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TMI Blog2014 (5) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... ial premises of partners including that of the assessee Late Chandra Bhan Bansal. The assessee was not assessed to tax earlier. Notices under Section 147 (a)/148 of the Act, 1961 were issued to the assessee on 08/11/1989 for the Assessment Years 1986-87, 1987-88 and 1989-90 requiring the assessee to file return. In response to the notices issued to the assessee, return was filed only for the Assessment Year 1989-90. Challenging the notice dated 08/11/1989, the assessee filed writ petition No.278/1992, for the Assessment Year 1986-1987 and 1987-88 in this Court. A Division Bench of this Court vide its order dated 24/3/1992, stayed the re-assessment proceedings. A Writ Petition No.162/1992 was filed challenging the further proceedings for the Assessment Year 1989-90. A Division Bench of this Court vide order dated 24/3/1992 had passed interim order staying the notices for the Assessment Year 1988-89. Both the above writ petitions were dismissed on 01/8/1995 on the ground that after the death of the sole petitioner, legal representatives of the deceased were not brought on the record. After dismissal of the aforesaid writ petitions, the proceedings for assessment were completed on 04/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel appearing for the assessee. Shri Shambhu Chopra, learned counsel appearing for the Revenue submits that the assessment order dated 04/1/1996 was not beyond 60 days and it was within sixty days from the date when the order of the High Court dated 01/8/1995 vacating the interim order was communicated. He submits that the period of limitation for making the assessment is to be reckoned not from the date of the vacation of the interim order, rather from the date the order of the High Court vacating the stay order has been communicated to the Department. He submits that the order vacating the interim could be communicated to the Assistant Commissioner of Income Tax (Investigations) on 18/12/1995, hence the assessment order dated 04/1/1996 is well within time. In addition to the above submission, Shri Shambhu Chopra, learned counsel appearing for the Revenue made one more submission i.e. the assessment order dated 04/1/1996 having been made in consequence to the order of the High Court dated 01/8/1995, dismissing the writ petitions of the assessee, there shall be no period of limitation as per Section 153 (3) (ii) of the Act, 1961. A Division Bench of this Court while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shri Rahul Agarwal, learned counsel appearing for the assessee refuting the submissions of Shri Shambhu Chopra, learned counsel appearing for the Revenue submitted that the assessment order dated 04/1/1996 was clearly beyond the limitation period prescribed under Section 153 (2) of the Act, 1961. He submits that the writ petitions having been dismissed on 01/8/1995, the period of stay of the proceedings which was required to be excluded was a period beginning from 24/3/1992 and ending with 01/8/1995. He submits that the statute does not contemplate reckoning of the period from the date of communication of the order of the High Court dismissing the writ petitions on 01/8/1995. The order of the High Court dated 01/8/1995 dismissing the writ petitions was passed in the presence of learned counsel appearing for the Department. Assessee submits that in the order dated 01/8/1995, itself reason has been mentioned for dismissing the writ petitions, hence the submission of Shri Shambhu Chopra, learned counsel for the Revenue that period of 60 days after the dismissal of the writ petition is to be reckoned from the date of communication of the order is misconceived. Shri Rahul Agarwal, fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is not allowed to be proceeded with by it, the period commencing from the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section,[or] (vi) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Commissioner under sub-section (3) of section 245R, or" [Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), [(1A), (1b)] [(2), (2A) and (4) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly:] [Provided further that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le petitioner Chandra Bhan Bansal has died, therefore, appropriate time was granted to the petitioner to bring the legal representatives of the deceased on record. However, despite affording time no application was moved for substitution. This being so this petition is dismissed for non-compliance of the order dated 13.7.1995. The interim order 24.3.1992 is hereby vacated. Dt/-1.8.1995 Sd/-B.M. Lal. Sd/-M.C. Agarwal." The aforesaid writ petitions having been dismissed on 01/8/1995, as per proviso to Explanation 1 to Section 153, the assessment was to be completed by 30/9/1995, but in the present case the assessment was completed on 04/1/1996 i.e. beyond 30/9/1995. The submission of