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TMI Blog2024 (12) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... decision on an issue framed in a suit and a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. It was observed that this was to say, the finding shall be one which is necessary for the disposal of the suit. It was held that a finding , therefore, can only be that which is necessary for the disposal of an appeal in respect of an assessment of a particular year as the Appellate Assistant Commissioner may hold in the facts, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. Thus, applying the principles of law as laid down in the decisions in Income Tax Officer vs. Murlidhar Bhagwan Das [ 1964 (1) TMI 5 - SUPREME COURT ], Rajinder Nath vs. Commissioner of Income Tax, Delhi [ 1979 (8) TMI 3 - SUPREME COURT ] and Tally India Pvt. Ltd. [ 2021 (4) TMI 547 - KARNATAKA HIGH COURT ] it is clear that the order dated 21 September 2021 passed by the Division Bench (supra) does not contain any findings necessary for disposal of the writ petition in a particular manner, so as to govern the issues which wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012. On 03 October 2013, an intimation was issued to the petitioner under Section 143 (1) of the IT Act. After a long period of time that is on 12 November 2018, a notice under Section 133 (6) was issued by the DDIT (I CI), Unit-2(2) calling for details like share of the petitioner in the sale proceeds, from the sale of land, computation of capital gains, etc. The petitioner, by its letter dated 27 November 2018, replied to the said notice in which it furnished all the details which were called for. On 07 December 2018, the petitioner filed further details as also requested that a personal hearing be granted to it by the DDIT. Again notices under Section 133 (6) were issued to the petitioner by the Income Tax Officer (I CI), Unit-2(1) on 20 November 2018 and 19 December 2018 to which replies were filed by the petitioner on 14 December 2018 and 28 December 2018, respectively. On 17 January 2019, a further notice was issued to the petitioner by the said Income Tax Officer under Section 133 (6). 5. It is on the aforesaid backdrop, on 29 March 2019, a notice was issued to the petitioner under Section 148 of the IT Act, informing the petitioner that there was reason to believe that inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are also quashed and set aside. 3. Keeping open the rights and contentions of the parties, we pass the following order with the concurrence of the counsel . (A) The impugned order dated November 25, 2019 (Exhibit P to the petition) disposing the objection raised against reopening of assessment under Section 147 of the Income Tax Act, 1961 (the Act ) is quashed and set aside. (B) The matter is remanded to the concerned authority to reconsider the objection dated May 6, 2019 and pass further orders. Should petitioner wish to file any further submissions in response to the letter dated April 23, 2019 giving reasons for reopening assessment for AY 2012-13, petitioner may do so within two weeks from today. No extension will be granted. (C) Should petitioner seek any clarification regarding the figures which are mentioned in the reasons for reopening, the concerned authority shall provide the same within two weeks of receiving the communication from petitioner. (D) The concerned authority may further dispose of the objection to the reopening of assessment after giving a personal hearing to the petitioner as per Rules prescribed. 4. We clarify that we have not made any observations on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce as also the notice under Section 142 (1) both dated 12 September 2022, hence, the same remained to be responded by the petitioner. 11. On 20 September 2022, a communication was addressed by respondent no.3/Assistant Commissioner of Income-tax, National Faceless Assessment Centre (for short, NFAC ) to the petitioner enclosing therewith a show cause notice dated 20 September 2022 inter alia recording that the variations, which were intended to be made, prejudicial to the interest of the petitioner, were primarily in regard to the information stated to be received in respect of transaction of sale of property by Shri. Daayas Lovaji Frezar and Shri. Sanjay Jadhav on 16 August 2011 to the tune of Rs. 9,00,00,000/- and more particularly, as seen from a copy of Index-II, which was obtained in relation to the said transaction from the office of the Sub-Registrar, Maval, Pune. The reason was recorded that the petitioner although was issued a notice, the same was not replied. The following reasons which were set out:- 2. The following variation(s) prejudicial to your interest are proposed to be made in your case:- In your case, order u/s. 147 was passed on 19.05.2021. Against this order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,75,00,000 Plot B 214879.95 10.08.2011 108,25,00,000 107,00,00,000 N.A. Land 12 Mtrs Internal Road of Plot A 8330 10.08.2011 3,25,00,000 3,25,00,000 While calculating the LTCG the assessee has taken into consideration expenses viz. cost of acquisition of and improvement, professional fees, supervisory charges etc. to curtail the amount of receipts of the assessee. In view of the above facts, the assessee had incurred aforesaid expenses to the tune of Rs.4,13,05,930/- escaped assessment. 1. In view of the above facts, I have reason to believe that income chargeable to tax of Rs. 4,13,05,930/- has escaped assessment within the meaning of section 147 of the I.T Act, 1961 for the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the previous year relevant to A.Y. 2012-13. 