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TMI Blog1997 (3) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-81 to 1987-88 were made under s. 143(3)/148. The assessee moved applications under s. 154 contending that the assessment orders were bad in law and legally not maintainable under s. 153(1) and that the assessment proceedings were legally void and unlawful. The AO, however, did not accept the plea of the assessment and he held in the process that the assessments were completed well within time in view of the provisions of s. 153(3)(v). He, therefore, rejected the applications moved by the assessee under s. 154. 3.1 On first appeal, the learned counsel for the assessee contended that the AO referred to wrong provisions and that there was no cl. (v) in s. 153(3). He also submitted that the assessee had filed settlement petitions before the Settlement Commission, which were subsequently rejected. However, he also mentioned that the AO could not take advantage of the period during which assessee's petitions were pending before the Settlement Commission because he had passed the assessment orders before the Settlement Commission gave the decision. The learned CIT(A) considered the submissions and observed that the assessments for all the years under consideration had been made on30t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts, the learned counsel submitted that the Department was relying on the provisions of Expln. 1(v) below s. 153 in order to defend the assessment orders as having been made within the period of limitation specified in s. 153(1). In this connection, the learned counsel further submitted that the assessee had filed appeals against the assessment order and the ground relating to limitation was not raised in the said appeals in view of the fact that in the meanwhile, the assessee had moved applications under s. 154. He also submitted that the AO had not dealt with this issue in the assessment orders and that he had disposed of this issue in the order under s. 154. The learned counsel argued that it is the right of the assessee to have the assessments made within the time prescribed under law and that before invoking the provisions of Expln. 1(v), the AO should have given an opportunity of being heard to the assessee. He emphasised that, in these cases, the AO did not give any such opportunity and, therefore, he could not have invoked the provisions of Expln. 1(v) so as to make the assessments beyond the normal period of limitation as specified in s. 153(2). He also submitted that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that there is no bar on the ITO from proceeding with the assessment in any pending case merely because the application for Settlement has been preferred to the Settlement Commission in relation to that case. It has further been observed that the IT Act does not contemplate set off of assessment proceedings during the period when the Settlement Commission is deciding whether to proceed or not to proceed with an application for settlement. (iii) CIT vs. Surajpal Singh (1991) 97 CTR (SC) 256 : (1991) 188 ITR 297 (SC), wherein it was held that where there is no finding of concealment within 4 years normal period for making the assessment there could be no extension of the period of limitation for making the assessment on the ground of concealment. 4.1 In view of the foregoing arguments, the learned counsel concluded that the assessee had raised a legal issue by moving application under s. 154 and that it was a case of mistake apparent from record and that the AO did not decide the said issue. In this connection, the learned counsel relied on the decision of the Hon'ble Supreme Court in the case of M.K. Venkatachalam, ITO Anr. vs. Bombay Dyeing Mfg. Co. Ltd. (1958) 34 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h remaining period shall be extended to 60 days and the assessment order can be made within such extended period. He further invited our attention to the order made by the Settlement Commission on 26th April, 1991, and submitted that the Hon'ble High Court of Allahabad had allowed a stay of proceedings under ss. 147/148 for the asst. yrs. 1980-81 to 1986-87 by its order, dt.22nd Feb., 1989and9th March, 1989. He submitted that the said fact has been mentioned in the said order of the Settlement Commission. He, therefore, submitted that in view of the provisions of Expln. 1(ii), the period from February/March, 1989 to26th April, 1991will have to be excluded and accordingly all the assessment orders made on30th Oct., 1992, were well within the period of limitation so computed. With reference to the plea of the learned counsel for opportunity to the assessee before invoking the provisions of Expln. 1(v), the learned Departmental Representative submitted that there was no provision in the IT Act, whereby the AO was bound to indicate to the assessee that he was going to invoke particular provisions more so, the provisions of Expln. 1(v) which only clothed the AO with statutory powers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er excluding the period referred to in cl. (v) is less than 60 days. We, therefore, feel that the AO is competent and is statutorily empowered to make an order of assessment or reassessment after excluding the period referred to in Expln. 1(v), i.e., during which the application of the assessee is before the Settlement Commission. We have carefully considered the plea of the learned counsel that before invoking the provisions of Expln. 1(v) the AO ought to have given the assessee an opportunity of being heard, but we find no force in this plea in view of the clear provisions of Expln. 1(v), which leave hardly any choice with the AO. The learned counsel has relied heavily, in this connection, on the decision of the Hon'ble Delhi High Court in the case of Deen Dayal Didwania vs. Union of India. We have carefully gone through the said judgment and it is observed that in the said case the appellant had made a prayer that a direction may be issued to the ITO, Central Circle-III, Madras not to proceed with the case and it was urged that s. 245D of the Act contemplates a report being received from the CIT on the basis of which the Settlement Commission can decide whether to proceed with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , been made on30th Oct., 1992. The date of receipt of the order of Settlement Commission by the CIT(A) is not mentioned by either party. Therefore even if the proviso to Expln. 1(v) is invoked the period gets extended only upto25th Sept., 1992. Thus, the assessment orders in relation to the asst. yrs. 1980-81 to 1986-87 are clearly beyond the period of limitation and same are set aside. In relation to the asst. yr. 1987-88, it is observed that the assessee had filed the application with the Settlement Commission on 31st May, 1988, i.e., on the next day after filing of the revised return for that year on 30th May, 1988. The said application was rejected by the Settlement Commission on26th April, 1991. Thus, in terms of the provisions of Expln. 1(v), a period of 2 years 10 months and 25 days will have to be excluded. The normal period for making the assessment for asst. yr. 1987-88 was upto 31st March, 1990 and if we add the period of 2 years 10 months and 25 days the time available with the AO for framing assessment in relation to asst. yr. 1987-88 will be beyond 31st Oct., 1992, the date on which the assessment has been made. Thus, the assessment for the asst. yr. 1987-88 is in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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