articles 226 and 227 of the Constitution is maintainable if the High Courts find that any authority is acting beyond its powers.

2. Application of Section 153(2A) of the Income-tax Act:
The petitioner argued that the reassessment was time-barred under Section 153(2A), which mandates that a "fresh assessment" must be made within two years from the end of the financial year in which the order is received by the Chief Commissioner or Commissioner. The court noted that the Income-tax Appellate Tribunal's order dated June 23, 2000, required the Assessing Officer to reconsider the matter after giving the petitioner a reasonable opportunity to furnish necessary details. The court observed that the Assessing Officer issued a notice under Section 143(2) on September 2, 2004, and completed the assessment on February 28, 2005, which the petitioner contended was beyond the prescribed time limit.

3. Interpretation of the Income-tax Appellate Tribunal's Order:
The court scrutinized the Tribunal's order, which stated that the case was not properly examined and directed the Assessing Officer to reconsider the matter. The court found the language of the Tribunal's order ambiguous, particularly the use of terms like "fresh order as per law" instead of "fresh assessment" or "reassessment." This ambiguity led to differing interpretations by the petitioner and the Revenue. The court emphasized that the Tribunal did not expect the Department to delay action for over four years and presumed that requisite action would be taken expeditiously.

4. Limitation Period for the Reassessment:
The court analyzed Section 153 of the Income-tax Act, particularly Sub-sections (2A) and (3)(ii). The court referred to precedents like *Rajinder Nath v. CIT* and *Shri Prem Nath Mayor v. CIT*, which clarified that a remand for a specific issue does not constitute a fresh assessment requiring adherence to the limitation period under Section 153(2A). The court concluded that the Tribunal's order did not set aside the entire assessment but remanded the case for reconsideration of specific issues. Therefore, Section 153(2A) was not applicable, and the limitation period prescribed therein did not bar the reassessment proceedings.

Conclusion:
The court held that the writ petition was maintainable but dismissed it on merits, stating that Section 153(2A) did not apply to the case. The court noted that the petitioners' representatives had chosen to address the merits of the case before the Assessing Officer, indicating their understanding of the law. The writ petitions were dismissed with no order as to costs, as the court found that the petitioners sought to avoid tax payment on non-existent technical grounds, and the Revenue's preliminary objection on maintainability was unreasonable.

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