2015 (9) TMI 1626 - SC - Income Tax

Application u/s 256(2) - rectification of mistake - Held that - High Court 1987 (4) TMI 20 - BOMBAY HIGH COURT is clearly wrong in observing that the proceedings got finality on 8.4.1987 when the reference application under Section 256(2) of the Act was dismissed by the High Court. Admittedly, it is this order dated 8.4.1987 which was the subject matter of appeal before this Court and the appeal was dismissed on 16.01.2001. Therefore, the order dated 8.4.1987 passed by the Bombay High Court had not attained finality. We find that the proceedings got finalized only on 16.01.2001 2001 (1) TMI 1001 - SUPREME COURT when the appeal of the assessee was dismissed by this Court. If the period of limitation is reckoned from that date the certificate issued on 15.7.2004 is well within four years of limitation provided under law. The recovery certificate was, therefore, not time barred as held by the High Court in the impugned judgment.

Summary

Issues:
Assessment years 1950-51 to 1958-59, validity of tax recovery certificate issuance, finalization of proceedings date.

Analysis:
The judgment pertains to the assessment years 1950-51 to 1958-59, where re-assessment proceedings were initiated based on notices issued under Section 144 read with Section 148 of the Income Tax Act, 1961. The appeal before the Commission of Income Tax (Appeals) was dismissed on 02.02.1972, and the subsequent appeal before the Income Tax Appellate Tribunal was partially allowed in favor of the assessee. The Tribunal referred one question to the High Court, leading to a series of legal challenges and appeals. The High Court dismissed an application for reference of remaining questions in 1987. A Special Leave Petition was filed, which was converted into Civil Appeal Nos. 6944-6952 of 1995 and finally dismissed on 16.01.2001.

The main issue in question was the finalization date of the proceedings. The High Court had observed that the proceedings were finalized on 8.4.1987, whereas the appellant argued that finality was achieved on 16.01.2001 when the civil appeal was dismissed by the Supreme Court. The Supreme Court held that the proceedings were concluded only on 16.01.2001, not in 1987 as contended by the High Court. Therefore, the recovery certificate issued on 15.7.2004 was within the four-year limitation period, contrary to the High Court's ruling, making it not time-barred.

In conclusion, the Supreme Court set aside the High Court's order, allowing the appeal in favor of the appellant. The judgment clarified the finalization date of the proceedings, emphasizing that it was in 2001 when the civil appeal was dismissed, not in 1987 as incorrectly determined by the High Court.