2. Considering the above mentioned facts, and circumstances of the case, I have reason to believe that an amount of Rs. 4,13,05,930/-has escaped assessment in the hands of the assessee for A. Y. 2012-13. The Income has escaped assessment on account of failure on the assessee's part to disclose the correct nature of income. So, the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 which was continued till the writ petition was disposed of i.e. on 21 September 2021. It was thus contended that the assessment proceedings had remained stayed by this Court from 13 December 2019 till 21 September 2021. Considering such fact, it was contended by the petitioner that as per Explanation 1 to Section 153 of the IT Act, in computing the period of limitation, the period during which the assessment proceeding was stayed by an order or injunction of any Court was required to be excluded. The petitioner hence contended that even taking into consideration such excluded period, the last date of passing the order as per the provisions of Section 153 of the Act which was 31 December 2019 stood extended by the period for which stay granted by the High Court was operating, which was for a period of 21 months and 9 days and accordingly, the last date for passing the assessment order had stood extended till 09 October 2021. It was contended that, accordingly, as the writ petition was disposed of by the High Court on 21 September 2021, the assessing officer had only 18 days to pass the order. However, applying the provisions of Section 153 of the IT Act, where immediately after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the order of the Respondent No.1 dated 14 October, 2021 rejecting the objections of the Petitioner (Ex. J ) and the assessment order u/s. 143 (3) r. w. sections 147, 260 and 144B of the Act dated 30% September, 2022 for A.Y. 2012-13 (Ex. Q ). (b) that this Hon'ble Court may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India ordering and directing the Respondent No.1 to withdraw and cancel the alleged order dated 14th October, 2021 rejecting the objections of the Petitioner (Ex. J ), withdraw and cancel notices issued from 8' September, 2022 to 27th September, 2022 and the assessment order u/s. 143 (3) r. w. sections 147, 260 and 144B of the Act dated 30th September, 2022 for A.Y. 2012-13 by Respondent No.3 (Ex. Q ). (c) that this Hon'ble Court may be pleased to issue a writ of prohibition or a writ in the nature of prohibition or any other appropriate writ, order or direction under Article 226 of the Constitution of India ordering and directing the Respondent No.1 3, not to proceed with or in pursuance of or in furtherance of the alleged orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 2019. This would have been the normal position. However, Writ Petition No. 3368 of 2019 was filed by the petitioner in this Court challenging the notice under Section 148 of the IT Act, in which this Court had granted interim stay on 13 December 2019, which continued until the petition was disposed of on 21 September 2021. Such period during which the stay operated would be required to be excluded. It is hence submitted that consequently the reassessment proceedings having remained stayed from 13 December 2019 till 21 September 2021, such period would be required to be excluded in computing the period of limitation. Mr. Mistri submits that as per Explanation 1 (ii) below the proviso to Section 153 (9) of the IT Act provides that in computing the period of limitation, the period during which the assessment proceedings were stayed by an order or injunction of any Court shall be excluded. It is thus submitted that respondent no.1 was left with only 18 days to pass the reassessment order, i.e. from 13 December 2019 to 31 December 2019 being the period from the date the stay was granted to the period the limitation would expire under the normal course. 19. It is submitted that as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of Karnataka High Court in Principal Commissioner of Income-Tax Anr. vs. Tally India Pvt. Ltd. 435 ITR 137 Kar. 21. It is next submitted that the impugned notice under Section 148 of the IT Act dated 29 March 2019 records that the notice was issued after obtaining the necessary satisfaction of the Principal Commissioner of Income Tax 21, Mumbai and this fact was reproduced in the copy of the reasons recorded and furnished to the petitioner on 23 April 2019. In such context, Mr. Mistri submits that the petitioner had requested for a copy of the approval under Section 151 of the IT Act being furnished to it, as also the same was demanded by the petitioner in its letters dated 21 September 2022 and 26 September 2022 however, the same is not furnished to the petitioner till date. It is therefore submitted that the petitioner is justified in raising the ground in the petition that respondent no.1 had issued notice under Section 148 of the IT Act without obtaining the approval of respondent no. 2, and hence, the notice issued under Section 148 void ab initio. It is submitted that such statement as made by the petitioner is not controverted by the respondents. In the aforesaid circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner and Mr. Sharma, learned counsel for the respondents. With their assistance, we have perused the record. Reasons and conclusion 24. In the facts and circumstances of the case, the short question which arises for consideration is whether the impugned assessment order dated 30 September 2022 would be required to be held to be bad in law and without jurisdiction, on the ground that the same was passed after the expiry of the period of limitation as prescribed under Section 153 of the IT Act and more particularly read with the proviso below Explanation 1 fallowing under sub-section (9) of Section 153. 