Shri Shambhu Chopra, learned counsel appearing for the Revenue to save the assessment from being beyond the period of limitation is that the period of 60 days is to be computed from the date of communication of the order. He submits that the order of the High Court dated 01/8/1995, dismissing the writ petitions could be received by the office of the ACIT (Investigation) on 18/12/1995. There are two reasons due to which the said submission cannot be accepted. Firstly, the order of the High Court dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court relied on by Shri Rahul Agarwal, learned counsel appearing for the assessee in Income Tax Appeal No.219/2013, Commissioner of Income Tax Central Kanpur Vs. M/s The Drs. X-Ray & Pathology Istitute Pvt. Ltd., also supports the submission made by the learned counsel for the assessee. In the said case following was laid down. "The department has preferred the appeal on following questions of law:- "1. Whether the Hon'ble ITAT has erred in law and on facts in annulling the assessment without appreciating the fact that the communication of dismissal of the assessee's writ petition against the proceedings initiated u/s 158BC of the I.T. Act, 1961, was made to the AO on 09.11.2009, and then the AO could not have proceeded to take up the assessment proceedings before 09.11.2009, consequently the period of limitation was counted from such date. 2. Whether the Hon'ble ITAT has erred in law and on facts in applying the ratio of the decision of Hon'ble Court in the case of CCE Vs M.M. Rubber & Co. (1992) Suppl. WP (C) No.4821/2010 page 16 of 68 1 SCC 471 and Municipal Corporation of Delhi Vs Qimat Rai Gupta & Others (2007) 7 SCC 209. 3. Whether Hon'ble ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2008) 305 ITR 249 (Raj.). In both the cases cited for the revenue the limitation as provided under Section 158BE was under consideration. The question as to whether the order should be communicated by the Court, which had stayed the proceedings to restart the period of limitation was neither raised nor considered. We do not find any error of law in the judgment of the Tribunal holding that the assessment was clearly barred by limitation. The questions of law as framed are not substantial questions of law, which may arise for consideration from the facts of the case. The income tax appeal is dismissed" In view of the foregoing discussions, the question no.1 as framed is answered in favour of the assessee and against the Revenue and the order of the Tribunal deserves to be confirmed. Now we come to the additional question which has been framed by us as noted above. The provisions of Section 153 (3) (ii) of the Act, 1961 are clear and explicit. The said provision provides that where the assessment, re-assessment or recomputation 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 a proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It must also be a direction which the authority or court is empowered to give while deciding the case before it. The expressions " finding " and "direction" in s. 153(3)(ii) of the Act must be accordingly confined. S. 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation for making an assessment order under s. 143 or s. 144 or s. 147: ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC) and N. K. T. Sivalingam Chettiar v. CIT [1967] 66 ITR 586 (SC). The question formulated by the Tribunal raises the point whether the AAC could convert the provisions of s. 147(1) into those of s. 153(3)(ii) of the Act. In view of s. 153(3)(ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point." The provision of Section 153 (3) (ii) of the Act, 1961 came up for consideration before several High Court's including this Court in large number of cases. In Goombira Tea Co. P.Ltd. Vs. Income-Tax OfficerA-Ward, Karimgunj, Assam, 125 ITR, 260. The Calcutta High Court in the said case also laid down following: "While, therefore, Sub-sections (1) and (2) of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation for making an assessment order under Section 143 or Section 144 or Section 147 : ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC) and N. K. T. Sivalingam Chettiar v. CIT [1967] 66 ITR 586 (SC)." In the above observation of the Supreme Court, it has been laid down, inter alia, that the finding and direction must be necessary for the disposal of the particular case, and that Section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or court. An authority or court, therefore, cannot simply for the purpose of lifting the bar of limitation give a finding or direction. Unless such a finding or direction is necessary for the disposal of the proceeding before such authority or court the provision of Section 153(3)(ii) will not be attracted. When making any finding or direction the authority or court will not take into consideration the provision of Section 153(3). It makes the finding or gives the direction, if required under the facts and circumstances of the case, for