TaxTMI 
TaxTMI 
2008 (5) TMI 695
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.... had received substantial gifts, which had not been reflected r 'heir Income-tax returns. He, therefore, initiated proceedings under section 148 of the Income-tax Act, 1961 on 15-3-2001 and served notice in next two or three days as admitted by the Assessing Officer in respect of such assessee's for assessment year 1995-96 or assessment year 1996-97. The Assessee challenged such issue of notice before the Hon'ble Allahabad High Court on the ground that such gifts had already been disclosed in then Wealth tax Returns and thus disclosed to the department, and therefore prayed that notice under section 148 be quashed. Hon'ble Allahabad High Court initially granted Stay on the reassessment and thereafter decided the issue against the assessee's. Such decisions of the Hon'ble Allahabad High Court were delivered on 3-12-2004/19-1-2005, in Arun Kumar Maheshwari v. ITO [2006] 284 ITR 642 and Arun Kumar Maheshwari v. ITO [2006] 285 ITR 179 in the case of. thereafter, Assessing Officer undertook the Assessment proceedings and as the details required were not submitted, in all the cases, Assessing Officer passed order under section 144/148 of the Act on 27-3-2006. 3. Before the CIT(A) the ....
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.... of re-computation under section 147 (sub section (2) of section 153)-Under the old provisions of sub-section (2) of section 153, different time limits were laid down for completion of assessment reassessment or re-computation under section 147 depending upon whether the case fell under clause (a) of clause (b) of the old section 147. Normally, the time limit, in a case failing in clause (a), was four years from the end of the assessment year in which the notice under section 148 was served and in a case falling in clause (b), the same was four years from the end of the assessment year in which the income was first assessable. 8.4 Consequent upon the merger of clauses (a) an (b) into a single new section 147, the Amending Act, 1987, has substituted a new sub-section (2) in section 153, which provides a uniform time limit fur completion of assessment, reassessment, etc., under section 147. The limit is two years from the end of the financial year in which notice under section 148 was served. Thus, the time allowed for completion of all assessments under section 147 has now been reduced to two years to facilitate quicker assessments. 8.5 As a transitory measures, an exception h....
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....e notice under section 148 was served : Provided that where the justice under section 148 was served on or before the 31-4-1999 but before the 1-4-2000, such assessment, reassessment or re-computation may be made at any time upto the 31-3-2002. In view of aforesaid, I have to decide that the period available to the Assessing Officer to complete reassessment was one year and not two year as understood by him. 14.(b) The Assessing Officer contended that the period of Stay be deemed to be extended till the date of rejection, of writ petition came to his knowledge on 22-8-2005. 14.2 I am not inclined to accept the contention of the Assessing Officer sub-section (ii) to Explanation (1) of section 153 cannot be read as understood by the Assessing Officer. The said section reads as under :- Explanation.-In computing the period of limitation for the purposes of this section (i) (ii) the Period during where the assessment proceeding is stayed by an order or ?????? of any court, or shall be excluded. 14.3 In the present appeals the Hon'ble Allahabad High Court dismissed the writ petitions on 3-12-2004 and 19-1-2005. There cannot ....
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....:- Group Notice u/s 148 Date of stay order Date of Dismissal of Writs Date of Asstt. order Maheshwari Group 15-3-2001 12-4-2001 3-12-2004 27-3-2006 Lalit Agarwal Group 153.2001 16.52001 3-12-2004 27-3-2006 Bishnoi Group 153.2001 26-5-2001 19-1-2005 27-3-2006 15.2 The perusal of above chart would show that in all the cases. Assessment orders have been passed beyond the period of one year from the date of the order of the Hon'ble Highs Court dismissing the writ petitions. Section 153(2) clearly lays down that re-assessment has to be passed within one year from the end of the financial year from the end of the financial year in which notice under section 148 was served. 16.3 In the Maheshwari Group stay was given on 12-4-2001, therefore period of 12 days had to be reduced from 365 days available to make assessment and therefore only 353 days were available from 3-12-2004. thus assessment had to be completed by 3-11-2005 16.4 In Lalit Agarwal group stay order was passed on 16-5-2001 therefore period of 46 days had to be reduced from 365 days available to make assessment and therefore ....
