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TMI Blog2008 (5) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... ch had not been reflected r 'heir Income-tax returns. He, therefore, initiated proceedings under section 148 of the Income-tax Act, 1961 on 15-3-2001 and served notice in next two or three days as admitted by the Assessing Officer in respect of such assessee's for assessment year 1995-96 or assessment year 1996-97. The Assessee challenged such issue of notice before the Hon'ble Allahabad High Court on the ground that such gifts had already been disclosed in then Wealth tax Returns and thus disclosed to the department, and therefore prayed that notice under section 148 be quashed. Hon'ble Allahabad High Court initially granted Stay on the reassessment and thereafter decided the issue against the assessee's. Such decisions of the Hon'ble Allahabad High Court were delivered on 3-12-2004/19-1-2005, in Arun Kumar Maheshwari v. ITO [2006] 284 ITR 642 and Arun Kumar Maheshwari v. ITO [2006] 285 ITR 179 in the case of. thereafter, Assessing Officer undertook the Assessment proceedings and as the details required were not submitted, in all the cases, Assessing Officer passed order under section 144/148 of the Act on 27-3-2006. 3. Before the CIT(A) the preliminary ground taken by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of section 153)-Under the old provisions of sub-section (2) of section 153, different time limits were laid down for completion of assessment reassessment or re-computation under section 147 depending upon whether the case fell under clause (a) of clause (b) of the old section 147. Normally, the time limit, in a case failing in clause (a), was four years from the end of the assessment year in which the notice under section 148 was served and in a case falling in clause (b), the same was four years from the end of the assessment year in which the income was first assessable. 8.4 Consequent upon the merger of clauses (a) an (b) into a single new section 147, the Amending Act, 1987, has substituted a new sub-section (2) in section 153, which provides a uniform time limit fur completion of assessment, reassessment, etc., under section 147. The limit is two years from the end of the financial year in which notice under section 148 was served. Thus, the time allowed for completion of all assessments under section 147 has now been reduced to two years to facilitate quicker assessments. 8.5 As a transitory measures, an exception has been made in cases where notice under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 148 was served on or before the 31-4-1999 but before the 1-4-2000, such assessment, reassessment or re-computation may be made at any time upto the 31-3-2002. In view of aforesaid, I have to decide that the period available to the Assessing Officer to complete reassessment was one year and not two year as understood by him. 14.(b) The Assessing Officer contended that the period of Stay be deemed to be extended till the date of rejection, of writ petition came to his knowledge on 22-8-2005. 14.2 I am not inclined to accept the contention of the Assessing Officer sub-section (ii) to Explanation (1) of section 153 cannot be read as understood by the Assessing Officer. The said section reads as under :- Explanation.-In computing the period of limitation for the purposes of this section (i) (ii) the Period during where the assessment proceeding is stayed by an order or ?????? of any court, or shall be excluded. 14.3 In the present appeals the Hon'ble Allahabad High Court dismissed the writ petitions on 3-12-2004 and 19-1-2005. There cannot be any dispute that with the passing of the order the Stay as provided by the Hon'ble High Court came to an end. The date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004 27-3-2006 Lalit Agarwal Group 153.2001 16.52001 3-12-2004 27-3-2006 Bishnoi Group 153.2001 26-5-2001 19-1-2005 27-3-2006 15.2 The perusal of above chart would show that in all the cases. Assessment orders have been passed beyond the period of one year from the date of the order of the Hon'ble Highs Court dismissing the writ petitions. Section 153(2) clearly lays down that re-assessment has to be passed within one year from the end of the financial year from the end of the financial year in which notice under section 148 was served. 16.3 In the Maheshwari Group stay was given on 12-4-2001, therefore period of 12 days had to be reduced from 365 days available to make assessment and therefore only 353 days were available from 3-12-2004. thus assessment had to be completed by 3-11-2005 16.4 In Lalit Agarwal group stay order was passed on 16-5-2001 therefore period of 46 days had to be reduced from 365 days available to make assessment and therefore only 319 days were available from 3-12-2004. Thus, the assessment had to be completed by middle of October, 2005. 16.5 In Bishnoi Group stay order was passed on 26-5-2001 therefore 56 days had to be reduced from 365 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been taken by the revenue in all the appeals :- 1.That the Ld. CIT(A) has erred in law in holding that assessment order is time barred. 1.That the Ld. CIT(A) has erred in law and on the facts of the case in not appreciating that provisions for limitation as laid down under section 153(2) of the Income-tax Act, 1961 will stood good even after amendment with effect from 1-6-2001 as a consequence of writ filed by the assessee before 1-6-2001 and stay granted before 1-6-2001 on decision in CIT v. Ashok Kumar Jain Javad [2004] 271 ITR 77 (MP) and Karim Tharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 (SC). 