9911796707
TMI Blog2017 (9) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO within the time limit specified in Section 153 (2A) of the Act. Inasmuch as the AO failed to do so, the impugned notice dated 14th September 2015 issued by the AO and all proceedings consequential thereto including the order dated 2nd December 2015 passed by the AO are hereby set aside. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue afresh after affording the assessee a reasonable opportunity of being heard." b. As regards the applicable rate of depreciation on computer peripherals, the ITAT allowed the Assessee's appeal and directed the AO to allow depreciation on computer peripherals at the rate of 60% instead of 15% as allowed in the original assessment order. c. As regards disallowance of expenditure on account of price protection expenses, the ITAT observed that "Since we have admitted additional evidence in respect of other distributors to whom trade price protection has been allowed, we set aside this issue to the file of the AO with the directions to examine the case of the assessee in the light of additional evidence filed before this Tribunal and decide the issue on merits. Needless to say the AO will provide the assessee a reasonable opportunity of being heard." d. As regards the TP adjustments in relation to provision of software development services to its AEs, the ITAT agreed with the Assessee that the DRP had obtained information under Section 133 (6) of the Act and had used such information without affording the Assessee an opportunity of being heard. Consequently, the ITAT he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies for considering certain issues afresh after giving a reasonable opportunity to the Assessee. Referring to paragraph 29 of the ITAT's order which stated that the appeal of the Assessee was being partly allowed for statistical purposes, the TPO stated that the limitation date for completing and passing of the assessment order had to be calculated in terms of Section 153 (3) (ii) of the Act. Alternatively, the TPO stated that, even in terms of Section 153 (2A) of the Act, the proceedings were not time-barred as of 31st January 2015. 8. On 29th January 2015, the Assessee responded to the TPO and a copy thereof was also sent to the AO. The Assessee reiterated that the limitation period for passage of a fresh order would be calculated in terms of Section 153 (2A) of the Act. Thereafter, the AO issued the impugned notice dated 14th September 2015 calling upon the Assessee to attend the AO's office on 22nd September 2015 for proceedings under Section 254 read with Sections 144C and 143 (3) of the Act for AY 2007-08. 9. On 21st October 2015, the Assessee responded to the above notice reiterating that Section 153 (2A) of the Act was applicable and, therefore, the fresh order of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153 as a whole as was further explained by Circular No. 56 dated 19th March 1971 issued by the Central Board of Direct Taxes ('CBDT'). Mr. Srivastava relied on the decision of this Court in Commissioner of Income-tax v. Bhan Textile (P) Ltd [2008] 300 ITR 176 (Del) and distinguished its decision in Basu Distributors (P) Ltd. v. Income Tax Officer [2007] 292 ITR 29 (Del). 14. On the other hand, Mr. Sanjay Jain, learned Additional Solicitor General of India ('ASG'), submitted that Section 153 (2A) of the Act would apply only where the entire assessment was set aside or cancelled. However, as in the present case, where the AO was required to follow certain specific directions issued to him by the ITAT he was 'chained' as far as exercise of discretion was concerned. In such circumstances, Section 153 (2A) of the Act would not apply. According to the learned ASG, it was only Section 153 (3) (ii) of the Act which would apply to the present case. 15. Mr. Jain submitted that Section 153 (3) (ii) of the Act would not only apply where 'appeal effect' had to be given but cases of "assessment and re-assessment" as well. Reference was also made to the phrases 'an assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such assessment year is an assessment year commencing on or after the 1st day of April, 1969; or (b) the expiry of eight years from the end of the assessment year in which the income was first assessable, in a case falling within clause (c) of sub-section (1) of section 271; or (c) the expiry of one year from the date of the filing of a return or a revised return under sub-section (4) or sub-section (5) of Section 139; whichever is latest. (2) No order of assessment reassessment or recomputation shall be made under Section 147- (a) where the assessment, reassessment or recomputation is to be made under clause (a) of that section, after the expiry of four years from the end of the assessment year in which the notice under Section 148 was served ; (b) where the assessment, reassessment or recomputation is to be made under clause (b) of that section, after- (i) the expiry of four years from the end of the assessment year in which the income was first assessable, or (ii) the expiry of one year from the date of service of the notice under Section 148, whichever is later. (3) The provisions of sub-sections (1) and (2) shall not apply to the following classes of assessments, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 1971 issued by the CBDT which reads as under: "Time limit for completion of assessments set aside in appeal or reopened under section 146 22. Section 153, relating to time limits for completion of assessments and reassessments has been amended so as to provide a time limit for completion of fresh assessments, to be made in cases where : (i) the original assessment made under section 144 has been