2014 (4) TMI 901 - HC - Income Tax

Validity of framing single assessment for entire period Validity of order passed - Held that - The Tribunal rightly held that the order u/s 154 has been set aside in appeal and the order has attained finality, resulting that the order passed granting permission to adopt the previous year ending on 30th June stood valid - there is no justification in taking a different view in the matter the very basis of passing two assessment orders does not survive, thus, there is no error in the order of the Tribunal the assessment made for the A.Y.1989-90 for the period is in consonance with the amended Section 3, which stood amended by the Taxation Laws (Amendment) Act, 1987 the amendment was applicable to the assessment year 1989-90, there is no ambiguity in adopting the period of assessment from 1.1.1987 to 31.3.1989 Decided against Revenue.

Summary

Issues:
1. Validity of upholding the order directing a single assessment for the entire period.
2. Legality of the order under Section 154 and its impact on the assessment year.

Issue 1:
The case involved the question of whether the Tribunal was justified in upholding the order of the CIT(A) directing the Assessing Officer to frame a single assessment for the entire period from 1.1.87 to 31.3.89. The respondent, a company engaged in the distillery and fertilizer business, had initially sought to change its previous year from the calendar year to ending on 30th June. However, an amendment in Section 3 of the Income Tax Act prescribed a uniform previous year ending on 31st March from 1989-90 onwards. Despite the assessing authority canceling the permission granted to the respondent, subsequent legal proceedings resulted in the order under Section 154 being set aside, thereby validating the permission to adopt the previous year ending on 30th June. The Tribunal held that there was no justification for a different view, and the assessment made for the period 1.1.1987 to 31.3.1989 was in line with the amended Section 3. The High Court affirmed this decision, dismissing the appeal and ruling in favor of the assessee.

Issue 2:
The second issue revolved around the legality of the order under Section 154 and its impact on the assessment year. The assessing authority had passed two assessment orders for the same assessment year based on the cancellation of permission to change the previous year. However, with the order under Section 154 being set aside in appeal and attaining finality, the permission to adopt the previous year ending on 30th June remained valid. The Tribunal rejected the revenue's appeals, emphasizing the validity of the original permission granted. The High Court concurred, stating that since the basis for passing two assessment orders no longer existed, there was no error in the Tribunal's decision. The assessment for the period 1.1.1987 to 31.3.1989 was deemed appropriate in accordance with the amended Section 3, and the questions were answered in favor of the assessee, leading to the dismissal of the appeal.