1997 (5) TMI 79 - AT - Income Tax

Assessing Officer, Assessment Year, Finding Or Direction, Time Limit For Completion, Tribunal s Order

Summary

Issues Involved:
1. Whether the DCIT(A) was right in annulling the orders passed by the Assessing Officer under section 154/155 on the ground of being barred by limitation as per section 154(7) of the Income-tax Act.

Detailed Analysis:

Issue 1: Annulment of Orders Based on Limitation

Facts and Background:
The primary issue to be decided was whether the DCIT(A) was correct in annulling the orders passed by the Assessing Officer under section 154/155 due to being barred by limitation as per section 154(7) of the Income-tax Act. The facts noted by the tax authorities were undisputed, and the case revolved around the assessment of interest on compensation received by the assessee.

Arguments by Revenue:
The revenue argued that the DCIT(A) overlooked the provisions of sub-clause (ii) of sub-section (3) of section 153, which provides no time limit for making an assessment, reassessment, or recomputation to give effect to any "finding or direction" contained in an order passed under sections 250, 254, 260, 263, or 264. The revenue emphasized that the assessee had consistently contended that the interest was taxable on an "accrual basis" and had accepted the computation of income as per the Tribunal's order dated 18-1-1993. The revenue contended that the consolidated order passed under section 154/155 was meant to give effect to the "direction contained in the order of the Tribunal."

Arguments by Assessee:
The assessee argued that the orders were barred by limitation and that the Tribunal's directions were only for verification of the "method of accounting." The assessee also contended that the order of the CIT(A) had merged with the order of the Tribunal, and no proceedings had been initiated under any other provision of the Income-tax Act to tax the interest income for the period before assessment year 1986-87.

Tribunal's Decision:
The Tribunal held that the order of the Tribunal dated 18-1-1993 had become final and confirmed the earlier order of CIT(A) for assessment year 1986-87. The Tribunal noted that the directions given in the order of the Tribunal were valid and that the normal time limit for completion of assessment or reassessment under section 153(1) and (2) did not apply when giving effect to any "finding or direction" contained in an order of the appellate authorities or courts. The Tribunal emphasized that the consolidated order passed by the Assessing Officer under section 154/155 was to give effect to the "finding or direction" and was not barred by limitation.

Conclusion:
The Tribunal concluded that the consolidated order passed by the Assessing Officer under section 154/155 was valid and not barred by limitation. The Tribunal set aside the orders passed by the DCIT(A) and restored the consolidated order of the Assessing Officer dated 12-1-1994. The appeals of the revenue were allowed.

Summary:
The Tribunal upheld the revenue's appeal, concluding that the DCIT(A) erred in annulling the orders passed by the Assessing Officer under section 154/155 on the ground of being barred by limitation. The Tribunal emphasized that the orders were meant to give effect to the "finding or direction" contained in the Tribunal's order and were not subject to the normal time limits for assessment or reassessment under section 153(1) and (2). The Tribunal restored the consolidated order of the Assessing Officer dated 12-1-1994.