2005-VIL-372-ITAT-
Equivalent Citation: ITD 093, 535, TTJ 094, 169,
Income Tax Appellate Tribunal CALCUTTA
Date: 31.01.2005
WC. SHAW (P.) LTD.
Vs
ASSISTANT COMMISSIONER OF INCOME-TAX.
BENCH
Member(s) : K. K. GUPTA., C. L. SETHI.
JUDGMENT
Per C.L. Sethi, JM. - The assessee is in appeal against the assessment order made by the Assessing Officer under section 143(3)/254/158BC dated 28-03-2003 for the block period from 1-4-1995 to 3-11-1995.
2. Ground No. 1 is general in nature and need not to be decided separately. Hence, it is rejected.
3. Ground No. 2 reads as under:-
"For that the order passed by the Ld. Assessing Officer, on 28-03-2003, under section 143(3)/254/158BC, for the aforesaid block period, in reassessment proceedings is barred by limitation, as per the amended provisions of section 153(2A) of the I.T. Act 1961, and hence liable to be quashed."
4. To appreciate the controversy raised by the assessee in this ground No. 2, it is necessary to state the facts of the case leading to the impugned fresh assessment order made by the Assessing Officer under section 143(3)/254/158BC on 28-03-2003.
5. In this case, the original block assessment was made on 29-11-1996 under section 143(3)/158BC determining the total undisclosed income at Rs. 1,34,13,424. The original block assessment was made on 29-11-1996 in consequence to a 'search' conducted at the residence and other places of the assessee on 3-11-1995. Being aggrieved with the assessment order made by the Assessing Officer under section 158BC on 29-11-1996, the assessee preferred an appeal before the Tribunal being the 1st appellate authority. The Tribunal vide its order dated 01-06-2000 in appeal no. IT(SS) A No. 9 (Cal.) of 1997 allowed relief on certain points and set aside the following points for fresh adjudication by the Assessing Officer after providing opportunity of being heard to the assessee:-
(i) Rs. 9,06,961 unrecorded credit notes
(ii) Rs. 3,66,746 Sundry Creditors; and
(iii) Rs. 65,000 Cash payment outside the Ledger (Assessment Year 1994-95)
In addition to the aforesaid issues, the Tribunal also directed the Assessing Officer to compute the gross profit by applying the rate of 12 per cent on the undisclosed sales/profit shown by the assessee for the block period as well as on unverifiable vouchers for the block period from 1-4-1995 to 3-11-1995 for the purpose of tax. However, this direction was further rectified by the Tribunal vide its order dated 08-10-2001 in MA No. 74 (Cal.) of 2001 arising out of the Tribunal order passed in IT(SS) A No. 9 (Cal.) of 1997 by saying that the aforesaid direction was not applicable for the entire block period, but the said direction was applicable only for the broken block period from 1-4-1995 to 3-11-1995 for the purpose of tax. The Tribunal, therefore, deleted the words "Block period" from the said order at para 10A. The issue restored back to the file of the Assessing Officer were taken up for fresh adjudication by the Assessing Officer and, accordingly, the case was fixed for hearing by issuing the required notices and questionaire. After considering the materials on record and hearing the assessee, the Assessing Officer completed the fresh assessment order under section 143(3)/254/158BC on 28-03-2003 against which the assessee has preferred this appeal.
