9911796707
TMI Blog2016 (10) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... ch notice on 27.11.2014. The assessment would have to be framed latest by 31.3.2015, failing which, the same would become timebarred. 3. On 1.2.2016, the petitioner wrote to the Assessing Officer that in connection with the pending assessments of the petitioner for the assessment years 2010-2011 to 2014-2015, the petitioner is in the process of filing settlement application before the Settlement Commission for settling all tax disputes. Such application would be filed within a short time. Substantial amount of tax is already paid by the petitioner. The partnership is facing financial crisis. Efforts are made to pay the balance amount which would be done shortly. Assessing Officer should therefore, keep the assessment proceedings in abeyance. 4. On 10.3.2016, the petitioner wrote yet another letter to the Assessing Officer and requested him to permit a correction in the payment of tax which would enable the assessee to file settlement application before the Settlement Commission. 5. Ignoring such requests of the petitioner, the Assessing Officer passed the assessment orders for five assessment years in question. When exactly were such orders passed and sought to be served on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintainable. Even if such orders were passed on 15.3.2016, as contended by the department, since the same were not served on the petitioner, the assessment proceedings would be deemed to be pending and, therefore, application for settlement would be maintainable. On the other hand, according to the department, orders of assessment were passed on 15.3.2016 and also tendered for service on the same day. Upon the petitioner refusing to accept the orders, the service thereof was complete. In any case, as soon as the orders of assessment were passed, the assessments came to a conclusion and were no longer pending with the Assessing Officer. Irrespective of dispatch of the orders of assessment or service thereof on the assessee, application for settlement after the date of orders of assessment would not be maintainable. 9. Shri S.N. Soparkar learned counsel for the assessee raised the following contentions : 1) The documents and materials on record would establish that the assessment orders were never passed on 15.3.2016 contrary to what is contended by the department. He took us painstakingly through the documents and registers on record to contend that it was highly improbable that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, learned counsel Shri Manish Bhatt for the department opposed the petitions raising the following contentions : 1) The documents on record would establish that the assessment orders were passed on 15.3.2016 and were also sought to be delivered personally on the same day through the officers of the department but the partners of the firm refused to accept the same. He pointed out that the Assessing Officer, the Inspector who had tendered the assessment orders for service and the Joint Commissioner who had approved draft orders of assessment on 15.3.2016 have all filed their affidavits. Several registers maintained by the department in course of the business, contained corresponding entries which would further establish the version of the department. 2) The facts on record would thus establish that the assessment orders were passed on 15.3.2016 and sought to be served on the petitioner also on the same day. The application for settlement which was filed only on 16.3.2016 was therefore, not maintainable. 3) In the alternative, counsel submitted that upon passing of an order of assessment, the assessment would no longer remain pending before the Assessing Officer. It would therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... speed post on 16.3.2016 at the last known address of the assessee which was returned as unserved with an endorsement "left". He has along with the affidavit produced a copy of envelope containing such orders and a copy of tracing record of the speedpost. Finally, according to him, the assessment orders were served personally to a partner of the assessee firm on 21.3.2016. 13. Along with this affidavit, deponent has produced a copy of the report dated 16.3.2016 by Shri Vinaykumar, Tax Assistant and Shri Suresh Kumar Senapati, Income-tax Inspector, in which it is stated that on 15.3.2016, they had gone to the office of the Bafna Panchal Group to handover the assessment orders passed in cases of four assessees which included M/s. Shalibhadra Developers, present petitioner assessee and M/s. Shanti Buildcon, the petitioner of the connected petition. It is further stated that: "2. When we reached there at about 6 p.m., Shri Rajesh S. Bafna (Partner of M/s. Shanti Buildcon and M/s. Shalibhadra Developers) and Shri Mahendra R. Kankaria (Partner of M/s. Shanti Buildcon) were available in the Office. Afterwards Shri Kalpen K. Doshi (Partner of M/s. Shalibhadra Developers) has arrived there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 153D for the financial years 2012-2013, to 2015-2016. At serial no.194, one would find the entry pertaining to M/s. Shanti Buildcon, and at serial no.195 concerning M/s. Shalibhadra Developers. As per this register, both were received by the approving authority on 15.3.2016 and approved also on the same day. Yet another document produced along with this affidavit is a copy of letter dated 15.3.2016 written by the Joint Commissioner of Income-tax to the Assessing Officer, the Deputy Commissioner, under which he conveyed his approval to the draft assessment orders in case of M/s. Shalibhadra Developers. This is followed by the register of DCIT CC1, Baroda for financial year 2015-2016 starting from 3.3.2016. At serial no.2975, there is a reference to the approval in case of M/s. Shanti Buildcon and at serial no.2976, there is a reference to the approval in case of M/s. Shalibhadra Developers. Both these entires, according to the register, were made on 15.3.2016. 16. In addition to such documents and other materials, the department would also refer to the notice of demand under section 156 of the Act which was issued against the petitioner on 15.3.2016 and a notice for penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adra Developers and M/s. Shanti Buildcon were brought by them. He had personally visited the Deputy Commissioner at about 1:00 pm on 16.3.2016 and served the declaration in Form 34BA. He was not informed by the said officer that the assessment orders in case of the petitioners were already passed on 15.3.2016. He did not even tender such orders for service, if they were otherwise ready. A similar affidavit has been filed on 20.8.2016 by Rajesh S. Bafna, partner of the petitioner firm. Another partner of the firm Mahendrakumar Kankaria has also filed affidavit dated 20.8.2016 along the same lines. In the affidavit in rejoinder dated 20.8.2016 sworn by Shri Kalpesh Kishorbhai Doshi, partner of the firm, same stand has been taken in more elaborate manner. 