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TMI Blog1993 (10) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of Sri K.R. Sheth under section 131 of the Income-tax Act, 1961, when it was stated that the sale-proceeds of 2200 shares of Advance Computers Services (P.) Ltd., amounted to Rs. 93,240 only. According to the Assessing Officer, this figure was confirmed from a letter of Joint Controller of Reserve Bank of India, dated 24-11-1978. It was further stated that the balance of Rs. 2 lakhs might be receivable by Sri U.J. Patel about which they did not have any knowledge. The statement was made on behalf of the four concerned persons. The Assessing Officer summoned Sri U.J. Patel under section 131 of the Act twice but he neither attended nor filed any explanation. The Assessing Officer concluded that at most, Sri K.R. Bakshi and others had to receive a sum of Rs. 93,240 from the assessee and the genuineness of the balance of the liability amounting to Rs. 1,06,760 had not been proved. This sum was, accordingly, added to the income as income from undisclosed sources. 5. The Assessing Officer also gave a finding that the interest shown as payable to Sri U.J. Patel amounting to Rs. 40,097 could not be allowed fully since Sri K. R. Bakshi and others had to receive only Rs. 93,240 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment made "in consequence of order to give effect to any finding or direction" in an order in appeal. Certain interest income was brought to tax for the assessment year 1949-50 but the AAC held that the income was received in the previous accounting year and directed that the amount should be deleted from the assessment for the assessment year 1949-50 and included in the assessment for assessment year 1948-49. Pursuant to this direction, the Assessing Officer initiated reassessment proceedings under section 34(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the "1922 Act"), in respect of the assessment year 1948-49. The question was whether the second proviso to section 34(3) of the 1922 Act applied and saved the notice which was served beyond the time prescribed by section 34(1) of the 1922 Act. It was held that the jurisdiction of the AAC under section 31 of the 1922 Act was strictly confined to the assessment order of the particular year under appeal, i.e., assessment year 1949-50 in that case. The assessment or reassessment made in consequence of or to give effect to any finding or direction contained in an order of the AAC under section 31 of the 1922 Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mrs. R.H. Dave was given with reference to the provisions of the Income-tax Act, 1961 (hereinafter referred to as the "1961 Act"). The assessee had taken on lease a plot of land which was acquired by the Government on 12th May, 1961. Subsequently, the assessee received compensation by an award dated 13-2-1970. The Assessing Officer brought the compensation amount to tax in assessment year 1971-72. However, the AAC deleted the addition and directed the Assessing Officer to bring the amount to tax in assessment year 1962-63. The Tribunal held that the decision of the AAC to exclude the amount in assessment year 1971-72 was correct and the AAC had no jurisdiction to direct the Assessing Officer to bring the amount to tax in the correct assessment year, i.e., assessment year 1962-63. The Tribunal further held that even without such a direction from the AAC, the Assessing Officer was at liberty to consider the assessment of the income in the correct assessment year in view of Explanation I(i) to section 153 of the 1961 Act, and, therefore, declined to accede to the request of the assessee to delete the direction given by the AAC to the Assessing Officer. However, the Calcutta High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .................................................................. (ii) where the assessment, reassessment or recomputation 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 264, or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act. Explanation 1: ....................................................................................... Explanation 2: Where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order." 17. The dispute before us can be bifurcated into two parts, relating, firstly, to the "finding" of the CIT(A) that the amount was assessable in the assessment year 1979-80 and, secondly, to the "direction" of the CIT(A) that the amount should be added in the assessment year 1979-80. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly confined. Section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or court." 18. As far as the "direction" of the CIT(A) to the Assessing Officer to add the sum of Rs. 1,06,760 in the assessment year 1979-80 is concerned, it follows clearly from the above decision that there was no jurisdiction or authority to do so since it was not necessary to dispose the appeal for assessment year 1983-84. We, therefore, delete the concerned direction. 19. Coming to the "finding" that the amount was assessable in assessment year 1979-80, the matter has to be examined in the light of the illustration contained in the extract reproduced above. In our opinion, the "finding" that the amount, if assessable, would relate to assessment year 1979-80 is a necessary finding and is directly involved in the disposal of the case, inasmuch as it follows from that finding that the amount is not assessable in the assessment year 1983-84. The finding that the amount was assessable in assessment year 1979-80, if at all, is, therefore, not an incidental finding and it is not possible to directly arrive at a finding that the amount is not assessable in assessment year 1983-84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays down that no order of assessment, reassessment, or recomputation shall be made under section 147 of the 1961 Act, after the expiry of two years from the end of the financial year in which the notice under section 148 of the 1961 Act was served. Under the 1922 Act, there was no time-limit for completion of an assessment which had been reopened under section 34(1)(a). Section 153(3) of the 1961 Act makes an exception, inter alia, to the time-limit for completion of the assessment, or reassessment under section 153(2) of the said Act. Thus, section 153(3)(ii) of the 1961 Act is also a new provision and so also is Explanation 2 below it. To the extent that these new provisions have been introduced in the 1961 Act, the law has also undergone a corresponding change. These changes have been explained by the Andhra Pradesh High Court in the case of B.A.R. Abdul Rehman Saheb as under: "Explanation 2 to sub-section (3) of section 153 partially supersedes the Supreme Court decision in Murlidhar Bhagwandas's case and Sivalingam Chettiar's case by providing that in any case where income is excluded in appeal, reference, or revision, or any other legal proceedings, from the assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to a finding or direction contained in the said order. If there is no finding or direction in the order of a higher authority, then Explanation 2 to section 153(3) of the Act will apply. On the other hand, if there is a finding or direction, the case would fall under section 153(3)(ii)." 22. In the case before us, the finding of the CIT(A) that the amount was assessable, if at all, in assessment year 1979-80, has been sustained. The case, therefore, falls under section 153(3)(ii) of the 1961 Act. However, if there was no such finding, or if the finding had not been sustained by us, then the case would fall under Explanation 2 to section 153(3) of the 1961 Act. Thus, the submissions of the learned Departmental Representative that acceptance of the assessee's plea in principle will make the provisions of sections 150(1) and 153(3)(ii) of the 1961 Act inoperative and redundant, are not acceptable and, are rejected. 23. To summarise, we uphold the finding of the CIT(A) that the amount is assessable, if at all, in assessment year 1979-80 and not in assessment year 1983-84 but, delete the direction to the Assessing Officer that it should be added in assessment year 1979-80. 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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