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TMI Blog2016 (10) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to be pending. Application for settlement would be maintainable only if filed before the said date. Date of dispatch of service of the order on the assessee would not be material for such purpose. Petition dismissed - Decided against the petitioner. - SPECIAL CIVIL APPLICATION NO. 7256 of 2016 With SPECIAL CIVIL APPLICATION NO. 7412 of 2016 - - - Dated:- 18-10-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR SN SOPARKAR SR ADVOCATE WITH MR JAIMIN DAVE WITH B S SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR MANISH BHATT, SR COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Rule. Learned counsel Mrs. Mauna Bhatt waived service of rule on behalf of the respondents. 2. These petitions arise in the common background. We may record facts from Special Civil Application No.7256/2016. This petition is filed by one M/s. Shalibhadra Developers who is a partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment were never communicated to the petitioner on 15.3.2016 as alleged by the department. In fact, the petitioner seriously disputes the very assertion of the department that such orders were passed on 15.3.2016. According to the petitioner, such orders came to be passed in great hurry, once the department realised that the petitioner has filed application for settlement before the Settlement Commission. 7. When the Settlement Commission took up the question of maintainability of the application of the petitioner, the Department was not party to such consideration. Before the settlement bare facts were that the order of assessment dated 15.3.2016 was served on the petitioner on 21.3.2016. With these facts, the question of maintainability of the application for settlement was discussed before the Commission. In the opinion of the Commission, date of service of the order would not be important since there is a clear distinction under the Act between the passing of the order and date of service. In the opinion of the Commission, expression assessment is made would not encompass the service of order of assessment. The Commission also referred to a circular of CBDT dated 17.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders were tendered for service to the petitioner on 15.3.2016 is wholly unbelievable. Partners of the firm to whom the orders were allegedly tendered for service, have filed their affidavits denying such allegations. Counsel would highlight that when the declaration of the filing of application before the Settlement Commission was filed before the Assessing Officer, he made no endorsement that such application was not maintainable or that the orders of assessment were already passed. This would be an additional ground to indicate that till the filing of the settlement application by the petitioner, no orders of assessment were passed. 3) Counsel contended that what is relevant for the purpose of maintainability of an application for settlement under subsection( 1) of section 245C of the Act is the date of service of assessment order and not the passing thereof. In this respect, counsel relied on the following decisions : 1) Collector of Central Excise, Madras v. M/s. M.M. Rubber and Co., Tamil Nadu reported in 1992 Supp(1) Supreme Court Cases 471. 2) Commissioner of Income-tax v. Income Tax Settlement Commission reported in (2015) 58 taxmann. Com 264 (Bombay). 3) Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. First, we would resolve the factual disputes. As noted, according to the department, assessment orders were passed on 15.3.2016, tendered for service to the petitioner on the same day. The department points out that the draft orders of assessment were passed on 15.3.2016, sent to Joint Commissioner for his approval on 15.3.2016, who approved the same, sent back to the Assessing Officer on the same day upon which the Assessing Officer passed the orders of assessment on 15.3.2016 itself. The petitioner however, refused to receive the orders when tendered. 12. In this context, the Assessing Officer, the Deputy Commissioner of Income-tax, Baroda, in his affidavit dated 12.7.2016 has stated that the assessment orders were getting timebarred on 31.3.2016. Though the petitioner had intimated under letter dated 1.2.2016 that he is contemplating to file settlement petition, there was no prohibition against the Assessing Officer passing the order of assessment and in any case, sufficient time passed after the said letter dated 1.2.2016 was written. He therefore, finalised the assessments in accordance with law on 15.3.2016. He has further stated that upon finalising the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with a covering letter. The Joint Commissioner gave his approval for passing the assessment orders also on 15.3.2016. The forwarding of the draft orders to the Joint Commissioner and receipt of the approval by the Joint Commissioner have been entered in the relevant registers, extracts of the relevant pages of the register have been produced along with this affidavit. Pursuant to the orders of the assessment, the same were also entered in the Demand and Collection register on 15.3.2016. Such orders were sent with an Inspector along with two assessment orders passed earlier in case of other assessees. As per the Inspector's report, the partners of the firm requested the officers to wait. After prolonged conversation with the authorised representatives, they refused to receive the orders late at night. The petitioner also refused to accept the envelope sent through speed post. 15.Along with this affidavit, the Assessing Officer has produced a letter dated 15.3.2016 written by him to the Joint Commissioner of Income-tax forwarding the draft assessment orders in respect of the present petitioner firm for the assessment years 2010-2011 to 2014-2015. He also produced the extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to order of assessment dated 11.3.2016 and followed by the order of assessment passed in case of some other assessee on 16.3.2016. This register does not contain any column for the date on which such entries were made. In that sense, therefore, this register is neutral. Counsel for the petitioner with whom we had shared this original register would however, draw our attention to a column pertaining to the date of service of notice of demand which in the present case was shown to be 21.3.2016. According to him, therefore, this would establish that the orders of assessment were served only on 21.3.2016 and not before. We would advert to this contention later. 17. The department has also produced for our perusal a penalty register for the year 2015-2016 in which at serial nos.51 to 54, there are four entries concerning M/s. Shanti Buildcon of the penalty notice having been issued. Likewise, at serial nos. 55 to 58, we find a similar reference in case of M/s. Shalibhadra Developers. 