1979 (12) TMI 40 - HC - Income Tax

Summary

Issues Involved:
1. Propriety of the direction given by the learned single judge for fresh assessments.
2. Validity of the transfer order under Section 127 of the Income Tax Act, 1961.
3. Applicability of Section 153(3)(ii) of the Income Tax Act, 1961, in lifting the bar of limitation.

Detailed Analysis:

1. Propriety of the Direction for Fresh Assessments:
The appellants challenged the direction given by the learned single judge for fresh assessments by the ITO, A-Ward, Karimgunj, within four months. The appellants argued that this direction was not necessary for the disposal of the rules nisi and that Section 153(3)(ii) does not enlarge the jurisdiction of the court to lift the bar of limitation unless such a finding or direction is necessary for the disposal of the case. The court agreed with the appellants, stating that the only subject matter was the validity of the impugned transfer order, and the direction for fresh assessments was not required for the disposal of the writ petitions.

2. Validity of the Transfer Order:
The transfer order dated June 30, 1973, issued by the Central Board of Direct Taxes (CBDT) transferring the cases from the ITO, A-Ward, Karimgunj, to the ITO, Central Circle XXXIII, Calcutta, was conceded by the revenue to be invalid as it did not state any reasons for the transfer. The court quashed the transfer order as it was not in compliance with the requirements laid down in Ajantha Industries v. CBDT [1976] 102 ITR 281, which necessitates stating reasons for such transfers.

3. Applicability of Section 153(3)(ii) in Lifting the Bar of Limitation:
Section 153(3)(ii) of the Income Tax Act, 1961, provides that the time limits for assessments and reassessments do not apply where such actions are taken in consequence of or to give effect to any finding or direction contained in an order of the court. The court referred to the Supreme Court's decision in Rajinder Nath v. CIT [1979] 120 ITR 14, which clarified that findings and directions must be necessary for the disposal of the particular case and that Section 153(3)(ii) does not enlarge the jurisdiction of the court. The court concluded that the direction for fresh assessments was not necessary for disposing of the writ petitions and thus, Section 153(3)(ii) was not applicable.

Conclusion:
The court set aside the direction given by the learned single judge for fresh assessments, affirming that such a direction was not necessary for the disposal of the writ petitions. The rest of the judgment of the learned judge was affirmed. The appeals were allowed without any order as to costs. An oral prayer for leave to appeal to the Supreme Court was refused, as the court did not consider the question to be of substantial general importance. The court granted a stay of all further proceedings till three weeks after the Christmas vacation.