High Court upholds Tribunal's decision on single assessment period for distillery & fertilizer company

The High Court affirmed the Tribunal's decision to uphold the order directing a single assessment for the entire period from 1.1.1987 to 31.3.1989 for a company engaged in distillery and fertilizer business. The court ruled in favor of the assessee, validating the permission to adopt the previous year ending on 30th June despite initial cancellation by the assessing authority. The legality of the order under Section 154 and its impact on the assessment year were also upheld, with the court emphasizing the validity of the original permission granted and dismissing the revenue's appeals.

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Issues:
1. Validity of upholding the order directing a single assessment for the entire period.
2. Legality of the order under Section 154 and its impact on the assessment year.

Issue 1:
The case involved the question of whether the Tribunal was justified in upholding the order of the CIT(A) directing the Assessing Officer to frame a single assessment for the entire period from 1.1.87 to 31.3.89. The respondent, a company engaged in the distillery and fertilizer business, had initially sought to change its previous year from the calendar year to ending on 30th June. However, an amendment in Section 3 of the Income Tax Act prescribed a uniform previous year ending on 31st March from 1989-90 onwards. Despite the assessing authority canceling the permission granted to the respondent, subsequent legal proceedings resulted in the order under Section 154 being set aside, thereby validating the permission to adopt the previous year ending on 30th June. The Tribunal held that there was no justification for a different view, and the assessment made for the period 1.1.1987 to 31.3.1989 was in line with the amended Section 3. The High Court affirmed this decision, dismissing the appeal and ruling in favor of the assessee.

Issue 2:
The second issue revolved around the legality of the order under Section 154 and its impact on the assessment year. The assessing authority had passed two assessment orders for the same assessment year based on the cancellation of permission to change the previous year. However, with the order under Section 154 being set aside in appeal and attaining finality, the permission to adopt the previous year ending on 30th June remained valid. The Tribunal rejected the revenue's appeals, emphasizing the validity of the original permission granted. The High Court concurred, stating that since the basis for passing two assessment orders no longer existed, there was no error in the Tribunal's decision. The assessment for the period 1.1.1987 to 31.3.1989 was deemed appropriate in accordance with the amended Section 3, and the questions were answered in favor of the assessee, leading to the dismissal of the appeal.

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