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TMI Blog2023 (10) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... do not set aside or cancel the subject assessment orders requiring a fresh assessment. The first question is answered accordingly. As apparent that the respondents have issued the impugned notices after the petitioner s applications dated 29.10.2020 as they were of the opinion that they could give effect to the ITAT s orders dated 31.03.2015, but the respondents, consequent to this Court s conclusion that the time for the AO to consider the question of disallowance of the claims of bad debts/ advances written off and under Section 14A of the IT Act stand lapsed as of 31.03.2017, must consider the petitioner s representation dated 29.11.2020 for refund. ORDER [A] The petitions are allowed in part and the impugned notices dated 05.11.2020 and 06.11.2020 are quashed on the ground that they are issued after 31.03.2017 which would be impermissible because of the provisions of Section 153[7] of the Income Tax Act, 1961 as amended by the Finance Act 2016. [B] The respondents are directed to consider the petitioner s representations for refund along with interest in the light of the decision of Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT] The respondents shall so consider the represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Rs. 575,40,27,792/- Balance tax payable[including interest] Rs. 7,53,16,766 /- (iii) For the Assessment Year 2009-10 Section 14A of the IT Act Rs. 53,53,60,238/- Bad Debts written off Rs. 16,43,981/- Taxable Income[R/O] Rs. 550,34,02,020/- Balance tax payable[including interest] Rs. 9,89,96,390/- 4. The petitioner, being aggrieved by the aforementioned Assessment Orders, has filed appeals before the Commissioner of Income Tax [Appeals] [for short, 'the CIT [Appeals]'] challenging the disallowances by the A.O. The CIT [Appeals] by its order dated 06.10.2010 has dismissed the appeal for the AY 2007-08 [against the order dated 31.12.2009], and the CIT [Appeals] by its order dated 18.02.2013 has partly allowed the appeal for the AY 2008-09 [against order dated 29.12.2010] deleting the disallowance with respect to foreign exchange fluctuation loss while upholding the disallowance under Section 14A of the IT Act and disallowance of bad debts/advances written off. Similarly, the CIT [Appeals] by its order dated 18.02.2013 has partly allowed the appeal for the AY 2009-10 [against the Assessment order dated 30.12.2011] deleting the disallowance made with respect to bad debts whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Towards Advance Tax, TDS /TCS as per ROI and Self-Assessment Tax paid Rs. 1,03,00,00,000/- Rs. 4,54,58,975/- Rs. 15,28,55,000/- Total Deductions Rs. 1,22,83,13,975/- Excess Tax paid Rs. 79,58,216.00 The petitioner, with the aforesaid amount of Rs. 79,58,216/- as the base figure, has given credit to certain refunds allowed and demands paid with additions towards interest under Section 244A of the IT Act in claiming refund of Rs. 22,57,55,400/-. Though the claim for refund in the ROI is for a sum of Rs. 2,74,12,043/-, the amount is revisited because of the subsequent rectification. The petitioner, in the communication dated 29.10.2020, has restricted the claim for refund to a sum of Rs. 22,55,72,973/- accepting that it has conceded to the disallowance on depreciation of building amounting to Rs. 2,45,116/-. 8.2 The petitioner s computation of Refund for the AY 2008-09: Particulars Amount Admitted Tax liability with the respective Surcharge and cess Rs. 1,78,73,63,021/- Deduction Towards Advance Tax, TDS and TCS as per ROI Rs. 1,75,00,00,000/- Rs. 19,33,25,912/- Rs. 5,54,40,230/- Total Deductions towards Taxes Rs. 1,99,87,66,142/- Excess Tax paid Rs. 21,14,03,121/- The petitioner wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to be completed before 31.03.2017. The impugned notices are issued only in the month of November 2020 and hence, the proceedings stood time barred. 11. Sri Percy Pardiwala submits that if alternatively, the substituted provisions of Section 153 of the IT Act vide the Finance Act 2016 are made applicable, the subject proceedings before the AO, as of the date of the impugned notices dated 05.11.2020 and 06.11.2020, stood lapsed in view of the provisions of Section 153[7] of the IT Act. The learned Senior counsel elaborates that if the substituted provisions of Section 153[3] of the IT Act encompass the position that prevailed because of the provisions of Section 153[2A] prior to substitution, the position that prevailed because of the provisions of Section 153[3] of the IT Act prior to substitution is now envisaged under the substituted Section 153[5] and 153[6] of the IT Act. 12. Sri Percy Pardiwala submits that consequent to this change, if the assessment is to be done entirely afresh the time limit would be as contemplated under substituted Section 153(3) of the IT Act, and on the other hand if the exercise is not an entirely fresh assessment but is for [a] giving effect to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2009, 29.12.2010 and 30.12.2011, and the applicability of the provisions of Section 153[3] as it stood prior to substitution is saved in these cases because the assessment is before 01.06.2016. Sri E I Sanmathi, to buttress this submission, relies upon the provisions of Section 153[9] of the IT Act, which without the proviso and the explanation clauses, read as hereunder: The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st day of June, 2016. 