the proper disposal of the case. It may be that the assessment or reassessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of this Court in Commissioner of Income-Tax Vs. S.P. Mishra, 297, ITR, 352. Following was laid in paragraph 13 which is quoted below: "13. The argument of learned Counsel for the Revenue is that reassessment has been made after issuing notice under Section 148 with a view to give effect to the finding of the Commissioner of Income-tax (Appeals) contained in his order of assessment for the year 1997-98 and, therefore, the case was governed by Section 153(3). This argument has to be seen in the light of the findings recorded by the Commissioner of Income-tax (Appeals) for the assessment year 1997-98, wherein he has made the following observations: "The appellant claims to have taken 28 bighas of agricultural land on lease.... But the learned authorised representative claimed that the land was not cultivated. However, he claimed for the first time before me that the appellant derived agricultural income of Rs. 1,80,000 from his ancestral orchard measuring 2 acres. No such claim of orchard was made before the Assessing Officer and no evidence has been given before me. The nature and number of trees have not been mentioned. It is also not clear whether the orchard is in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.P.). Following was the question which was considered in the above case. "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the direction given by the Appellate Assistant Commissioner was wholly unwarranted and redundant?" The Madhya Pradesh High Court in the said case laid down that once the Appellate Assistant Commissioner came to the conclusion that the Income-tax Officer had no jurisdiction to reopen the case under section 147 (a) of the Act, and the order of reassessment was liable to be quashed, he had no jurisdiction to make any further direction for recomputing the amount of capital gains. The Apex Court's judgment in Rajinder Nath's case was also relied on. Following was laid down by the Madhya Pradesh High Court in the said case. "Having heard learned counsel for the parties, we are of the view that the aforesaid question of law deserves to be decided in favour of the assessee and against the Revenue. In the appeal preferred by the assessee before the Appellate Assistant Commissioner, the only question that required decision was whether, in the facts and circumstances of the case, the Income-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted meaning and should be read as referable to proceedings of the very assessee for the very assessment period either before a High Court or the Supreme Court that can deal with an assessment under the Constitution and not to every order of every court in other legal proceedings like the land acquisition proceedings." Another Division Bench judgment of the Calcutta High Court in Commissioner of Income-Tax Vs. Chitranjali, 159 ITR 801, has been relied on by Shri Shambhu Chopra, learned counsel appearing for the Revenue. Following was laid down by the Calcutta High Court in the said case. "In the instant case, the assessment has been completed on a return filed by the assessee within the period prescribed under section 153(1)(a) of the Act. It was not contended that in view of the subsequent return filed, the original return was invalid or non est. Section 139(5) permits an assessee, if he discovers an omission or wrong statement in the original return to file a revised return at any time before the assessment is made. Such revised return does not wash away the original return. Such revised return does not exonerate the assessee of any default or offence committed with refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the order passed by the Appellate Assistant Commissioner." In the above case, the appellate authority has set-aside the assessment made by the Income Tax Officer and directed for making fresh assessment. In the said background it was held that the limitation prescribed under Section 153 (1) will not apply. The said case is not applicable and also does not help Shri Shambhu Chopra, learned counsel appearing for the Revenue. The last case relied on by Shri Shambhu Chopra, learned counsel appearing for the Revenue is the Division Bench judgment of the Madras High Court in J.K.K. Natarajah & Ors. Vs. Wealth-Tax Officer, Central Circle-VII, Madras & Ors, 142, ITR, 804. A similar provision in the Wealth Tax Act,1957 namely:Section 17 A(4) came up for consideration in the aforesaid case. In the said case the Madras High Court held that the bar of limitation otherwise prescribed under the Wealth Tax Act, 1957 shall not apply in this context to any direction issued by the High Court. Following was laid down by the Madras High Court. "Section 17A(4) lays down that the bar of limitation otherwise prescribed under the Act shall not apply to any assessment or reassessment made on an a ..... 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