TaxTMI 
TaxTMI 
2010 (6) TMI 282
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....Constitution of India prohibiting the respondent permanently from taking any action pursuant to the notice issued under section 148 of the Act on August 7, 1996. 2. The petitioner is an agriculturist. The petitioner jointly purchased agri- cultural land at Mundra with one Shri Kanji Pethabhai, which was pur- chased by the Gujarat Sheep Development Corporation for a sum of Rs. 5 lakhs. The petitioner filed an application for issue of a certificate under sec- tion 230A of the Income-tax Act, 1961 (the Act) on June 17, 1983. The Assessing Officer issued a notice under section 139(2) on June 18, 1984 for the assessment year 1984-85, however, the petitioner did not respond to the same. Hence, the Assessing Officer finalized the assessment under sec- tion 144 of the Act on March 30, 1987 on a total income of Rs. 1,62,000, inter alia, taxing capital gain on sale of the said property. Against the said order, the petitioner approached the Commissioner of Income-tax, Rajkot, under section 264 of the Act. Vide order dated March 22, 1992, the Com- missioner directed to reframe the assessment after giving the petitioner an opportunity of being heard. Notices under section 142(1) came ....
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....pon the decision of the Andhra Pradesh High Court in the case of CIT v. G.Viswanatham [1988] 172 ITR 401, it was submitted that section 147 of the Act provides for assessment and reassessment of income, which has escaped assessment. The reassessment is, however, subject to the provi- sions contained in sections 148 to 153. Section 149 provides the time limit for issuance of notice, i.e., for initiation of proceedings under section 147. Section 150 is in the nature of a proviso to section 149. A reading of sub- section (1) of section 150 shows that where the reassessment proceedings are initiated in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Income-tax Act by way of appeal, reference or revision, the time limits prescribed in section 149 shall not apply, and that notice under section 148 can be issued at any time. Sub-section (2), however, is again in the nature of a proviso to sub-section (1). It says that the provisions of sub-section (1) shall not apply where, by virtue of any other provisions limiting the time within which action for assessment, reassessment, or recomputation is barred on....
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....Commissioner (Appeals) contains neither a finding nor a direction in consequence of which or to give effect to which the reassessment proceedings could be said to have been taken, hence the provisions of section 153(3)(ii) would not be attracted. Reliance was placed upon a decision of the Supreme Court in the case of Rajinder Nath v. CIT [1979] 120 ITR 14. It was further submitted that while considering an appeal in respect of an assessment year, a direction regarding another assessment year does not fall within the scope of section 153(3) of the Act. The purpose of section 153(3) is to lift the bar of limitation to make an effective order of assessment, consequent upon an appellate order. Section 153(3) does not create a new power or jurisdiction. In support of the said submission, reliance was placed upon a decision of the Karnataka High Court in the case of M. K. Thakker v. CIT [1992] 197 ITR 110. It was accordingly, submitted that the impugned notice is barred by limitation and is without jurisdiction or authority of law, and as such deserves to be quashed and set aside. 7. Opposing the petition, Mr. M. R. Bhatt, learned senior advocate appear- ing for the respondent,....
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....fferent contingencies and circumstances where an assessment or a reassessment may be made. Section 148 provides for initiation of reassessment proceedings. Section 149 prescribes the time limit within which a reassessment notice may be issued by the Assessing Officer on the assessee concerned. Section 150 which provides for issuance of notice under section 148 at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference or revision, is by way of exception to the rules of limitation laid down in sec- tion 149. If a case falls within the circumstances mentioned in section 150, the time limits stipulated under section 149 do not have application. Sec- tion 153 of the Act provides for the time limit for completion of assess- ments and reassessments. Sub-section (1) of section 153 prescribes the time limit for making an order of assessment under section 143 and section 144 of the Act, and sub-section (2) thereof prescribes the time limit for making an order of assessment, reassessment or recomput....
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....tion 150, it is apparent that under sub-section (1) thereof, the time limit stipulated under section 149 is removed in case notice for reassessment is issued in consequence of or to give effect to any finding or direction contained in any order passed by any authority by way of appeal, reference or revision. Sub-section (2) thereof makes it clear that the reassessment permissible under sub-section (1) of section 150 cannot be made by the Department, where the period of limitation for assessment or reassessment had expired at the time when the order, which was the subject-matter of appeal, etc., for another assessment year had been originally made. 12. Section 153 provides for time limit for completion of assessments and reassessments. Sub-section (1) thereof provides that no order of assess- ment shall be made under section 143 or section 144 at any time except as specified therein. Sub-section (2) thereof provides for the period of limi- tation within which an order of assessment, reassessment or recomputa- tion shall be made under section 147. Sub-section (2A) thereof provides that in relation to the assessment year 1971-72 and subsequent years, a fresh assessment under....
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....direction contained in an order under sections 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 the Act. 14. The language employed in Explanation 2 to section 153 makes it abun- dantly clear that under the said provision, when an order in appeal, revi- sion or reference is made whereby any income is excluded from the total income of an assessee for an assessment year, then an assessment of such income for another assessment year shall be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order for the purpose of section 150 or section 153. Thus, for the pur- pose of resorting to the exception provided under sub-section (3)(ii), it is not necessary that there should be any specific finding or direction con- tained in the said order with regard to assessment of income for another assessment year in the light of the deeming provision in Explanation 2 below section 153 of the Act. The very fact that income has been excluded from the total income of the assessee for an assessment year by virtue of an order referred to in clause (ii) of sub-secti....
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.... 17. It is not disputed that the order made by the Commissioner (Appeals) has been made in exercise of appellate jurisdiction. The operative part of the order indicates that the Commissioner (Appeals) has held that the long-term capital gain arising on the sale was liable to be taxed in the assessment year 1983-84 and not in the assessment year 1984-85. Conse- quently, the addition made by the Assessing Officer for the assessment year 1984-85 came to be deleted. Liberty has also been reserved for the Assessing Officer to bring the long-term capital gain on the transaction to tax in the assessment year 1983-84 keeping in view the time limit pres- cribed in Explanation 2 below section 153 read with section 153(3). On behalf of the petitioner, it has been contended that reservation of liberty does not amount to a direction as envisaged under section 150(1) and sec- tion 153(3) of the Act. However, the said contention is misconceived inas- much as, it is apparent that the Commissioner (Appeals) has recorded a specific finding that the transfer of the property in question took place on March 8, 1983 and that the long-term capital gain arising on the sale was, therefore, liable to be tax....
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....ained in the said order. 20. In the circumstances, though notice has been issued under section 148 of the Act in the light of the findings recorded by the Commissioner (Appeals), considering the language of Explanation 2 to section 153, it is apparent that the very fact that income for the year 1984-85 has been excluded from the total income of the assessee for the said year would be sufficient for the Assessing Officer to make assessment of such income for another assessment year, which for the purposes of section 150 and section 153 would be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, albeit provided such income is otherwise taxable for the said year. If the transaction in question was for any reason, say non-applicability of the taxing provision, not tax- able operation of sections 150(1), 153(3)(ii) read with Explanation 2 there- under would not make the transaction taxable. In the circumstances, even in the absence of any finding or direction specifically stating that the said income may be brought to tax in another assessment year, in the light of the provisions of Explanation 2, it is permissibl....