2017 (3) TMI 1473 - AT - Income Tax

Application of provisions of Section 150(1) - period of limitation - Held that - If we read sub Section (2) of Section 150, it provided that sub Section (1) thereof will not apply to a case of assessment, reassessment or recomputation of income, if it related to assessment year in respect of which assessment, reassessment etc. could not have been made at the time when the order, which was the subject matter of appeal, reference or revision was made, by reason of the time limits fixed u/s 153 for making the reassessment, it would be seen that sub section (2) of Section 150 does not refer to Section 153. It only refers to any other provisions limiting the time within which any action for assessment, reassessment or recomputation may be taken. The word taken refers only to initiation of proceedings and not to completion. The time limit for initiation of such proceedings are contained in Section 149 & 150 while the time limit for completion of such proceedings are mentioned in sub Section (2) & (3) of Section 153 just as Section 150 is the proviso to Section 149, sub Section (3) of Section 153 is a proviso to sub section (2) thereof. We find that the plain language of sub-section (2) of Section 150 clearly restricts the application of sub-section (1) of Section 150 to enable the authorities to reopen the assessments which have not already become final on the expiry of the period of limitation prescribed u/s 149(2) of the Act. In the light of above discussion in respect of provisions of Section 150(1) and (2) of the Act and relying on various judicial pronouncements as relied on by the ld. Authorized Representative of the assessee as well as discussed as above by us and the decision of Jurisdictional High Court in the case of Computer Science Corporation India (P) Limited (2013 (3) TMI 743 - MADHYA PRADESH HIGH COURT), we are of the considered opinion that the directions issued by the ld. CIT(A) u/s 150(1) of the Act for the assessment years 2004-05 to 2006-07 are barred by limitation legally and not permissible considering the facts of the present case. Accordingly, the same are directed to be expunged and deleted.

Summary

Issues Involved:

1. Jurisdiction of CIT(A) to give directions for assessment years not under appeal.
2. Validity of directions under Section 150(1) of the Income Tax Act, 1961.
3. Limitation period for reopening assessments under Section 150(2) of the Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of CIT(A) to give directions for assessment years not under appeal:

The CIT(A) directed the AO to take necessary action for the assessment years 2004-05, 2005-06, and 2006-07 based on the DVO's report. The assessee argued that the CIT(A) exceeded his jurisdiction by giving directions for years not under appeal. The Tribunal referred to several precedents, including the Indore Tribunal's decision in M/s. Om Prakash Bagdia vs. ACIT, Ujjain, and the case of Lilasons Industries Limited vs. ACIT, Bhopal, which established that the CIT(A) cannot give directions for years not under appeal. The Tribunal concluded that the CIT(A)'s directions for the years 2004-05 to 2006-07 were beyond his jurisdiction.

2. Validity of directions under Section 150(1) of the Income Tax Act, 1961:

The CIT(A) directed the AO under Section 150(1) to take action based on the DVO's report for the years 2004-05 to 2006-07. The Tribunal examined the provisions of Section 150(1) and concluded that the CIT(A) can direct the AO to take action if it is necessary to give effect to any finding or direction contained in an appellate order. However, the Tribunal noted that such directions must be within the jurisdiction of the CIT(A) and related to the year under appeal.

3. Limitation period for reopening assessments under Section 150(2) of the Act:

The Tribunal analyzed the limitation period for reopening assessments under Section 150(2). It found that the directions issued by the CIT(A) were beyond the permissible limitation period. The relevant assessment years were 2004-05, 2005-06, and 2006-07, and the limitation period for issuing notice under Section 148 expired on 31.03.2010, 31.03.2011, and 31.03.2012, respectively. Since the CIT(A)'s order was passed on 22.03.2016, any action based on this order was barred by limitation. The Tribunal relied on several judicial pronouncements, including the decision of the Jurisdictional High Court in Computer Science Corporation India (P) Limited vs. Addl. CIT & Ors, to support its conclusion that the directions issued by the CIT(A) were legally barred by limitation and not permissible.

Conclusion:

The Tribunal held that the directions issued by the CIT(A) for the assessment years 2004-05 to 2006-07 were beyond his jurisdiction and barred by limitation. Consequently, these directions were expunged and deleted. The appeal of the assessee was partly allowed, and the order was pronounced in the open court on 28th Feb., 2017.