19. In addition to the affidavits of the Assessing Officer noted above, in which the stand of the department is stated and reiterated, we have several other documents supporting such stand. First of all, the draft orders were sent by the Assessing Officer to the Joint Commissioner for approval along with a covering letter dated 15.3.2016. The Additional CIT Central Range, Baroda, register from 1.4.2016 contained entries in case of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, upon which, the Assessing Officer passed his orders of assessment on 15.3.2016. This may exhibit a certain anxiety or urgency shown by the department in passing orders of assessment and may also have the angle of thwarting the petitioner from approaching the Settlement Commission. However, this would not necessarily mean that no orders of assessment were actually passed and in fact, the department had predated such orders. Had there been any attempt of predating the orders, there would have been some trace of such attempt in some register or the other betraying the truth which despite minute scrutiny, we have not detected. In so far as approval is concerned, we find from the register that in large number of cases approval is granted on the same day or at best in a day or two. We must therefore, accept the department's version that the orders of assessment were actually passed on 15.3.2016. 21. If that be so, there is no reason why we should disbelieve the department's version that the same were also tendered for service on 15.3.2016. Even according to the petitioner, the department wanted to prevent the petitioner from applying for settlement. The petitioner also agrees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service of the orders would not perse falsify the department's stand that no previous failed attempts of serving the orders were made. 23. Counsel for the petitioner however, drew our attention to section 282 of the Act pertaining to service of notice generally. Subsection( 1) thereof provides that a service of notice or summon or requisition or order or any other communication under the Act may be made by delivering or transmitting a copy thereof, to the person therein, in different modes provided in clauses (a) to (d) of the said subsection. Clause (b) pertains to the manner as provided in Code of Civil Procedure for the purpose of service of summons. This in turn would lead us to Order V Rule 17 of the Code of Civil Procedure which pertains to a situation where defendant refuses to accept service or cannot be found. In essence, this rule provides that where the defendant or his agent or such other person refuses to sign the acknowledgment or where despite exercise of reasonable diligence, the defendant cannot be found, etc., the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house where the defendant ordinarily r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53A would be deemed to conclude on the date on which the assessment is made. In plain terms, the language used is the date on which the assessment is made. The date of conclusion thus is related neither to the date on which the assessment order is served nor to the date on which it is dispatched for service. If one therefore, were to give the plain meaning interpretation to this expression, the assessment would be deemed to be concluded on the date on which such order of assessment is passed. 26. As is well known, all assessments under the Act come with timeframe beyond which the assessments would become timebarred. Such time limit is laid down under section 153 of the Act. For example under subsection( 1) of section 153, it is provided that no order of assessment shall be made under section 143 or section 144 at any time after the expiry of twentyone months from the end of the assessment year in which the income was first assessable. Under subsection( 2) of section 153, it is provided that no order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order made in writing on the person", who is directed to take the building down etc. Lord Watson observed at page 236: "But it is admitted that, although the Magistrate announced the terms of his judgment on the 24th of January, the order itself was not reduced to writing or subscribed by him until the 21st of March following. It was never served upon the person to whom it is directed; and the fact of a written order having been made did not come to his knowledge before the expiry of the day upon which it was issued. I am of opinion that an order verbally intimated by the magistrate is not in any sense an order 'in writing' within the meaning of the Act; and further, that in proceedings like these of a harsh and penal character a written order cannot be regarded as made 'on' the defendant until it has been duly served upon him or otherwise brought to his knowledge." 12. The necessity to bring the terms of the order to the knowledge of the person affected therefore turned on the expression "on" and not so much as on the necessity to have the order in writing. There is no such provision in Section 23(3) of the Act, though, it requires an order of assessment to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cannot ignore the harm that is likely to happen by unsettling law that had been once settled. We may also note that the Act has been repealed by the Income-tax Act, 1961. The corresponding provisions of the1961 Act are materially different from the provisions referred to earlier. Under these circumstances we do not think that we would be justified in departing from the interpretation placed by the Madras High Court in Viswanathan Chettiar's case, though a different view of the law may be reasonably possible." 29. In case of K N K Keddy (supra), Division Bench of Karnataka High Court considered a question whether within the meaning of section 275 of the Act, penalty order must not only be made within two years of the completion of proceedings for the imposition of penalty but also communicated to the assessee within the said period of limitation. In this context, it was observed as under : "14. The expression used in this section is "made". It is in regard to such an order that is going to be "made" that section 275 prescribes the time limit. It provides that no order imposing a penalty (under Chapter XXI) shall be passed after the expiration of two years. Therefore, the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Courts of Madras and Calcutta. We have earlier held that no distinction is possible to be made between the use of the expression "made" and "passed". Therefore, the principle that has been applied by more than one court in the matter of construction of such expression in the Income-tax Act should be upheld as the enactment has to be administered throughout the territory of India, though as the matter of general principle it seems to us that to be an effective order the order imposing liability on a party should communicated to him and there does not appear to be any difficulty in passing such an effective order within the time prescribed in section 275. 