18. Against such documents and materials on record, the petitioner relies on contents of the petition, but more importantly on the further affidavits filed in the present proceedings. At page404 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential entries of various draft orders which were received and in respect of which approvals were granted. The DCIT CC1 register Baroda, contained corresponding entries of forwarding of two sets of orders for approval in case of M/s. Shanti Buildcon, and M/s. Shalibhadra Developers respectively at serial nos. 2975 and 2976. These entries were made on 15.3.2016. The register contains sequential entries date wise and contains several other entries for a period before and after 15.3.2016. 20.These registers which are maintained by the department in the ordinary course of business, thus contain various entries contemporaneously made concerning the present case. The outward movement of the draft orders, the receipt of such draft orders by the approving authority, the approval by the approving authority and forwarding and receipt of such approvals by the Assessing Officer are all thus documented. In addition to the affidavits filed by the Assessing Officer and the Joint Commissioner as approving authority, we therefore, have considerable supporting evidences from the registers maintained by department establishing the movement of the assessment proceedings and the events closely conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... messengers who were carrying other assessment orders. We have in support of such version, the affidavit of the Inspector concerned who had personally visited the office of the petitioner firm and who even according to the petitioner had tendered the assessment orders in case of other assessees. 22. We also have on record a report made by such visiting officers of having attempted to tender the orders of assessment which the petitioner refused to accept. This report ofcourse is dated 16.3.2016, since in the report itself it is mentioned that officers were made to wait for long time and it was only at about 9 O' clock at night that they were informed that the petitioner would not be accepting the assessment orders. In case of the present petitioner, documents on record and preponderance of possibilities would convince us that the department is correct on both counts that the assessment orders were actually passed on 15.3.2016 and were sought to be served on the petitioner through personal messengers on the same date. The fact that the register referred to the date of service of the assessment order as 21.3.2016 would not be a clinching factor. It is not in dispute that the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the serving officer to thereafter, follow the procedure would not alter this factual position. It is perhaps not even the case of the petitioner that since these followup actions were not taken, the order should not be taken to have been served. 24. With this factual conclusions, we may assess the legal position. Chapter XIXA of the Act pertains to settlement of cases. Under subsection( 1) of section 245C of the Act, an assessee at any stage of a case relating to him can make an application for settlement in the prescribed manner. The term 'case' has been defined in clause(b) of section 245A as to mean any proceedings of assessment under the Act of a person in respect of any assessment year or assessment years which may be pending before an Assessing Officer on the date on which an application under subsection(1) of section 245C of the Act is made. Explanation clause (iiia) which is relevant in this context reads as under : As per this clause thus a proceeding for assessment or reassessment under section 153A or 153C shall be deemed to have commenced from the date of issue of notice initiating such proceeding and concluded on the date on which assessment is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be made after expiry of four years from the end of the year in which the income, profits or gains were first assessable. In this context, the Court held as under : 10. Subsection (2) of Section 34 itself, in our opinion makes it clear that the expression no order of assessment shall be made hay to be given an identical meaning, whether the assessment is under Section 23 or whether the assessment is under Subsection (1) of Section 34 of the Act. what we have stated above with reference to the provisions of Section 23 of the Act should make it clear that the order of assessment provides for a stage that precedes the communication of the tax due under Section 29 of the Act, that is, the sum payable by the assessee on the basis of the assessment of the income within the meaning of Subsections (1), (3) or (4) of Section 23. The assessment and the order of an assessment are steps to be taken by the Income-tax Officer. There is no question of anything further that has to be done by the assessee himself at that stage. As pointed out in ' (B)' itself, there could be no occasion to apply to such a case, the rule enunciated in '34 Mad 151 (D)' or 'AIR 1930 Mad 490 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been stated over and over again by this Court as well as by the Judicial Committee that the words assessment and the assessee are used in different places in the Act with different meaning. Therefore in finding out the true meaning of those words in any provision, we have to see to the context in which the word is used and the purpose intended to be achieved. It is true that subss. 1, 3 and 4 of s.23 require the Income-tax Officer to assess the total income of the assessee and determine the sum payable by him . In other words in those provisions the word assess has been used with reference to computation of the income of the assessee and not the determination of his tax liability. But in s.34(3) the word used is not assess but assessment . The question for decision is what is the meaning of that word ? As long back as September 24, 1953, the High Court of Madras in Viswanathan Chettiar's case, 25 ITR 79 = (AIR 1954 Mad 928) (supra) came to the conclusion that the word assessment in proviso to s.34(3) means not merely the computation of the income of the assessee but also the determination of the tax payable by him. No other High Court has taken a contrary view. