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TMI Blog2016 (3) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... e years after the last date and for the Assessment Year 2001-2002, it is more than two years after the last date. Such a situation cannot be countenanced as rightly held by the High Court. When the last date of assessment in respect of these Assessment Years expired, it vested a valuable right in the assessee which cannot be lightly taken away. As a consequence, sub-section (11) of Section 10 has to be interpreted in the manner which is equitable to both the parties. Therefore, the only way to interpret the same is that by holding that power to extend the time is to be exercised before the normal period of assessment expires. - Decided against the revenue. - Civil Appeal Nos. 2506-2511 of 2016 (Arising out of SLP (C) Nos. 21712-21717 of 2009) - - - Dated:- 4-3-2016 - T. S. Thakur, CJI, A. K. Sikri And R. Banumathi, JJ. JUDGMENT Per A. K. Sikri Leave granted. 2) In these appeals, the judgment which is impugned is passed by the High Court of Punjab Haryana. The issue involved in these appeals is identical which pertains to the interpretation that is to be accorded to sub-section (10) of Section 11 of Punjab General Sales Tax Act, 1948 (hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred upon the Commissioner under Section 11(10) of the Act, the Commissioner was within his powers to extend the period. The contention of the assessee was that though there was a power of extension, such a power could be exercised only within the limitation prescribed. In other words, it was contended that when the normal period of limitation for passing assessment order by the Assessing Officer was three years, as per Section 11(3) of the Act, the power to extend the period could be exercised within the said period of three years and not after the expiry of limitation period. This plea of the assessee was rejected by the Tribunal. 6) The assessee took up the matter further by filing appeals before the High Court. Here, the assessee has succeeded in its submission as the High Court of Punjab and Haryana vide impugned judgment dated September 26, 2008 has held that once the period of limitation expires, the immunity from subjecting itself to the assessment sets in and the right to make assessment gets extinguished. Therefore, when the period of limitation prescribed in the Act for passing the assessment order expires, thereafter, the Commissioner is debarred from exercising his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire on specified points, [pass an order of assessment within a period of three years from the last date prescribed for furnishing the last return in respect of nay period.] (4) If a dealer having furnished returns in respect of a period, fails to comply with the terms of notice issued under sub-section (2), the Assessing Authority shall, [within a period of three years from the 1st date prescribed for furnishing the last return in respect of such period, pass an order of assessment to the best of his judgment.] (5) If a dealer does not furnish returns in respect of any period by the last date prescribed the assessing authority shall within a period of five years from the last date prescribed for furnishing the return in respect of such period and after giving the dealer a reasonable opportunity of being heard, pass an order of assessment to the best of his judgment. (6) IF upon information which has come into his possession, the Assessing Authority is satisfied that any dealer has been liable to pay tax under this Act in respect of any period but has failed to apply for registration, the Assessing Authority shall, within five years after the expiry of such period, af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect that wherever return is filed by the assessee, assessment is to be made within a period of three years from the last date prescribed for furnishing the return in respect of such period. On the other hand, in those cases where return is not filed or any dealer, who is liable to pay the tax under the Act, does not get himself registered therein, the period of assessment prescribed is five years. We are not concerned with the alternate situation as in the instant appeals not only the assessees are registered dealers, they had also filed their returns regularly within the prescribed period and, therefore, assessments were to be completed within a period of three years from the last date prescribed for furnishing the returns, which is the normal period prescribed. At the same time, sub-section (10) of Section 11 gives power to the Commissioner to extend a period of three years. Interestingly, there is no upper limit prescribed for which the period can be extended, meaning thereby such an extension can be given, theoretically, for any length of time. This discretion is, however, controlled by obligating the Commissioner to give his reasons for extension, and such reasons are to be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctionary defines the expression 'extension' as follows: Extension, n. 3. Tax. A period of additional time to file an income-tax return beyond its due date. 4. A period of additional time to take an action, make a decision, accept an offer, or complete a task It was argued that the word 'extension has' varied meanings, dependent on the context in which it is used. The expression 'extension' in the context of surveillance orders, has been interpreted in the following manner: Where surveillance pursuant to order issued