6. It has been contended by the ld. Counsel for the assessee that the fresh assessment order should have been completed by the Assessing Officer within one year on or before 31-3-2002, i.e. from the end of the financial year 2000-01 in which the Tribunal's order under section 254 dated 1-6-2000 was received by the Chief Commissioner/Commissioner as provided under sub-section (2A) of section 153 of the Act. It was further contended that the period for completing the fresh assessment in pursuance of an order under section 250 or 254 or 263 or 264 setting aside or cancelling an assessment, has been reduced from two years from the end of the financial year in which such order was received by the Chief Commissioner/Commissioner to one year by the Finance Act 2001, w.e.f. 1-6-2001, and as such the fresh assessment order in the present case should have been made before the expiry of 31-3-2002. He further submitted that the provisions of section 153(2A) are even applicable to the cases where some of the additions or issues are set aside to the file of the Assessing Officer for fresh adjudication. In the case on hand, he further clarified that these three additions amounting to Rs. 9,06,961, Rs. 3,66,746 and Rs. 65,000 on account of unrecorded credit notes, Sundry Creditors and cash payment outside the Ledger (Assessment Year 1994-95) respectively has been restored back by the Tribunal under section 254 of the Act, to the file of the Assessing Officer to decide the same afresh after providing a reasonable opportunity of being heard to the assessee and as such period of limitation to make fresh assessment order on these issues is subject to the provisions contained in section 153(2A) of the Act read with section 158BH of the Act. He further clarified that the Tribunal's order dated 8-10-2001 passed in MA No. 74 (Cal.) of 2001 is not related to these issues, and as such the period of limitation as provided under section 153(2A) is not to be reckoned from the Tribunal's order dated 8-10-2001 passed in MA No. 74 (Cal.) of 2001. The Tribunal's order dated 8-10-2001 in MA No. 74 (Cal.) of 2001 has substituted the Tribunal's earlier order dated 1-6-2000 only in respect to the direction given by the Tribunal to compute the gross profit by applying the rate of 12 per cent on the undisclosed profit shown by the assessee for the broken period from 1-4-1995 to 3-11-1995. He, therefore, contended that the Assessing Officer's fresh assessment order on the aforesaid three issues, which are related to the unrecorded credit notes, sundry creditors and cash payment made outside the ledger, having been made on 28-3-2003 is beyond the prescribed period as provided under section 153(2A) of the Act and as such the fresh assessment order on those issues remitted back to the Assessing Officer by the Tribunal for his fresh adjudication are beyond the limitation and are to be struck down as ab intio void and barred by limitation. In this connection, the ld. Counsel for the assessee as relied on the following decisions:-
(i) Judgment of ITAT, Agra Bench in the case of Smt. Krishna Devi [2004] 270 ITR (AT) 24
(ii) Judgment of Madras High Court in the case of M. Katiannan v. CIT [2003] 261 ITR 466
(iii) Judgment of MP High Court in the case of Gulabchand Motilal v. CIT [1988] 174 ITR 117
(iv) Judgment of Allahabad High Court in the case of CIT v. Smt. Kamla Devi [1985] 217 ITR 330
7. He further placed reliance on Explanatory note in circular No. 14 of 2001 of the CBDT with regard to the amendment in section 153(2A) and section 251, reported in 252 ITR (st) 115, 119. A reliance was also placed on the decision of the ITAT Kol. Bench 'A' & 'C in the case of Saratkumar Jhunjhunwala in WT Appeal No. 586/(Kol.) of 2002 dated 30-5-2003 and in the case of Peerless Consultancy Services (P.) Ltd. in ITA No. 1105/K/ 2003 dated 15-01-2004 respectively.
8. The ld. DR, on the other hand, contended that the Assessing Officer's fresh assessment made on 28-3-2003 under section 143(3)/254/158BC was in accordance with the direction given by the Tribunal vide its order dated 1-6-2000 and subsequent order dated 8-10-2001. He submitted that the Assessing Officer's order made on 28-3-2003 is not barred by limitation.
9. We have considered the rival contention of both the parties. We have deliberated upon the relevant provisions of law as contained in that behalf. We have carefully perused the various decisions cited at the bar.
10. We fell it necessary to set out the provision of law related to the issue under consideration.
11. Section 158BE reads as under:-
" Time limit for completion of block assessment
158BE(1) The order under section 158BC shall be passed-
(a) Within one year from the end of the month in which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997;
(b) within two years from the end of the month in which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997.
(2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be-
(a) one year from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; and
(b) two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997.