2.That the Ld. CIT(A) has erred in law and on the facts of the case in not admitting that period of limitation of stay granted by the Hon'ble Court will tie counted from the date of stay till date of receipt of certified copy of the court order by the Assessing Officer. Reliance is placed on decision in Director General of Income Tax v. Board for Industrial & Financial reconstruction [2000] 246 ITR 718 (Delhi). 3.What the Ld. CIT(A) has erred in law and on the facts of the case in not accepting that limitation is applicable in the present case as per ratio of Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be taken into account i.e., which is two years from the end of the relevant financial year in which notice was served, and not one year as per the amended provisions brought on the statute book with effect form 1-6-2001. 6. On the other hand, learned AR elaborately demonstrated the sequence of the events with reference to date of service of notice under section 148, filing of writ petitions before the High Court for stay of proceedings initiated under section 148, dismissal of writ petitions by the Hon'ble High Court thereafter and completion of reassessment by the Assessing Officer. After drawing our attention to the computation of limitation period in case of each assessee, as placed on the paper book, he demonstrated that in case of a the assessee's involved in the appeal, the assessment was framed beyond the statutory time prescribed under section 153(2). He also relied on the detailed order passed by, the ITA, Delhi Benches, with reference to the amended provisions for completion of reassessment as brought in the statute book by Finance Act, 2001, with effect form 1-6-2001 and completion of assessment with reference to issue of notice under section 148 prior to the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluded while computing period of limitation as per the mandate of clause (2) of Explanation 1 to section 153 of the Act. The stay so granted on 16-5-2001 by the Hon'ble Allahabad High Court remained in force till 3-12-2004 i.e., the date of the order of the Hon'ble Allahabad High Court when the stay was vacated. Thus, the total period for which the stay remained in operation works out to be 1297 days which if excluded from the period of limitation, the mandate expires on 18-10-2005 and impugned assessment having been framed on 27-3-2006, are barred by limitation. Complete working of days have been placed on record and a clear finding has been recorded by the CIT (Appeals) regarding the date on which reassessment should have been completed winch has been controverted by the department. Similar finding has been recorded by the CIT (Appeals) in case of all the other assessee's. With reference to contention of learned DR for taking the date of service of High Court order to the Assessing Officer, instead of date of High Court order for computing the limitation period as per our considered view clause (2) of Explanation 1 to section 153 is very clear which stipulate that, the period du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001, section 153(2) provided a period of two years from the end of the financial year in which the notice under section 148 was served, for completing the assessment. The proviso to the said section, as it stood before 1-6-2001 stated that where the notice under section 148 was served on or before 3-3-1987, the assessment, may be made at any time upto 31-3-1900. The normal period available for completion of the assessment was two years from the end of the financial year in which the notice was served, which period was extended in case the notice was served on or before 31-3-1987. In such a case the Assessing Officer had a time limit, of three years upto 31-3-1990, to complete the assessment. With effect from 1-6-2001, the sub section was amended. The time of two years available to the Assessing Officer was reduced to one year from the end of the financial year in which the notice under section 148 was served. Accordingly, the proviso was amended to make provision in a case where the notice under section 148 was served between the period 1-4-1999 and 1-4-2000. In such a case the proviso stated that the assessment could be completed at any time upto 31-3-2002. If we accept the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him 10 months time (from June 2001 to March 2002) to complete the assessment after the amendment came into force). Therefore, by holding that after 1-6-2001, the time limit of one year would operate in respect of all cases covered by the amended proviso, would not, in our opinion prejudice the rights of the Assessing Officer to complete the assessment within the amended time frame nor would it become impossible for him to complete any assessment. His rights are sufficiently protected. For the above reasons, we are of the opinion that the view taken by the CIT(A) that the assessment ought to have been completed on or before 31-3-2002 is correct, in law. We affirm his order and dismiss the appeal." 9. In view of the above discussion we are inclined to agree with the learned AR that CIT (Appeals) was justified in taking the period of limitation as pet the amended provisions of law applicable at the time of framing the assessment, and not the relevant provisions as were available on the statute book when notice under section 148 was served. Accordingly, we can conclude that even after the amendment, the only protection given where the notice, is issued between 1-4-1999 and 31-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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