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TMI Blog2013 (7) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... including the assessment orders that have been passed – petition allowed in the favor of the assessee. - W.P.(C) No. 7944, 7945,7946,7947/2011 - - - Dated:- 23-4-2013 - Badar Durrez Ahmed And Vibhu Bakhru, JJ. For the Appellant: Mr. M S Syali, Sr. Adv with Mr Satyen Sethi, Mr Mayank Nagi and Mr Arta Trana Panda, Adv For the Respondent : Mr. Kiran Babu, Sr. Standing Counsel. JUDGEMENT:- Per : Badar Durrez Ahmed, J : 1. These writ petitions pertain to the assessment year 1999-2000, 2000-2001, 2001-2002 and 2002-2003. In these petitions the common issue relates to the initiation of reassessment proceedings by issuance of notices under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the said Act'). All the four notices were issued on 23.03.2011. 2. The purported reasons for believing that income had escaped assessment have been disclosed as under:- 11. Reasons for the belief that income has escaped assessment. 1. In this case assessment under section 147/148 was completed on 17.2.2005 at an income of Rs.249,38,81,974/-. The assessee company is a public financial institution engaged in business of providing finance for rural elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 to 2006-2007 and held that the interest income was not taxable in the hands of the Co-operative Electrical Supply Society Ltd., Siricilla but, was taxable in the hands of the petitioner. As can be seen from the purported reasons, the petitioner had advanced loans to the said Co-operative Electrical Supply Society Ltd. which created a special corpus fund. The said society earned interest on the special fund but did not disclose it in its returns of incomes on the ground that the money, as mentioned in the purported reasons, actually belonged to the petitioner and that any income earned thereon was on behalf of the petitioner. The Tribunal agreed with the submissions of the said Co-operative Electrical Supply Society Ltd. and held that the said interest income was not taxable in the hands of the society but ought to be taxed in the hands of the petitioner. 5. The learned counsel for the petitioner pointed out that though the Tribunal had returned a finding that the said interest income was not taxable in the hands of the said society, there was no specific or clear finding that the same should be taxed in the hands of the petitioner. The exact findings returned by the Tribunal ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- 150. Provision for cases where assessment is in pursuance of an order on appeal, etc. - (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. xxxx xxxx xxxx xxxx xxxx 153. Time limit for completion of assessments and reassessments. - xxxx xxxx xxxx xxxx xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of ITO Vs. Murlidhar Bhagwan Das: 52 ITR 335 (SC) . For the sake of convenience the provisions of Section 34(3) of the 1922 Act are reproduced below:- (3) No order of assessment or reassessment, other than an order of assessment under Section 23 to which clause (c) of sub-section (1) of Section 28 applies or an order of assessment or reassessment in cases falling within clause (a) of sub-section (1) or sub-section (1) of this section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable: Provided that where a notice under clause (b) of sub-section (1) has been issued within the time therein limited, the assessment or reassessment to be made in pursuance of such notice may be made before the expiry of one year from the date of the service of the notice even if at the time of the assessment or re-assessment the four years aforesaid have already elapsed: Provided further that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made shall apply to a reassessment made under Section 27 or to an assessment or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of or to give effect to any finding or direction contained in the said order. In other words, a finding in respect of a different year can also be used for the purposes of invoking the provisions of Section 150 of the said Act, by virtue of the deeming provision contained in Explanation 2 in Section 153 of the said Act. This would otherwise not have been available in view of the decision of the Supreme Court in Murlidhar Bhagwan Das (Supra) . Similarly, Explanation 3 stipulates that where, by an order inter-alia passed by the Tribunal in an appeal, any income is excluded from the total income of one person and held to be the income of another person, then, assessment of such income on such other person shall, for the purposes of Section 150 as also Section 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order. However, this deeming provision is subject to a proviso that such other person ought to be given an opportunity of being heard before such an order is passed. 12. Coming back to the factual matrix of the present case, Mr Syali submitted that the provisions of Section 150 read with Explanation 3 in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any time without being curtailed by the time limit prescribed under section 149, there must be satisfaction of the ingredients under Explanation 3 to section 153. The endeavour of Mr. M.R. Bhatt, learned counsel for the respondent, was to bring the matter within the ambit of Explanation 3 to section 153. xxxx xxxx xxxx xxxx xxxx We must point out that there is no discussion in the pronouncement of the implications of Explanation 3 to section 153. Even otherwise, we are unable to spell out any parity between the facts of the case dealt with by the High Court of Patna and the facts of the present case. There the parties were very much in the picture from the inception putting forth the stand with reference to status and, in that view, it was held that they were vitally interested in the firm in which they were partners and in that context Explanation 3 to section 153 would come to the rescue of the Revenue and against the assessee. Our analysis of the implications of the provisions of the Act relevant for the purpose of our case, as done above, has left us with no other alternative but to allow this special civil application. Since we have sustained the first point re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scertain as to whether the decision would go in favour of the said society or not. In particular, the learned counsel for the respondent / revenue submitted that the question as to whether the interest income could be taxed at the hands of the petitioner would only come to be decided after the Tribunal came to the conclusion that it was not to be taxed in the hands of the society and, till that stage, there was no question of granting any opportunity of hearing to the petitioner. Be that as it may, the specific condition for attracting the deeming provision of Explanation 3 to Section 153 requires that the person ought to be given an opportunity of being heard before an order is passed whereunder any income is excluded from the total income of one person and held to be the income of another person. It is not as if the revenue is being faulted or the Tribunal is being faulted for not granting an opportunity of hearing to the petitioner. The placing of a blame is not the issue. What is relevant is whether the petitioner had been given an opportunity of hearing before the Tribunal concluded that the interest income was taxable in its hands and not in the hands of the society. It is ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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