In some provision limitation is about issue and service of order demand notice etc. However, in some provisions limitation is only about making of order or issue of notice. When a specific law provides for limitations as to some matters relevant to the enactment, those limitations shall prevail. In absence of such prescription, general law as to limitation like the Limitation Act will be applicable.

Presumption:

As per provisions of the Indian Evidence Act 1872 there are some presumptions as to existence of some facts. These are protective provisions based on such presumption. If one need to challenge that the real facts are different then apparent facts which are presumed to exist, then the person so challenge must prove that real facts are different. Failing which presumption shall prevail. Section 114 of the said Act is reproduced with highlights for provisions which may be relevant in relation to proceedings under the Income-tax Act.

From the Indian Evidence Act 1872:

114. Court may presume existence of certain facts - The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.

Illustration

The Court may presume -

(a) That a man who is in possession of stolen goods after the theft is either the thief or has received the goods knowing them to be stolen, unless he can account for his possession;

(b) That an accomplice is unworthy of credit, unless he is corroborated in material particular;

(d) That a thing or state of things which has been shown to be in existence within a period shorter than that within which such things or state of things usually cease to exist, is still in existence;

(e) That judicial and official acts have been regularly performed;

(f) That the common course of business had been followed in particular cases;

(g) That evidence which could be and is not produced would, if produced be unfavorable to the person who withholds it;

(h) That if a man refuses to answer a question which he is not compelled to answer by law, the answer, if given, would be unfavorable to him;

(i) That when a document creating an obligation is in the hands of the obligor, the obligation has been discharged.

But the Court shall also have regard to such facts as the following, in considering whether such maxims do or do not apply to the particular case before it -

As to illustration (a) - A shopkeeper has in his till marked rupee soon after it was stolen, and cannot account for its possession specifically, but is continually receiving rupees in the course of his business;

As to illustration (b) - A, a person of the highest character, is tried for causing a man's death by an act of negligence in arranging certain machinery; B, a person of equally good character, who also took part in the arrangement, describes precisely what was done, and admits and explains the common carelessness of A and himself;

As to illustration (bb) - A crime is committed by several persons, A,B and C, three of the criminals, are captured on the spot and kept apart from each other. Each gives an account of the crime implicating D, and the accounts corroborate each other in such a manner as to render previous concert highly improbable;

As to illustration (c) - A, the drawer of a bill of exchange, was a man of business. B, the acceptor, was a young and ignorant person, completely under A's influence;

As to illustration (d) - It is proved a river ran in a certain course five years ago, but it is known that there have been floods since that time which might change its course;

As to illustration (e) - A judicial act, the regularity of which is in question, was performed under exceptional circumstances;

As to illustration (f) - The question is, whether a letter was received, it is shown to have been posted, but the usual course of the post was interrupted by disturbances;

As to illustration (g) - A man refuses to produce a document which would bear on a contract of small importance on which he is sued, but which might also injure the feelings and reputation of his family;

As to illustration (h) - A man refuses to answer question which he is not compelled by law to answer but the answer, to it might cause loss to him in matters unconnected with the matter in relation to which it is asked;

As to illustration (i) - A bond is in possession of the obliger, but the circumstances of the case are such that he may have stolen it.

S. 153 of the Income-tax Act,1961 was considered along with clause (e) of s.114 of the Indian Evidence Act, by the Calcutta High Court in case of Subrata Roy (supra.). The High Court reversed the judgment of ITAT and held that a delay of 47 days in service of assessment order and demand notice will not invalidate the order and notice which bore date within limitation. The Court applied presumption. However, it seems that the provision of exception as to presumption was neither referred by counsel of assessee nor an attempt was made to rebut the presumption by documentary evidences- available or not due to evidence not being available.

Facts of the case are as follows:

The limitation expired on 31.12.2008.

The order and demand notice were received through post after 47 days from 31-12-2008 which was the last date for making such assessment.

The assessee challenged the assessment order and demand notice on ground of limitation.

Assessee contended that there was no evidence that the assessment was completed before the end of such limitation period.

The Commissioner (Appeals), after perusing the assessment records and order sheets attached to the assessment record, observed that the assessment was completed on 31-12-2008 and it was signed on the same date along with the demand notice and was issued to the assessee within due time through department's notice server but the assessee refused to accept the same.