18. Having regard to the view taken in the three cases referred to above, we hold that passing of the order imposing penalty was on 31st March, 1965, within two years as prescribed in section 275 of the Act and the communication of the order subsequently did not affect the validity of the order imposing penalty. We, therefore, answer the question referred to us thus : "The order imposing penalty under section 271(1)(c) should be passed within two years from the date of the completion of the proceedings in the course of which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment servant. It was held that the communication is complete once the order is put in the course of transmission and thus goes out of the control of the authority passing it. Be that as it may, the said principle applicable in the case of administrative orders cannot be extended to or applied in the case of quasijudicial orders passed by the authorities in exercise of their quasijudicial function. Indeed, we may refer to a decision of this court in Kodidasu Appalaswamy & Suryetnarayana v.CIT [1962] 46 ITR 735, in this behalf. There the order of assessment had to be made on or before March 31, 1957. It was purported to be made on March 29, 1957, but was actually served on April 6, 1957. The contention raised there was identical to the one raised here, viz., it must be deemed to have been made only on April 6, 1957, the date on which it was served upon the assessee. This contention was rejected and it was held that the order must be deemed to have been made on the date on which it purports to have been made. Mr. Dasaratharama Reddy contended that this decision requires reconsideration in the light of the decisions of the Supreme Court in CWT v. Kundan Lal Behari Lal [1975] 99 ITR 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 245C on or after the 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdiction from the date on which the application was made. Thus, upon making of an application before the Settlement Commission, the Assessing Officer would be, divested of his jurisdiction over the case which would vest exclusively in the Settlement Commission. Subsection( 7) of section 245D however, provides that where a settlement becomes void, proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage where the application was allowed to be proceeded with by the Settlement Commission and the income-tax authority concerned, may, notwithstanding anything contained in the provisions of the Act, complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void. 32.The statutory provisions noted above manifest intention of the legislature to vest the jurisdiction to process a case of the assessee either in the Settlement Commission or in the Assessing Officer. No sooner an application for settlement is filed under subsection( 1) of section 245C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission that the word 'issued' should be interpreted as served and that delivery of envelope to the postal authority on 18.3.2013 cannot be termed as service to the applicant. One of the factors which weighed with the Bombay High Court in the said decision was a circular of CBDT dated 12.8.2008, in which it was clarified that the assessment shall be deemed to have been completed only on the date of service of assessment order to the applicant. We may record that subsequently the circular was superseded by a circular of the Board dated 17.11.2014, in which it was clarified that the assessment shall be deemed to have been completed on the date on which the assessment order is passed. 34.When the case again arose before the Bombay High Court in case of Yashovardhan Birla (supra), after issuance of the circular by CBDT dated 17.11.2014, the Revenue contended that earlier decision in case of Income Tax Settlement Commission (supra), would not hold good. Such contention was rejected by the Bombay High Court interalia on the premise that the Board circular cannot overrule the High Court judgement. It was also observed that the decision of the Court did not rest on the circular d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating authority in the sense explained above, the "case" can no longer be said to be pending before him. Conversely, the proceeding would be regarded as pending before an adjudicating authority till the order does not go out of his control. In the present case, this happened on 31.12.2009. Thus, on 08.01.2010, when the settlement applications were filed by the petitioners, the matter before the adjudicating authority had already been adjudicated." 37. Thus between the views of Bombay High Court and Delhi High Court also there is divergence. Bombay High Court holds, the date of service of assessment order is the crucial date only after which application for settlement could not be filed. According to Delhi High Court the crucial date would be the date of dispatch of the order and not the date of its service. Even for the sake of consistency and comity, we would have persuaded ourselves to follow the line adopted by either of the High Courts in above noted decisions, our own reading of the situation differently notwithstanding. However, in our opinion, if such interpretation is accepted, it would lead to grave conflict. As noted, in a situation where an order of assessment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation prescribed with reference to invoking such remedy shall be read as commencing from the date of communication of the order. But if it is a limitation for a competent authority to make an order the date of exercise of that power and in the case of exercise of suo moto power over the subordinate authorities' orders, the date on which such power was exercised by making an order are the relevant dates for determining the limitation. The ratio of this distinction may also be founded on the principle that the Government is bound by the proceedings of its officers but persons affected are not concluded by the decision." 40. Our conclusions in facts and law can be summarized thus : 1) The orders of assessment were passed by the Assessing Officer on 15.3.2016. 2) They were also tendered for service to the partners of the petitioner firm on the same day who refused to receive them and thus service was complete. 3) For the purpose of application under section 245C(1) of the Act, a case would be pending only as long as the order of assessment is not passed. Once the assessment is made by the Assessing Officer by passing the order of assessment, the case can no longer be stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
