TaxTMI 
TaxTMI 
2006 (1) TMI 62
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....saved by anything stated in sub-section (2) of section 158BE of the Income-tax Act, 1961? 3. Ought the Income-tax Appellate Tribunal to have held that the earlier order dated September 30, 1996, under section 127 of the Act was illegal and void, and not merely irregular, especially when it was patently wrong, non-speaking and in violation of rules of natural justice being open to collateral attack so that the Revenue itself abandoned the said proceedings, and there was nothing to save anything done thereunder?" In respect of question No. 3, counsel appearing for the appellant submitted that he is not pressing the same. The facts leading to the remaining two questions of law are as under: (i) The premises of the appellant were raided under section 132 of the Act on April 2, 1996, and cash, jewellery, documentation, etc., came to be seized. The Assessing Officer issued a notice under section 158BC of the Act on December 6, 1996, and the appellant-assessee on December 14, 1996, received the notice. The appellant-assessee, however, did not file any return, in response to the said notice. The Assessing Officer proceeded to frame the assessment and in this process, issued questi....
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....appellant-assessee from the file of the Assistant Commissioner of Income-tax, Investigation Circle No. II, Trichy, to the Assistant Commissioner of Income-tax, Central Circle 11(3), Chennai. The said notification was stated to take effect from April 16, 1998. On November 6, 1998, an order was passed in W. P. No. 4782/97 wherein the transfer proceeding dated September 30, 1996, was dismissed as infructuous in view of the fresh order passed on the case. (iii) The Assessing Officer called upon the appellant-assessee with a questionnaire dated November 16, 1998, on the issues concerning the block assessment to submit his reply by November 23, 1998. The appellant also filed his reply on November 23, 1998, conveying his inability to give his submissions on various points, because the time was too short and raised points of assessment being barred by time. The contention of the appellant-assessee of the assessment being barred by time, was based on two basic points. The first point was that the High Court had stayed the proceedings initiated by the transferee officer and the Assessing Officer should have completed the assessment by September 30,1997. The second point was that the secon....
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....al passed an order on February 26, 2001, and rejected the grounds as above stating: (1) that even though the transfer of the case ordered on April 13, 1998, under section 127 of the Income-tax Act was effective from April 16, 1998, the earlier proceeding was only irregular which was cured and the assessing authority had 28 days only in framing the assessment, especially when the assessing authority at Trichy who had the jurisdiction over the case, could not have proceeded with the assessment because there was an earlier order of transfer dated September 30, 1996, under section 127 of the Act; (2) that the conferment of jurisdiction by earlier orders dated September 30, 1996, under section 127 of the Act was only containing a procedural defect of not affording opportunities to the appellant, and the High Court had not and perhaps could not have held that the assessing authority who had initiated the assessment proceedings earlier to April 13, 1998, had no jurisdiction to proceed further; (3) that the Department could not restart the proceedings even after the notification dated April 13, 1998, without the express sanction of the court, and therefore the assessing authority ....
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....ted that it is a clear indication that it was only after the issue of the fresh notification that the Assessing Officer has jurisdiction over the case, and therefore it must be held that the issue of the notification in 1996 and all that followed it are illegal and deserve to be quashed. He further submitted that the raid was on September 24, 1996, and in accordance with the provisions of section 158BE(1)(a) of the Act, the Assessing Officer would get one year to frame the assessment and in the normal course by September 30, 1997, the Assessing Officer must have made the assessment and despite the intervention by the High Court, and granting stay on September 2, 1997, the time available to frame the assessment expired on September 30, 1997. Hence the assessment made on December 3, 1998, was beyond time and must be quashed. It was submitted that the notification issued in 1996 suffered from basic legal infirmity and after this was redressed, a fresh notification became a necessity and this clearly shows that the Assessing Officer, who completed the assessment, got the jurisdiction only from April 16, 1998, by which time, the time for framing of the assessment had already expired. Th....
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....n May, 1998, and viewing from this point also, the conclusion has to be that the assessment was barred by time. Learned counsel for the Revenue submitted that the issues concerning the assessment being barred by time had been dealt with by the lower authorities are in accordance with law and he also stated that the order passed by the Assessing Officer was within a time allowed under the statute and further submitted that the transfer of case for the convenience of tax administration is an administrative act only and would not be open for question before any court. He also further submitted that in this case, the court had also ruled that the co-ordination of investigation is a good ground for such transfer. He also contended that the Allahabad High Court in Hindustan Transport Co. v. IAC of I.T. [1991] 189 ITR 326 had held that the allocation of functions is a procedural matter only and hence strict construction of the section applies only to a charging provision and not a machinery provision for which he relied on the apex court in the case of CIT v. National Taj Traders reported in [1980] 121 ITR 535 and he also further relied on the decision of the Supreme Court judgment rep....
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....on November 6, 1998. Therefore, there were 28 days left after the writ petition of the appellant-assessee was dismissed on November 6, 1998, and the assessment has become time-barred only on December 4, 1998. The date of search was on September 24, 1996. The Assessing Officer has to pass orders within one year from the end of the month in which the raid was conducted. Section 158BE(1)(a) deals with limitation. In the present case, the officer has to pass order on or before September 30, 1997. The limitation starts from the end of the month of the raid (i.e.) September 30, 1996. The only exception prescribed in the Act is that if there is any stay order, the period of stay order will have to be excluded for the purpose of computation and the exclusion clause is prescribed under section 158BE(1)(a) read with Explanation 1(i). In this case, interim stay was granted on September 2,1997, and the same was made absolute on November 4,1997, and later, the writ petition was dismissed on November 6,1998, and hence there were 28 days left for completing the assessment after excluding the stay period. The said 28 days commenced from the date on which the writ petition was dismissed on November....