Later on, such order and demand notice were sent by the AO, by Registered post.

It was also observed that the last date of hearing was on 15-12-2008, hence, on the basis of observations, the Commissioner (Appeals) held that the assessment was completed within the limitation period and same was not barred by limitation.

Tribunals order:

Assessee preferred appeal before Tribunal against the order of the CIT(A).

The Tribunal accepted the contention of the assessee and held that the revenue could not prove any documentary evidence that the assessment was framed on 31-12-2008 i.e., on the date of the assessment order. The tribunal held that both the assessment order and demand notice was bad in law being made after limitation.

On appeal of assessee the High Court reversed the order of Tribunal.The Court observed and held on the following lines:

The submission of the assessee that the assessment records were taken into account by the Commissioner (Appeals) without disclosing the same to the assessee is altogether without any merit.
The appellate authority cannot be expected to dispose of an appeal without looking into the assessment records.
Had the appellate authority relied upon any independent enquiry or the result of any such enquiry, then it would have been incumbent upon the appellate authority to inform the assessee about the result of such enquiry so as to afford an opportunity to the assessee to make his submission with regard thereto.
The appellate authority had no such obligation to disclose the assessment records to the assessee before taking them into account at the time of hearing of the appeal.
An appellate court cannot be prevented from perusing the lower court records. It is a strange submission to make that the lower court records could not have been perused without giving an opportunity to the assessee.
The Tribunal was hearing an appeal. The Tribunal was not taking evidence of the matter as a Court at the first instance would do.
The question for consideration was whether the order dated 31-12-2008, could be said to have been passed on 31-12-2008 when the demand notice together with a copy of the order was served after 47 days (by post).
A period of 47 days time is not time long enough which can even make anyone suspicious as regards the correctness of the date of the order.
In any case the presumption arising out of clause (e) of section 114 of the Indian Evidence Act, 1872 proves the fact that the order was passed on 31-12-2008.
The same presumption once again would apply to the order dated 13-11-2009, passed by the Commissioner (Appeals). There is, as such, no reason to even entertain any doubt as regards the existence of the file including the order dated 31-12-2008

Observations of the author:

In this case, the assessee refused to accept order and demand notice – this was a point to weaken the case of assessee.

Service by post within 47 days may be a reason of doubt, but that doubt need to be established. If the assessee had demanded copy of order and demand notice within limitation or few days thereafter, and the AO did not provide the same, then assessee could have claimed that I demanded the order on (say 01.01.2009,10.01.2009 …) but it was not provided, this proves that the assessment order was not made on 31.12.2008. There was no such effort on part of assessee.

The assessment order and demand notices are important documents, and therefore they should not only be made but should also be delivered within limitation. A few days delay, that too in exceptional circumstances can be considered as rebuttable but not long period of 47 days.

The learned CIT(A) noted that last hearing took place on 15.12.2008, therefore assessment order was made on 31.12.2008 (as per date put on by the AO). If we consider it from another point of view, we can say that during fag end of limitation, usually order must be passed immediately after last hearing and a time gap of 15 days really cast a serious doubt, as to whether the order was passed on 31.12.2008 or many days thereafter.

There was no attempt to make out a case with evidence ofbook of steno to whom AO dictated order, the history of document in file or computer, movement of file etc.

The Court held that 47 days is not long period, however, author feels that this is a long period and normal period of 5-7 days in dispatch can be considered as normal. 47 days is sufficient to cast a serious doubt.

The following exceptions to illustrations must have been pressed by counsel of assessee:

As to illustration (e) - A judicial act, the regularity of which is in question, was performed under exceptional circumstances;

As to illustration (f) - The question is, whether a letter was received, it is shown to have been posted, but the usual course of the post was interrupted by disturbances;

There was no effort on part of assessee to deny that a service of order and demand notice was not refused by him when such service was offered.

There is nothing about date of posting of order and demand notice and actual delivery by postman. A case of exception has not been made out.

Therefore, it seems that if the assessee was active in receiving order and demand notice and if he had demanded the same on or around 31.12.2008 and even say in last week of January 2009, then the assessee could have made a stronger case that assessment order was not made on or before 31.12.2008.

By: CA DEV KUMAR KOTHARI - August 30, 2014