2018 (1) TMI 809 - HC - Income Tax

Assessment u/s 153C - limitation for assessment on search and seizure - fresh assessment ordered u/s 263 to be completed within the time provided under Section 153B - Held that - On the question of limitation, Section 263 confers power on the Commissioner to revise orders, which are found to be prejudicial to the revenue. When such an order is made within the time provided for making such order, it cannot be said that the limitation under Section 153B has to be resorted to, which would be impossible of compliance. If no further extension is provided, either under Section 153B or under Section 263, for making a fresh assessment on the assessment being remanded to the AO, it has to be taken that there is no limitation provided. There is no limitation provided to carry out the assessment. The fresh assessment cannot be said to be possible only within the limitation provided under Section 153B, since the power to revise extends to two years while that under Section 153B is far lesser. The legislature cannot be said to have conferred a power redundant, ineffective and unworkable. In the present case, suffice it to notice that the Commissioner had passed the order cancelling the assessment and directing a fresh assessment on 12.03.2010, within the two year period provided under Section 263 of the Act. The fresh assessment was passed on 30.12.2010, a little more than nine months from the order of revision. Considering the fact that there was requirement for a fresh notice and a hearing, in making that fresh assessment and that too of seven years, we are of the opinion that the fresh assessment made under Section 153C is within a reasonable time. - Decided against assessee.

Issues Involved:
1. Limitation for completion of assessment on remand under Section 263 of the Income Tax Act, 1961.
2. Extension of limitation period under Section 153B on remand under Section 263.
3. Validity of remand by the Commissioner when the limitation period under Section 153B has expired.
4. Requirement of satisfaction by the Assessing Officer (A.O.) under Section 153C for assessment.

Detailed Analysis:

1. Limitation for Completion of Assessment on Remand under Section 263:
The appellant contended that the fresh assessment on remand should be completed within the period of limitation provided under Section 153B. The original assessment was completed within the limitation period, but the fresh assessment was made beyond this period. The court held that the limitation under Section 153B is for the original assessment and does not apply to fresh assessments ordered under Section 263. The court reasoned that if the limitation period under Section 153B were to apply to fresh assessments on remand, it would render the power of the Commissioner to remand the matter ineffective and unworkable.

2. Extension of Limitation Period under Section 153B on Remand under Section 263:
The appellant argued that the Commissioner should not have remanded the matter for fresh assessment after the limitation period under Section 153B had expired. The court found that Section 263 provides the Commissioner with the power to revise orders prejudicial to revenue within two years from the end of the financial year in which the order sought to be revised was passed. The court concluded that when a fresh assessment is ordered under Section 263, it must be completed within a reasonable time, as no specific limitation period is provided for such assessments.

3. Validity of Remand by the Commissioner when the Limitation Period under Section 153B has Expired:
The appellant contended that the Commissioner should not have remanded the matter for fresh assessment when the limitation period under Section 153B had expired. The court held that the Commissioner’s power to revise an order under Section 263 includes the power to remand for fresh assessment, and this power is not curtailed by the limitation period under Section 153B. The court reasoned that the legislature would not confer a power that is redundant, ineffective, and unworkable.

4. Requirement of Satisfaction by the A.O. under Section 153C for Assessment:
The appellant raised the issue of whether the A.O. was justified in proceeding with the assessment under Section 153C without entering satisfaction. The court held that the A.O. had entered satisfaction at the initial stage when the notice for assessment was issued based on the materials recovered. There was no requirement for further satisfaction for a fresh assessment on remand under Section 263. The court reasoned that requiring the A.O. to enter satisfaction again would result in the A.O. sitting in appeal over the order of the Commissioner.

Conclusion:
The court concluded that the fresh assessment made under Section 153C was within a reasonable time and upheld the power of the Commissioner to remand the matter for fresh assessment under Section 263. The court rejected the appellant’s arguments on limitation and satisfaction, holding that the assessments were valid and within the statutory framework. The appeals were rejected, and no costs were awarded.

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