Explanation 1 - In computing the period of limitation for the purposes of this section, the period-
(i) during which the assessment proceeding is stayed by an order or injunction of any court; or
(ii) commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section, shall be excluded.
Explanation 2 - For the removal of doubts, it is hereby declared that the authorization referred to in sub-section (1) shall be deemed to have been executed-
(a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorization has been issued.
(b) In the case of requisition under section 132A on the actual receipt of the books of account or other documents or assets by the Authorised Officer".
12. Section 158BH reads as under:-
"Application of other provisions of this Act.
158BH. Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter."
13. Section 153 is as under:-
" Time limit for completion of assessments and reassessments.
153(1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of-
(a) two years from the end of the assessment year in which the income was first assessable, or
(b) one year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section (4) or sub-section (5) of section 139, whichever is later.
(2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of [one year] from the end of the financial year in which the notice under section 148 was served:
Provided that where the notice under section 148 was served on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such assessment, reassessment or recomputation may be made at any time upto the 31st day of March, 2002.
(2A) Notwithstanding anything contained in sub-sections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner:
Provided that where the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner, on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such an order of fresh assessment may be made at any time upto the 31st day of March, 2002.
(3) The provisions of sub-sections (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, subject to the provisions of sub-section (2A), be completed at any time-
(i) *** [omitted by the Finance Act, 2001 w.e.f. 1-6-2001].
(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.
(iii) where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147.
Explanation 1 - In computing the period of limitation for the purposes of this section-
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(i) ** ** **
(ii) ** ** **
(iii) ** ** **
(iv) ** ** **
(iva) ** ** **
(v) ** ** **
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shall be excluded:"
14. On reading section 158BE of the Act, it is seen that section 158BE only specifies the period within which the Assessing Officer must complete the assessment. The limitation specified in section 158BE is the limitation for completing the assessment to be made by the Assessing Officer, and it is not a limitation for making a fresh assessment in pursuance of an order under section 250 or 254 or 263 or 264 setting aside or cancelling the assessment. In other words, there is no time limit prescribed under Chapter XIV-B for completion of fresh assessments in pursuance of an order under section 250 or 254 or 263 or 264 of the Act. At the same time, section 158BH provides that save as otherwise provided in Chapter XIVB, all other provisions of IT Act shall be applied to the assessment made under that Chapter i.e. Chapter XIV-B. Therefore, to find out the time limit for completing the fresh assessment made by the Assessing Officer in pursuance of an order under section 250/254/263 or 264, we have to refer to the relevant provisions provided elsewhere in the IT Act. At this stage, it is pertinent to note that new Chapter XIV-B containing sections 158B to 158BH was introduced by the Finance Act, 1995 w.e.f. 1-7-1995 laying down special procedure for block assessment for search cases, where a search is initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132 A on or after 1st July, 1995. The scope and effect of Chapter XIV-B (containing section 158B to section 158BH) originally inserted w.e.f. 1-7-1995 was elaborated in paragraph 39.1 to 39.3 of the Departmental Circular No. 717 dated 14-8-1995. Under the item (f) of para 39.3 of the said Circular, it is clarified as under-
"besides, all other provisions of the Act shall apply to the assessments to be made under this Chapter. In other words, the provisions relating to regular IT proceedings, obligations for the payment of assessment of tax under section 140A before filing the return showing an undisclosed income, recovery proceedings, appellate proceedings, etc. shall be applicable."
It is, thus, clear that the matters which has not been otherwise provided under Chapter XIV-B shall be governed by the provisions of the IT Act. It is the intention of the department that save and except as otherwise provided in Chapter XIV-B, all other provisions of the Act shall, mutadis & mutandis, shall be applied to the block assessment. The intention of the legislation to apply all other provisions of the Act to the proceedings under Chapter XIV-B is thus very much clear however, that is subject to the provisions as otherwise provided in Chapter XIVB of the Act. Since in the Chapter XIVB, no provision is provided for time limit for completing the fresh assessment in pursuance of an order under section 250/254/263 or 264, we have to refer to the time limit provided in section 153(2A), which is applicable to the fresh assessments made in pursuance of an order under section 250 or 254 or 263 or 264 of the Act. Therefore, we have to examine as to whether the present fresh assessment made by the Assessing Officer is within the time limit provided under section 153(2A) of the Act.
