AI Drafter 
TaxTMI 
TaxTMI 
2016 (5) TMI 805
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.... of the assessment to be made under Sections 143 or 144 of the Act is at any time after the expiry of two years from the end of the Assessment Year in which the income is first assessable, where Assessment Year is commencing on or after 01.04.1969. On this reckoning, the date by which assessment should have been carried out by the Assessing Officer in respect of Assessment Year 1981-82 was 31.03.1984. The assessment order was, however, passed on 01.09.1984. The Revenue claimed that this assessment order was still within the prescribed period of limitation because of the reason that on 13.03.1984 draft assessment order was passed pertaining to the aforesaid Assessment Year and forwarded to the Inspecting Assistant Commissioner, Central Range-II, Ahmedabad (hereinafter referred to as "the IAC") on 13.03.1984 (i.e. before 31.03.1984). The IAC issued instructions under Section 144B of the Act on 31.08.1984 and based on that the Assessing Officer framed the assessment on 01.09.1984 under Section 143(3) of the Act read with Section 144B of the Act. 3. The position that was taken by the Revenue was that the period from 13.03.1984 to 31.03.1984, when the matter was before the IAC, had t....
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....on 144B of the Act. We are, thus, faced with two conflicting views and to decide as to which High Court has correctly decided the issue of limitation. 6. We have already stated, in detail, the facts of Civil Appeal No. 2984 of 2008. Before we embark upon our detailed discussion on the issue, we would like to place on record the relevant provisions of the Act which have bearing on the issue. As mentioned above, Section 153 prescribes limitation of two years for making assessment under Section 143 or Section 144 of the Act. Avoiding those portions of these Sections with which we are not concerned, the material provisions are re-produced below: "153. Time-limit for completion of assessments and reassessments. - (1) No order of assessment shall be made under section 143 or section 144 at any time after - (a) the expiry of - ... (iii) two years from the end of the assessment year in which the income was first assessable, where such assessment year is an assessment year commencing on or after the 1st day of April, 1969; or.... whichever is latest. . . . (3) The provisions of sub-sections (1) and (2) shall not apply to the following....
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....ion 124, on the other hand, deals with the jurisdiction of the Income Tax Officer and reads as under: "124. Jurisdiction of Income-tax Officers. - (1) Income-tax Officers shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of income or of such cases or classes of cases as the Commissioner may direct. (2) Where any directions issued under sub-section (1) have assigned to two or more Income-tax Officers, the same area or the same persons or classes of persons or the same incomes or classes of income or the same cases or classes of cases, they shall have concurrent jurisdiction and shall perform their functions in relation to the said area, or persons or classes of persons, or incomes or classes of income, or cases or classes of cases, in accordance with such general or special orders in writing as the Commissioner or the Inspecting Assistant Commissioner authorised by the Commissioner in this behalf may make for the purpose of facilitating the performance of such functions. (3) Within the limits of the area assigned to him, the Income-tax Officer shall have jurisdiction - (a)....
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.... provisions directly relevant for the controversy in issue are contained in Chapter XIV, namely, Sections 144A and 144B of the Act. Section 144A authorises the IAC to issue directions in certain cases and Sections 144B provides that in certain cases reference is to be made to the IAC by the ITO before framing the final assessment order. Under Section 144A, the IAC may, on his own motion or on a reference being made to him by the ITO or on the application of an assessee, call for and examine the record of any proceedings in which the assessment is pending and, if he considers that, having regard to the nature of the case or the amount involved or for any other reason, it is necessary or expedient so to do, he may issue such directions as he thinks fit for the guidance of the ITO to enable him to complete the assessment. Directions so issued are binding on the ITO. 10. Section 144B of the Act deals with a situation where the ITO intends to pass an assessment order which is in variation to the income or loss that is shown in the return of the assessee and the amount of such variation exceeds the amount that can be fixed by the Board under sub-Section (6) thereof. In such a situatio....
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....ssioner may direct. (3) Without prejudice to the generality of the provisions contained in sub-section (3) of section 119, every Income-tax Officer shall also observe and follow such instructions as may be issued to him for his guidance by the Inspecting Assistant Commissioner within whose jurisdiction he performs his functions in relation to any particular proceeding or the initiation of any proceeding under this Act : Provided that no instructions, which are prejudicial to the assessee, shall be issued before an opportunity is given to the assessee to be heard. Explanation. - For the purposes of this sub-section, no instruction as to the lines on which an investigation connected with the assessment should be made shall be deemed to be an instruction prejudicial to the assessee. (4) Where an order is made under sub-section (1) and the Inspecting Assistant Commissioner exercises the powers or performs the functions of an Income-tax Officer in relation to any area, or persons or classes of persons, or incomes or classes of income, or cases or classes of cases, references in this Act or in any rule made thereunder to the Income-tax Officer shall be....
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....of cases or of any specified person or class of persons, be exercised by the Inspecting Assistant Commissioner. By an order of the Commissioner under section 125(1)(a), the Income-tax Officer is divested of his jurisdiction to deal with the specified case or class of cases or specified person or persons. Hence, even though the Income-tax Officer is having jurisdiction in respect of any specified case or person, the Commissioner is empowered to direct that the said powers shall be exercised by the Inspecting Assistant Commissioner. Where such order is made under section 125(2)(a), any provision of the Act requiring approval or sanction of the Inspecting Assistant Commissioner will not be applicable. (iv) Section 125A carves out further exception with regard to the jurisdiction of an Income-tax Officer. It does not oust the jurisdiction of Income Tax Officer but confers concurrent jurisdiction on the Inspecting Assistant Commissioner. It provides that the Commissioner may, be general or special order in writing, direct that all or any of the powers or functions conferred on, or assigned to, the Income-tax Officer or Income-tax Officers by or under this Act in respect of any ....
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....classes of persons, or incomes or classes of income, or cases or classes of cases, - (i) references in this Act or in any rule made thereunder to the Income-tax Officer shall be construed as references to the Inspecting Assistant Commissioner, and (ii) any provision of this Act requiring approval or sanction of the Inspecting Assistant Commissioner will not be applicable. 15. Hence, the provision of the Act requiring the approval or sanction of the Inspecting Assistant Commissioner will not be applicable only in those cases where both the aforementioned conditions (a) and (b) are satisfied. It would mean that, even though an order is made under section 125A(1) empowering the Inspecting Assistant Commissioner to perform the functions of an Income-tax Officer, yet if he has not exercised the power or performed the function of an Income-tax Officer, the provisions requiring approval or sanction of the Inspecting Assistant Commissioner will be applicable. Sub-section (4) nowhere provides that, if some directions by the Inspecting Assistant Commissioner are issued as provided under sub-section (2), then provisions requiring approval or sanction of the Inspecting Ass....