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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 ..... so part of the same statutory scheme - In Explanation 1 (v) and (vi) to Section 153 of the Act, 1961 the statutory scheme provides for computing the period of limitation from the date when the order under sub-section (1) of Section 245D and 245Q is received by the Commissioner - the legislature has provided for excluding the period from the date of communication of the order where they so intended - The use of concept of communication of receiving the order in the same provision which is absent in Explanation 1 (ii) concerned clearly indicates that for the purposes of Explanation 1 (ii), the communication of the order of the Court vacating the stay order or injunction is not contemplated - The provisions of Section 153 (3) (ii) of the Act, 1961 are clear and explicit - where the assessment, re-assessment or re-computation 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 proceeding otherwise than by way of appeal or reference under this Act, the provisions of sub-section (1) (1a) and (1b) of the Act, shall not apply. Where the assessment, re-assessment or re-computation is made on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 04/1/1996 by the Assessing Officer. Against the order dated 04/1/1996, appeals were filed by the assessee before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide order dated 10/12/1996, restored the matter to the file of Assessing Officer for providing proper opportunity to the legal heirs of the assessee. Notices were issued to the legal heirs of the assessee to attend the proceedings before the Assessing Officer. In response to the summons/notices issued to the legal heirs of the assessee the counsel for the legal representatives appeared. One of the objection taken bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 hearing the Income Tax Appeal No.19/2010 on 03/12/2013, in context to the above submission of Shri Shambhu Chopra, learned counsel appearing for the Revenue passed following order which is quoted below: Shri Shambhu Chopra, appearing for the revenue prays for and is allowed time to produce the order of the High Court, in which according to him there is a finding or direction, which will make his case fall under Section 153 (3) (ii) of the Income Tax Act, 1961. According to Shri Chopra there is no limitation for framing assessment, re-assessment or re-computation, where the assessment has been fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, further submits that the provision of Section 153 (3) (ii) of the Act, 1961 is not attracted in the present case, since neither there is any finding nor there is any direction in the order of the High Court dated 01/8/1995 on the basis of which the Assessing Officer can claim to frame the assessment order dated 04/1/1996. He submits that the order of the High Court dated 01/8/1995 was an order dismissing the writ petition on account of non bringing of the heirs of the assessee on record. The High Court neither entered into the merits of the case, nor recorded any finding nor issued any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 Assessing Officer for making an order of assessment, reassessment or re-computation, as the case may be, shall, after the exclusion of the period under sub-section (4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 149,153B,154,155,158BE and 231 and for the purposes of payment of interest under section 243 or section 244 or, as the case may be, section 244A, this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 01/8/1995, dismissing the writ petitions was passed in the presence of the learned counsel for the revenue, hence the submission that it was communicated on 18/12/1995 has no relevance, and secondly the provision of Explanation 1 (ii) of Section 153 of the Act, 1961 which is to the following effect: Explanation 1- In computing the period of limitation for the purposes of this Section -(i) ............. (ii) the period during which the assessment proceeding is stayed by an order or injunction of any Court, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout 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 ITAT was justified in ignoring the provisions of Income Tax Act in the case of a proceeding under the I.T. Act and applying the provisions of High Court Rules which would be applicable in the case of proceedings in the High Court only. In this case search was conducted at the assessee's address on 14.9.2002 and notice under Section 158BC of the Act was issued on 29.4.2003. Consequent thereto the return was filed by the assessee on 16.6.2003. The search proceeding was challenged by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantial 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 proceeding otherwise than by way of appeal or reference under this Act, the provisions of sub-section (1) (1a) and (1b) of the Act, shall not apply. Thus, where the assessment, re-assessment or re-computation is made on the assessee or any person in consequence of or to give effect to any finding or direction in an order of any Court in a proceeding otherwise than by way of appeal or reference under this Act, the period of limitation as provided under Section 153 (2) of the Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 153 provide for the time-limit for completion of assessment and reassessment, Sub-section (3) makes such provision inapplicable under certain circumstances, one of which is that such assessment or reassessment can be made in consequence of or to give effect to any finding or direction contained in an order under certain provisions of the Act or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Act. In a recent decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 reassessment has become barred by limitation during the pendency of a case before the authority or court, but that will be no consideration for making a finding or a direction, unless it is necessary for the disposal of the case. In Raj Kishore Prasad Vs. Income-Tax Officer, 195 ITR, 438, a Division Bench of our Court had occasion to consider the expressions finding or direction . In the said case, the Commissioner has simply dropped the proceedings. The High Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 of the appellant and the orchard of 2 acres cannot produce income of Rs. 1,80,000. Keeping in view of these facts, I hold that the Assessing Officer was justified in taxing Rs.1,80,000 as income from other sources. A perusal of the aforesaid finding reveals that it considered a fresh plea taken by the assessee in appeal, to rebut the finding recorded by the Assessing Officer in respect of the alleged agricultural land but this finding cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Officer had jurisdiction to reopen the assessment under Section 147(a) of the Act. 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, because as held by the Supreme Court in Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tranjali, 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 reference to the original return. As a matter of fact, in this case, the Income-tax Officer in the course of the assessment initiated penalty proceedings under section 271(1)(c) of the Act. An originally filed return is a return in all essential respects and the revised return only cures the defects contained in the original return. In disposing of an appeal, the Appellate Assistant Commissioner may confirm, reduce, enhance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee in consequence of, or to give effect to, any direction contained in any order of a Court otherwise than by way of reference. Orders of the High Court under art.226 of the Constitution are covered by this provision. In the foregoing paras. of this judgment we have shown how the valuation orders and the consequential assessment orders are bad in law. Our decision, however, is founded on the limited ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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