15. On reading sub-section (2A) of section 153 of the Act substituted by the Finance Act, 2001 w.e.f. 1-6-2001, it is seen that fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264 are required to be made before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner. In the instant case the Tribunal's order under section 254 dated 1-6-2000 was received by the Chief Commissioner or Commissioner within financial 2000-01, and as such the fresh assessment order in pursuance of the Tribunal's order under section 254 dated 1-6-2000 was required to be made before the end of 31-3-2002 as per provisions contained in sub-section (2A) of section 153, which is mutatis & mutandis, is applied to the block assessment proceedings are clarified by the Board that the provisions relating to regular I.T. proceedings shall be applied to the assessment to be made under Chapter XIVB save as otherwise provided in that Chapter XIVB of the Act.
16. We further clarify that on reading the Tribunal's order dated 1-6-2000 directing the Assessing Officer to decide the matter afresh after providing a reasonable and proper opportunity in respect of three additions referred to in para 5 hereto, it is thus clear that there was no specific finding or direction given by the Tribunal to the Assessing Officer on the issues involved therein. Thus, the provisions of sub-section (3) of section 153 are not applicable to the present case. Moreover, sub-section (3) of section 153 are expressly made "subject to the provisions of sub-section (2A)". It is, therefore, clear that the time limit for making fresh assessments referred to in sub-section (2A) of section 153 is not lifted by sub-section (3) of section 153 of the Act. It is further clear that for the purpose of applicability of section 153(2 A), it is not necessary that the whole assessment should be set aside to complete the same de novo. Even if fresh assessment is to be made in respect of any one issue in pursuant to the order under section 250 or section 254 or section 263 or section 264, the provisions of section (2A) of section 153 would be applicable for the purpose of completing the fresh assessment on the said issue which has been set aside for fresh adjudication. The decisions cited by the Ld. Counsel for the assessee in the following cases may be referred to:
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(i) Order of ITAT, Kolkata Bench 'C' in
Peerless Consultancy Services (P.) Ltd. ITA No. 1105/Kol/03
Assessment Year 1996-97
Dated 15-01-2004.
(ii) decision of Madras High Court in
M. Kailannan 261 ITR 466
(iii) decision of MP High Court in
Gulabchand Motilal 174 ITR 117
(iv) decision of Allahabad High Court in
Kamla Devi 217 ITR 330
(v) Order of ITAT, Kolkata Bench 'A' in
Saratkumar Jhunjhunwala WTA No. 586/Kol/06
Assessment Years 1981-82,
1982-83
Dated 30-5-2003.
(vi) Order of ITAT, Agra Bench in
Smt. Krishna Devi 270 ITR (AT) 24
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17. In this view of the matter, we are, therefore, of the opinion that the fresh assessment order dated 28-3-2003 in pursuance to the Tribunal's order dated 1-6-2000 is barred by limitation inasmuch as it has not been made within one year from the end of the financial year in which the Tribunal's order dated 1-6-2000 was received by the Commissioner or the Chief Commissioner.
18. At this stage, we would like to observe that the subsequent rectified order dated 8-10-2001 passed by the Tribunal would not extend the limitation period provided in sub-section (2A) of section 153 as the Tribunal's said order dated 8-10-2001 was not in relation to the issues involved in this appeal.
19. In the result, the assessment order is found to be barred by limitation. Since we have hold that the assessment order passed by the Assessing Officer on 28-03-2003 is beyond the prescribed period of limitation and is thus bad in law, we need not to decide the other grounds raised by the assessee on merit of the various additions made by the Assessing Officer.
20. In the result, the appeal filed by the assessee is allowed by holding the impugned assessment is time barred and is thus cancelled.
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