25. Having noted the factual matrix in detail, to answer the issue at the outset it would be imperative to note the provisions of Section 153 which read thus:- 153. Time limit for completion of assessment, reassessment and recomputation. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ursuance of an order under [section 250 or] section 254 or section 263 or section 264, setting aside or cancelling an assessment, [or an order under section 92CA, as the case may be], 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 250 or] section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be] : Provided that where the order under [section 250 or] section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,] on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words nine months , the words twelve months had been substituted. (3A) N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be], if satisfied, may allow an additional period of six months to give effect to the order: Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3). [(5A) Where the Transfer Pricing Officer gives effect to an order or direction under section 263 by an order under section 92CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or recomputation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him.] (6) Nothing contained in sub-sections (1) (1A) and (2) shall apply to the following classes of assessments, reassessments and recomputat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016). Explanation 1. For the purposes of this section, in computing the period of limitation (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or (ii) the period during which the assessment proceeding is stayed by an order or injunction of any court; or (iii) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) [, under clause (i) of the first proviso]to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpetent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the [Assessing Officer; or (xii) the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee, (a) in whose case such search is initiated under section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso shall also apply accordingly: Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under sections 149, 154 and 155, and for the purposes of payment of interest under section 244A, the provisions of the fourth proviso shall apply accordingly: [Provided also that where after exclusion of the period referred to in clause (xii), the period of limitation for making an order of assessment, reassessment or recomputation, as the case may be, ends before the end of the month, such period shall be extended to the end of such month.] Explanation 2. For the purposes of this section, where, by an order referred to in clause (i) of sub-section (6), (a) any income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be. Explanation 1(ii) to Section 153 which falls below sub-section (9) provides that for the purposes of this section, in computing the period of limitation, the period during which the assessment proceeding is stayed by an order or injunction of any court shall be excluded. Further the proviso below Explanation 1 ordains that where immediately after the exclusion of the period as contemplated under the Explanation, the period of limitation referred to in sub-sections (1), (1A), (2), (3) and sub-section (8) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by clause (i) of sub-section (6) as applicable to the facts in hand, namely whether the assessment/reassessment in question is being made in consequence of or to give effect to any finding or direction as contained in the orders passed by this Court, being a proceeding otherwise than by way of appeal or reference under the Act, for which the limitation would stand extended for a period of twelve months, from the end of the month in which such order is received or passed by the Competent Authority. 29. To appreciate the issue, as to what has been the interpretation of this provision by the Court is required to be seen. The Constitution Bench of Supreme Court in Income Tax Officer vs. Murlidhar Bhagwan Das (supra) was considering the facts, where the respondent / assessee was assessed to income-tax under Section 23 (4) of the IT Act for the assessment year 1949-50, on the ground that the notice issued under sub-section (2) and (4) of Section 22 of the IT Act had not been complied with. On 27 September 1955, the said assessment was cancelled under Section 27 of the IT Act, but before the said cancellation, it was found that an interest income of Rs. 88,737/- received by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person in consequence of or to give effect to any finding or direction contained in an order under Section 31, Section 33, Section 33A, Section 33B, Section 66 or Section 66A. 30. In the context of the facts in hand, the expression direction and in consequence of or to give effect to are the key words which are common expressions used in the second proviso to Section 34 (3) of the IT Act, as it stood at the relevant time, and presently as falling under clause (i) of sub-section (6) of Section 153 of the IT Act. The Supreme Court in interpreting the said expressions held that the expression finding has not been defined in the IT At. Referring to Order XX Rule 5 of the Code of Civil Procedure, it was observed that a finding is, therefore, a decision on an issue framed in a suit and a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. It was observed that this was to say, the finding shall be one which is necessary for the disposal of the suit. It was held that a finding , therefore, can only be that which is necessary for the disposal of an appeal in respect of an assessment of a particular year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances the Income-tax Officer would have to initiate proceedings for the said year