16. In the light of the rival submissions, this Court is called upon to decide on the following questions: [a] Whether the ITAT by its Orders dated 31.03.2015 has entirely set-aside or cancelled the assessment orders dated 31.12.2009, 29.12.2010 and 30.12.2011, or has the ITAT in these orders issued certain directions for consideration of a few aspects for conclusion of the assessment; and [b] Whether the proceedings before the AO for the Assessment Years 2007-08, 2008-09 and 2009-2010 consequent to the ITAT s common order dated 31.03.2015 stood time barred as of the date of the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iry, in which case every aspect, computation and dimension is open for consideration. This partake 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. 19. The ITAT by its common order dated 31.03.2015 has granted certain relief to the petitioner against disallowance of bad debts/advances written off and under Section 14A of the IT Act essentially because of its order on these very aspects in the petitioner s appeal against the authorities orders for the AY 2006-2007. The ITAT in its order [The details of this order are extracted in the ITAT s common order dated 31.03.2015.] in the proceedings for the AY 2006- 2007, both on the question of disallowance of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon intervention with the earlier assessment orders being entirely cancelled or set aside in appeal and review. As regards the cases in which the assessment proceedings are to be completed by just giving effect to certain orders or findings or directions under Section 254 [and similar orders under other sections], the Parliament has now provided a bifurcation with separate timelines i.e. either three months or twelve months from the end of the month in which the order is received, and this is because of the substituted provisions of Section 153[5] 2 and 153[6] 3 . 23. Insofar as where assessment/re-assessment/ re-computation orders are made before 01.06.2016 but the further appeal and revision proceedings have not attained finality, it must be opined without much dilation as it would not be germane to the present decision, that the legislature has saved the timelines as contemplated before the substitution of Section 153 of the IT Act, and these timelines are also saved for cases where notices have been issued under Sections 142[1], 143[2] and 148 of the IT Act prior to 01.06.2016 but assessment proceedings are not completed due to the exclusion of time as mentioned in Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 is passed by the Principal Commissioner or Commissioner. It is further provided that the period for giving effect to an order under sections 250 or 254 or 260 or 262 or 263 or 264 of the Income-tax Act or an order of the Settlement Commission under sub-section (4) of section 245D of the Income-tax Act, where effect can be given wholly or partly otherwise than by making a fresh assessment or reassessment shall be three months from the end of the month in which order is received or passed, as the case may be, by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. It is also provided that where the assessment, reassessment or re-computation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263, or section 264 of the Income-tax Act or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Income-tax Act, then such assessment, reassessment or re-computation shall be made on or before the expiry of twelve months from the end of the month in which such order is received by the Principal Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the questions restored by the ITAT and consequentially, the petitioner s declaration of bad debts/advances written off and allowance claimed under Section 14A of the IT Act are restored. As such, the petitioner will be entitled for refund in terms of the computation annexed to the representations dated 29.10.2020 along with interest. 27. The Hon ble Supreme Court in CIT v. Shelly Products supra, while examining the effect of the failure to make an order of assessment and the right to claim refund has observed as follows in paragraph 35 after holding that even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount when a fresh assessment is barred. The Hon ble Supreme Court, in other words, has observed that the tax paid by the assessee must be accepted as it is and if any amount is paid in excess of the admitted tax liability, the same shall be refunded to the assessee since its retention may offend Article 265 of the Constitution, and the enunciation is thus: 35. What then is the effect of the failure to make an order of assessment after the earlier assessment made is set aside or nullified in appropriate procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in WP No. 13946/2020 and WP No. 13934/2020 and, Annexure - F in WP No. 13953/2020] are quashed on the ground that they are issued after 31.03.2017 which would be impermissible because of the provisions of Section 153[7] of the Income Tax Act, 1961 as amended by the Finance Act 2016. [B] The respondents are directed to consider the petitioner s representations dated 29.10.2020 [Annexure F in WP No. 13946/2020 and WP No. 13934/2020 and, Annexure - E in WP No. 13953/2020] for refund along with interest in the light of the decision of the Hon ble Supreme Court in CIT v. Shelly Products reported in [2003] 5 SCC 461. The respondents shall so consider the representations within a period of 3 [three] months from the date of receipt of a certified copy of this order. -------------------------- Notes: 1. Section 153[3]: Notwithstanding anything contained in sub-sections (1) and (2), an order of fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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