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st to the assessee and it was received by him on 4th April, 1960. The assessment was for the year 1955-56, the relevant accounting year being one ended 31st March, 1955. In the appeal before Appellate Assistant Commissioner, against a reassessment it was contended that the assessment was barred by limitation as the order was not communicated to the assessee within four years from the end of assessment year and the order can be said to have been made only when the order was communicated to the assessee. That was not accepted. In the reference to the High Court, a similar argument was reiterated. This court rejected the contention referring to the ruling of the High Court of Madras in Viswanatha Chettiar v. Commissioner of Income-tax This court held that section 34(3) did not speak of any communication and what was of the essence was the making of the order and not its communication and the assessment had been made within the time prescribed and the date of the communication could not be taken as the date or making of the order. It transpires that certain decisions in which it had been held that for purposes of filing the appeal or revision against the order made, the relevant date w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is true that an order of assessment may not have been made in the presence of the assessee and that it requires to be communicated, but still, its character as a quasijudicial order must be kept in mind while interpreting the word made . The Act merely requires that an order of assessment shall be made within the prescribed period. It does not further require that it should be communicated within the period prescribed. Mr. Dasaratharama Reddy relied upon the decision of the Supreme Court in CWT v. Kundan Lal Behari Lal [1975] 99 ITR 581, where the word issued occurring in Section 18(2A) of the W.T. Act was construed as synonymous with the word served . Section 18(2A) confers a right on the assessee to seek waiver or reduction of the penalty if he files a return before the WTO issues the notice. We are afraid, the principle of the said judgment can have no application here for more than one reason, that not only the expression construed is different, but that there is also a distinction between a notice and an order of assessment. Mr. Dasaratharama Reddy then relied upon the decision of the Supreme Court in State of Punjab v. Khemi Ram. There the expression which fell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have emphasized on the expression assessment made and equated with the order of assessment being passed. In context of the settlement proceedings, identical expression has been used. An assessment would be deemed to be concluded on the date on which the assessment is made. We do not see any reason to interprete this expression any differently. It is true that both the expressions are used in different context. Nevertheless, there are other reasons why even otherwise, we would not depart from what has been adopted by the Courts in the context of time limit provisions for assessment contained in the Act. As noted under subsection( 1) of section 245C of the Act, an assessee can file an application for settlement at any stage of a case relating to him. A case means any proceeding for assessment or reassessment which may be pending before the Assessing Officer on the date of making an application for settlement. Thus pendency of assessment proceeding is of vital importance for maintaining an application under subsection( 1) of section 245C of the Act. Upon an application for settlement being filed, the same would pass through various stages envisaged in section 245D of the Act. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of assessment by Assessing Officer for the same period for which the Commission would also pass the order of settlement. Accepting the contention of the petitioner that even if the order of assessment has been passed by the Assessing Officer, his case may still be deemed to be pending since such order was not dispatched or served, would lead to a conflicting situation. For the purpose of settlement, assessment would be deemed to be pending. For the purpose of section 143 or section 147 as the case may be, the order of assessment would be deemed to have been passed. The Settlement Commission thereafter, would be authorised to proceed and process the application for settlement and as a natural consequence, pass an order of settlement. There is no provision, to our mind, under which the order of assessment already passed by the Assessing Officer under such a situation would be obliterated. Surely, the legislature would never bring about a situation where an order of assessment would remain on record in respect of same period for which the Settlement Commission would pass a settlement order. 33.We are conscious that the situation has been viewed somewhat differently by some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment provisions contained in the Central Excise Act, wherein a case would be pending if the adjudicating authority has not adjudicated the proceedings. In the said case, the adjudicating authority had passed an order on 24.12.2009 and was served on the petitioner on 8.1.2010 which was the date on which the petitioner had filed the application for settlement. The High Court considered the date on which the order of adjudication was dispatched for service as a crucial date for consideration of pendency of the case. It was observed as under : Thus, the date of receipt of the orderinoriginal is not a relevant circumstance. What is of prime importance is the date on which the orderinoriginal was despatched from the office of the adjudicating authority (in this case, the Commissioner of Central Excise Customs, Ghaziabad). As we have seen, the order in original dated 24.12.2009 had left the office of the said Commissioner on 31.12.2009 and was beyond his reach and control. Consequently, the adjudication becomes effective and complete on that date, i.e. 31.12.2009. That being so, the necessary pre condition of a case pending adjudication on the date of the settlement application is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the CBDT circular cannot alter the correct legal position. We have not based our conclusions on the CBDT circular dated 17.11.2014. Prior to this, earlier circular dated 1.6.2007 provided that the assessment shall be deemed to have been completed only on the date of service of assessment order to the applicant. In the circular dated 17.11.2014, it has been provided that the assessment shall be deemed to have been completed on the date on which the assessment order is passed. At best, this circular neutralised the earlier clarification of the Board that assessment shall be deemed to be complete only upon the order of assessment being served on the applicant. 39.The decision in case of M/s. M.M. Rubber and Co., Tamil Nadu (supra) of the Supreme Court relied upon by the petitioner was however, rendered in very different background. The question before the Court in the said case was of computation of period of limitation for revision under the Income Tax Act, 1922, an order of assessment could be subject to revision either by the Commissioner or also at the hands of assessee. In context of limitation of such proceedings, it was held that for the Commissioner to take an order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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