pursuant to an order made by an Appellate Assistant Commissioner. This contention is obviously untenable. The Appellate Assistant Commissioner or the Appellate Tribunal may set aside the notice itself for one reason or other and in that event the Income-tax Officer may have to initiate the proceedings once again in which case section 34 (1) will Il be attracted. The expression finding or direction , the argument proceeds, is wide enough to take in at any rate a finding that is necessary to dispose of the appeal or direction which Appellate Assistant Commissioners have in practice been issuing in respect of assessments of the years other than those before them in appeal. What does the expression finding in the proviso to sub-section (3) of section 34 of the Act mean? Finding has not been defined in the Income-tax Act. Order XX, rule 5, of the Code of Civil Procedure reads: In suits in which issues have been framed, the court shall state its finding or decision, with the reasons therefore, upon each separate issue, unless the finding upon any one or more of the issues is sufficient for the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court was whether there was any finding or direction within the meaning of Section 153 (3) (ii) of the Act in the order passed by the Appellate Assistant Commissioner, in consequence of which or to give effect to which the assessments in question were made. In such context, the Supreme Court considered as to what could be the meaning required to be attributed to the expressions finding and direction . It was held that the finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. As regards the expression direction in Section 153 (3) (ii) of the IT Act, it was observed that it was well settled that it must be an express direction necessary for the disposal of the case before the authority or Court. It must also be a direction which the authority or Court is empowered to give while deciding the case before it. It was thus held that the expressions finding and direction in section 153 (3) (ii) of the IT Act must be accordingly confined and more particularly considering the fact that secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority or court. It is a provision which merely raises the bar of limitation of making an assessment order under section 143 or section 144 or section 147: ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC) and and N. K. T. Sivalingam Chettiar v. CIT. [1967] 66 ITR 586 (SC). The question formulated by the Tribunal raises the point whether the Appellate Assistant Commissioner could convert the provisions of section 147(1) into those of section 153 (3) (ii) of the Act. In view of S. 153 (3) (ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point. 34. . 35. It is also not possible to say that the order of the Appellate Assistant Commissioner contains a direction that the excess should be assessed in the hands of the co-owners. What is a direction for the purposes of section 153 (3) (ii) of the Act has already been discussed. In any event, whatever else it may amount to, on its very terms the observation that the Income Tax Officer is free to take action to assess the excess in the hands of the co-owners cannot be described as a direction . A direction by a statutory authority is in the nature of an order requiring positive compliance. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the writ petition, set aside the impugned order and remit the matter to the 1st respondent-Assessing Officer. 4. The petitioner shall take these proceedings as notice to them and shall appear before the 1st respondent on 21st March 2012. The petitioners are not entitled for any fresh notice. 8. The Supreme Court in Rajinder Nath v. CIT, [1979] 120 ITR 14 (SC); [1979] taxman 204 (SC) and ITO v Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC), has held that a finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for disposal of a particular case. Similarly, a direction must be an expressed direction necessary for disposal of the case before the authority of court and must also be a direction which the authority of court is empowered to give while deciding a case before it. Thus, it is evident that the order dated March 7, 2012 passed by learned Single Judge of this court neither contains any finding nor any direction. 9. The proceedings were stayed for a period from December 8, 2011 to March 7, 2012, i.e., for a period of 103 days and if the period of 103 days is added, and a period of 60 days as prescribed in the proviso to Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. We may observe that in the context in hand when the Revenue seeks to take recourse to sub-section (6) (i) of Section 153 of the IT Act so as to avail all the benefits of extended period as stipulated by such provision, necessarily the Court is required to apply the principles as enunciated in the decisions as noted by us hereinabove, so as to make an exception from the applicability of sub-sections (1), (1A) and (2) and subject to the provisions of sub-sections (3), (5) and (5A) can be, only in the event when such assessment, reassessment and recomputation is being made qua the assessee in consequence of or to give effect to any finding or direction of any Court, as relevant in the present facts. Thus, the words in consequence of or to give effect would be required to be read in conjunction. As both these expressions are complementary to each other namely that such assessment, reassessment or recomputation is required to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order of the nature as specified in clause (i) of sub-section (6). Thus, the consequence needs to be created by such order a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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