under Title III of Omnibus Crime Control and Safe Streets Act is of same premises, involves substantially same persons, and is part of same investigation, second Title III surveillance order issued after expiration of first order is 'extension' of first order for purposes of requirement of sealing of recordings, even if there is gap of time in between expiration of first order and entry of second. (Emphasis supplied) 12) Mr. Ganguli also referred to the concept of extension as incorporated in Section 148 of the Code of Civil Procedure, 1908. He relied upon the judgment of this Court in D.V. Paul v. Manisha Lalwani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters were placed upon the discretion of the ITO as regards the number of times he could extend the date or the period for which he could extend it. It is conceded that repeated applications could be made within the time allowed, in view of the clear indication to that effect in Form No. 6, by the use of words it has not been possible . If it was intended that the application for extension of time under Section 139(2) was to be made within the time allowed originally or within the extended time then the words it has not been possible were not at all necessary and the words it is not possible would have been sufficient. Though the rule cannot affect, control or derogate from the section of the Act, so long as it does not have that effect, it has to be regarded as having the same force as the section of the Act. If Section 139(2) is read along with Rule 13 and Form No. 6 it becomes clear that an application for extension could be made even after the period allowed originally or as a result of extension granted had expired. Keeping in mind the object of giving discretion to the ITO and the consequences that were to follow from not filing the return within time, we see no justific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of Gujarat High Court in Javer Jivan Mehta2 case was distinguishable since that was also a case of exclusion of a period and the issue therein was the computation of period of limitation. 16) The aforesaid contentions were refuted by the learned counsel who appeared for assessees in these appeals. It was submitted that sub-section (10) of Section 11 states, in no uncertain term, that the assessment order is to be passed 'within a period of three years......'. It was emphasised that the word 'within' was of significance. It was pointed out that before the year 1998, no period of limitation was prescribed and such a provision came to be inserted by way of amendment vide Act No. 12 of 1998 dated April 20, 1998 . It was further argued that sub-section (10) of Section 11 obligates the Commissioner to record reasons in writing while extending the period. It was submitted that this requirement of recording of reasons came up for consideration before Punjab Haryana High Court and in a series of judgments, it is held that such an order of extension of time can be passed only after giving an opportunity of hearing to the assessee. The learned counsel referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these provisions is same. As noticed above, insofar as scheme of Punjab Act is concerned, the assessment order is to be normally passed within a period of three years. At the same time, power is given to the Commissioner under Section 11(10) of the Act to extend the said period of three years. Once such an extension is given, the order is passed even beyond the period of three years. Significantly, no upper limit is fixed while giving such extension which means that the power can be exercised for extending the period for any length of time, subject however to the condition that the Commissioner is bound to record the reasons justifying such an extension. Obviously, when the Commissioner passes such an order and give reasons, not only he would have to justify his action of extending time but also the period by which the time is extended. In the Karnataka Legislation, the power is of 'deferment'. In that Legislation as well, the Assessment Order is to be passed within three years as sub-section (5) of Section 12 of Karnataka Sales Tax Act stipulates that no assessment shall be made after a period of three years from the date on which the return under sub-section (1) of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity against being subject to assessment sets in and the right to make assessment gets extinguished. Resort to deferment provisions does not retrieve the situation. There is no question of deferring assessment which has already become timebarred. The provision for exclusion of time in computing the period of limitation of deferment of assessment is meant to prevent further running of time against the Revenue if the limitation had not expired. (emphasis supplied) 23) It was also observed that upon the lapse of the period of limitation prescribed, the right of the Department to assess an assessee gets extinguished and this extension confers a very valuable right on the assessee. 24) If one is to go by the aforesaid dicta, with which we entirely agree, the same shall apply in the instant cases as well. In the context of the Punjab Act, it can be said that extension of time for assessment has the effect of enlarging the period of limitation and, therefore, once the period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished. Therefore, there would be no question of extending the time for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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