cancelled by the Income Tax Officer on an application by the assessee under Section 146; or (ii) the original assessment is set aside or cancelled in appeal by the Appellate Assistant Commissioner or the Appellate Tribunal or in revision by the Commissioner. For this sub-section (2A) has been inserted in section 153. Under this sub-section the fresh assessment in the cases mentioned at (i) may be made at any time before the expiry of two years from the end of the financial year in which the original assessment was cancelled by the Income-tax Officer under section 146. In the cases mentioned at (ii) the fresh assessment may be made at any time before the expiry of two years from the end of the financial year in which the order of the Appellate Assistant Commissioner or the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter remanded, with a direction that the issue has to be determined afresh, Section 153 (2A) of the Act would get attracted. 24. What is important to note is that, along with the insertion of sub-section (2A), sub-section (3) underwent a simultaneous change. It was expressly made "subject to the provisions of sub-section (2A)." This meant that Section 153 (3) would thereafter apply only to such cases where Section 153 (2A) did not apply. In other words, in all instances of an AO having to pass a fresh assessment order upon remand where Section 153 (2A) would apply, the AO would be bound to follow the time-limit imposed by sub-section (2A). Where the AO was only giving effect to an appellate order, then Section 153 (3) (ii) of the Act would apply. 25. In the present case, of the seven issues, the assessment in respect of five was set aside and the issues remanded for a fresh determination. Whether the remand was to the TPO or the DRP would not make a difference as long as what results from the remand is a fresh assessment of the issue. Clearly, therefore, the time limit for completing that exercise was governed by Section 153 (2A) of the Act. The decision in Basu Distributors 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irection is passed by an Appellate Authority which is of the opinion that it would not be possible to decide the appeal before it without a clarification on this point. The Appellate Authority has also the power to set aside the Assessment Order and direct a de novo enquiry, in which case every aspect, computation and dimension is open for consideration. This partakes of the nature of an assessment which is akin to the original assessment and, therefore, the period of limitation applicable to the original assessment must apply to the fresh assessment. Where the Appellate Authority remands the case for a determination on a selected issue or aspect of the assessment, the uncertainty or discomfort of the sword of uncertainty provides no peril to the assessee. All the parties are fully aware of the parameters within which the fresh enquiry is circumscribed and limited. It is obviously for this reason that the rigours of limitation are totally removed. If the AO is unduly slow in completing the assessment, it may be open to the assessee to approach the High Court under Articles 226 and 227 of the Constitution seeking a direction for an expeditious end and closure to the restricted enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty provides no peril to the assessee." The enquiry to be undertaken by the AO upon evidence being furnished by the Assessee was indeed a fresh enquiry and if no time limit was prescribed for that exercise, the Assessee would undoubtedly have the sword of uncertainty hanging. Considering the additions made, there was, in fact, no other substantive issue that had to be examined afresh by the AO. Therefore, the Court, in terms of its own analysis of Section 153 (2A) in the aforementioned decision, required a fresh assessment order to be made by undertaking a de novo enquiry. For such an exercise the limitation in Section 153 (2A) had to apply. On the facts of Basu Distributors (supra), it is not understood how Section 153 (2A) would not apply. 28. Be that as it may, as far as the present case is concerned, the aforementioned decision in Basu Distributors (supra) would, not in fact, come to the aid of the Revenue. The facts in the present case fully answer the description of the case which in para 20 of the decision in Basu Distributors (supra) was held to be subject to the limitation under Section 153 (2A) viz., where the order of the appellate authority results in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of the case. The Tribunal on an appeal filed by the assessee, upheld the assessee's contention that the commission was disallowed in case of two agencies, placing reliance on statements recorded behind the back of the assessee without affording the cross-examination of such witnesses. It was on this count that the Tribunal remitted the matter to the file of Assessing Officer with direction to summon those two parties again and allow the assessee an opportunity to cross-examine them so that true facts may emerge in relation to the payment of commission by the assessee company to these two agencies. While doing so, (be Tribunal also granted liberty to the Assessing Officer to probe into the matter further by way of an inquiry and investigation into the alleged payment of commission to such parties. 25. To our mind, the case on band would fall under sub-section (2A) of section 153 of the Act. The Tribunal may not have used the words of "setting aside the assessment", nevertheless, when it remitted the matter back to the Assessing Officer for summoning two witnesses again for cross-examination by the assessee and permitted further probe to the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
