9911796707
TMI Blog1977 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... the minors. He repeated the same process for the asst. yr. 1965-66. The appellant filed revision petitions before the CIT who passed orders under s. 264 aggreeing with the contentions that the ITO had no authority to include the income not disclosed by the appellant in the orders passed under s. 143(1) of the Act. Hence he set aside both the assessments and directed the ITO to make fresh assessments in accordance with law. Pursuant to these directions, the ITO issued notice under s. 143(2) of the Act to the appellant and completed the assessments on 8th Feb., 1973. It appears that the appellant raised a contention before the ITO that as the assessments were cancelled by Addl. CIT and as the proper returns were filed by her, the assessments ought to have been made by 31st March, 1969 and 31st March, 1970 and that the notices issued sometime in 1973 were clearly barred by limitation. The ITO rejected the contention and acted on the view that the Addl. CIT had only set aside the assessments but did not cancel the assessments. The Officer included the share incomes of the minors in the assessments completed under s. 143(3) of the Act. He was of the opinion that share of profit which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogical consequence of such waiver, the ITO had the jurisdiction to pass a fresh order. After referring to the decision of the Bombay High court in 39 ITR 522 and also referring to the passage at page 531 the Judicial Member found that the said passage furnishes a complete answer to the contention raised on behalf of the assessee. Then taking the next line of argument on the same contention that the original orders passed under s. 143(1) of the Act were passed the violation of the principles of natural justice and as such were void ab-initio, the Judicial Member took the view it was true that the orders passed then were labelled as the orders passed under s. 143(1) though the orders should have been termed as the orders passed under s. 143(2) of the Act and, therefore, no doubt there was confusion in the mind of the ITO and in the mind of CIT. He further stated that it is well settled that the exercise of a power is referable to a jurisdiction which conferred validity upon it and not to a jurisdiction under which it would be nugatory. In support of that he took guidance from the authority found in the decision of the Supreme Court in L. Hazari Mal Kuthiala vs. ITO 41 ITR 12 (SC). He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law would have no relevance. On the contrary, according to him, the decision of the Allahabad High Court in CIT vs. Ram Baran Ram Nath 104 ITR 691 (All) would apply to the facts of the present case. He further discussed the matter in extensor on this issue in paragraph 15 of his order and then finally held that the CIT could not have given in this case any other type of direction to make a fresh assessment without regard to the provisions of law because under s. 264 he has to pass an order "subject to the provisions of this Act". He could not confer jurisdiction on the ITO to make a fresh assessment which the law had taken away by the expiry of the period of limitation prescribed under s. 153(1). Later he dealt with the question whether the CIT s order contained any finding or direction because he wanted to deal with the matter even assuming for the sake of argument that the ITO can be vested with jurisdiction for making a valid assessment by an appellate or revisional order passed after the period of limitation prescribed under s. 153(1) of the Act. According to him to hold that an assessment is valid, did not amount to finding as a consequence of which an assessment or reassessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appeal as no appeal lay with reference to an order under s. 143(1) of the IT Act, 1961. Consequently the assessee had to go to the CIT under s. 264 and he referred to page 34 of the paper book containing a copy of the revision petition under s. 264. In that petition the assessee s prayer was only to strike down the assessment as illegal and null and void. Alternatively, the CIT may grant such other relief or reliefs as he may deem fit and proper in the facts and circumstances of the case. Similarly request was made for the asst. yr. 1965-66 also. He then referred to the Addl. CIT order a copy of which is contained at page 39 of the paper book, where the CIT had agreed with the submissions made by the authorised Representative before him that the ITO had no authority to include such income under s. 143(1) when the return of income submitted by the assessee did not include it and pointed out that in the context of the same he had set aside the assessments. His further direction to the ITO was to make fresh assessments as per provisions of law. It was here that the controversy had arisen and the ITO had made the assessments beyond the period of statutory time the fixed to make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Going by this interpretation, it is plain that the incidence and operation of the tax on the assessee after the order passed on revision, do not certainly leave him in a worse position that what he was in, prior to the revision Therefore, it cannot be said that the order passed by the CIT was prejudicial to the assessee within the meaning of s. 264 of the Act." Can it be said in this case that by both the orders of the CIT and the ITO passed in pursuance of the direction of the CIT the assessee s position was wrose than prior to the revision. The answer is admittedly no as the same total income as was determined originally under s. 143(1) remained unvaried in the fresh assessment. 7. The Accountant Member s view supported by the learned counsel s argument that fresh lease of life has been given to a time-barred assessment and therefore prejudicial to the assessee does not appeal to me. Let me examine if any prejudice is caused to the assessee at all in this case by the order of the Addl. CIT: (1) Is it the assessee s case that she was not liable originally to any assessment at all or liable to be assessed even under s. 143(1)? Both were not undoubtedly the assessee s case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even under s. 143(3) in the assessment if any item of inclusion was disputed for want of natural justice it would not be that the entire order of assessment would get upset but only with reference to that part of the item disputed which can be interfered with. It is no doubt true that so far as the ITO is concerned he has no power on his motion to cancel an assessment except an assessment under s. 144 where in terms of s. 146 he can cancel the same and proceed to make a fresh assessment in accordance with the provisions of s. 143, but in the case of other assessments the power to the higher authorities to set right such assessments and also to direct fresh assessments in such cases for consideration of the items under dispute is undoubtedly there. Further it is not also the case of the assessee that the assessment to the extent of the returned income would not be proper. In fact the assessment to the extent of that part of the total income returned by the assessee would be valid and to the extent of the income so included it is considered to be invalid. But it cannot be thus said that the entire assessment has proceeded without jurisdiction; when an assessment can be said to be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction and void or whether it was merely irregular. The learned Judges did not consider the question whether an assessment made by invoking a wrong provision of law was altogether void merely on that ground though the assessment was capable of being sustained under the correct provision of law. Where an assessment is found to be defective because of being sustained under the correct provision of law, the assessment could not be without jurisdiction and void. In such a case, it would be open to the appellant authority to confirm the assessment by reference to the appropriate provision of law or set aside the assessment and direct the ITO to make a fresh assessment with reference to the correct provision of law. If the latter course were to be adopted, it would not mean that the appellate authority had declared the assessment to be without jurisdiction and void." In this case, can it be said that the ITO, while making the assessment under s. 153(1) purported to act only under that section or under wrong lebelling instead of s. 143(3)? In fact the whole question went on the basis of only s. 143(1) assessment and even the AAC, during the appellate stage, had only proceeded on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction to pass any order of assessment in respect of the relevant years. It was further contended that sub-s. (3) of s. 153 is a proviso to sub-ss. (1) and (2) of the same section and its provision could not enlarge or curtain the substantive provisions for limitation of time for assessment. Their Lordships dealing with these contentions observed in paras 9, 10, 11,12 and 13 as under: 9. Dealing with the question of injunction, it is true there was no fetter on the ITO A Ward Karimaganj to proceed with the assessments for the relevant years. But so long as the impugned order of the CBDT dt. 23rd Dec., 1972 transferring the case of the appellant from the file of the said officer to the ITO Central Circle-XXXIII, Calcutta is in existence, as it does exist even today till it is quashed, the ITO of Karimganj has no jurisdiction to proceed with the assessment. His inaction, which is inevitable, cannot accordingly be a ground for refusal to exercise a jurisdiction by this Court if it is otherwise called for the in the circumstances of the case and the Court has been conferred such jurisdiction which it should exercise in national interest as otherwise taxes payable for these years w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One of such classes of assessment is where it is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order of any Court in such proceeding. When the Court is in seisin of such proceedings, the time-limit of assessment as provided in sub-ss. (1) and (2) of s. 153 shall have no application to the assessment which may be made at any time in consequence of or to give effect to any finding or direction contained in an order of Court in the said proceedings. Accordingly it can be said that when such proceeding is pending before a Court there can be no limitation on the Revenue to make assessment in consequence of any finding or to give effect to any direction if any in the order of Court in such proceedings. In respect to such matters there can be no question of limitation as expressly provided in sub-s. (3) and accordingly there is no question of extending the period of limitation or revival of time barred assessments when such assessments may be made at any time. Those provisions in our opinion are also salutary and in national interest when mere initiation and pendency of proceedings by an assessee may defect the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