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....Time Barred, I am not going to the merits of other pleas raised by the assessee. 20. In view of aforesaid, the Assessment order passed is held as null and void." 4. Aggrieved by the above orders of CIT (Appeals), Following common grounds have been taken by the revenue in all the appeals :- 1.That the Ld. CIT(A) has erred in law in holding that assessment order is time barred. 1.That the Ld. CIT(A) has erred in law and on the facts of the case in not appreciating that provisions for limitation as laid down under section 153(2) of the Income-tax Act, 1961 will stood good even after amendment with effect from 1-6-2001 as a consequence of writ filed by the assessee before 1-6-2001 and stay granted before 1-6-2001 on decision in CIT v. Ashok Kumar Jain Javad [2004] 271 ITR 77 (MP) and Karim Tharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 (SC). 2.That the Ld. CIT(A) has erred in law and on the facts of the case in not admitting that period of limitation of stay granted by the Hon'ble Court will tie counted from the date of stay till date of receipt of certified copy of the court order by the Assessing Officer. Reliance is placed on decision i....
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....dering the date on which the order of the Hon'ble Allahabad High Court dismissing the writs were received by the Assessing Officer. He further contended that for computing the limitation period under section 153(2), the relevant provisions applicable in the statute book a on the date of service of notice under section 148 is to be taken into account i.e., which is two years from the end of the relevant financial year in which notice was served, and not one year as per the amended provisions brought on the statute book with effect form 1-6-2001. 6. On the other hand, learned AR elaborately demonstrated the sequence of the events with reference to date of service of notice under section 148, filing of writ petitions before the High Court for stay of proceedings initiated under section 148, dismissal of writ petitions by the Hon'ble High Court thereafter and completion of reassessment by the Assessing Officer. After drawing our attention to the computation of limitation period in case of each assessee, as placed on the paper book, he demonstrated that in case of a the assessee's involved in the appeal, the assessment was framed beyond the statutory time prescribed under section 153....
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....erein assessment was required to be framed within one year from the end of the financial year in which notice under section 148 was served i.e., up to 31-3-2002, which is a time limit as prescribed under section 153(2) of the Act. However, due to the stay granted by the Hon'ble Allahabad High Court, the period of stay had to be excluded while computing period of limitation as per the mandate of clause (2) of Explanation 1 to section 153 of the Act. The stay so granted on 16-5-2001 by the Hon'ble Allahabad High Court remained in force till 3-12-2004 i.e., the date of the order of the Hon'ble Allahabad High Court when the stay was vacated. Thus, the total period for which the stay remained in operation works out to be 1297 days which if excluded from the period of limitation, the mandate expires on 18-10-2005 and impugned assessment having been framed on 27-3-2006, are barred by limitation. Complete working of days have been placed on record and a clear finding has been recorded by the CIT (Appeals) regarding the date on which reassessment should have been completed winch has been controverted by the department. Similar finding has been recorded by the CIT (Appeals) in case of all th....
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....e financial year in which notices were served. Undtsputedly, in all the cases before us, the notice was not served between 1-4-1999 and 31-3-2000, but much thereafter. In case of Smt. Anchi Devi (supra) following ratio was laid down by the Hon'ble bench :- "We have carefully considered the rival submissions. Prior to 1-6-2001, section 153(2) provided a period of two years from the end of the financial year in which the notice under section 148 was served, for completing the assessment. The proviso to the said section, as it stood before 1-6-2001 stated that where the notice under section 148 was served on or before 3-3-1987, the assessment, may be made at any time upto 31-3-1900. The normal period available for completion of the assessment was two years from the end of the financial year in which the notice was served, which period was extended in case the notice was served on or before 31-3-1987. In such a case the Assessing Officer had a time limit, of three years upto 31-3-1990, to complete the assessment. With effect from 1-6-2001, the sub section was amended. The time of two years available to the Assessing Officer was reduced to one year from the end of the ....
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.... to the Assessing Officer to complete the assessment within a period of one year from the end of the financial year in which the notice was served. (For example, if the notice under section 148 was served on an assessee on 1-4-2000 itself, the Assessing Officer as per the amended sub-section (2), would have time upto 31-3-2002. That would leave him 10 months time (from June 2001 to March 2002) to complete the assessment after the amendment came into force). Therefore, by holding that after 1-6-2001, the time limit of one year would operate in respect of all cases covered by the amended proviso, would not, in our opinion prejudice the rights of the Assessing Officer to complete the assessment within the amended time frame nor would it become impossible for him to complete any assessment. His rights are sufficiently protected. For the above reasons, we are of the opinion that the view taken by the CIT(A) that the assessment ought to have been completed on or before 31-3-2002 is correct, in law. We affirm his order and dismiss the appeal." 9. In view of the above discussion we are inclined to agree with the learned AR that CIT (Appeals) was justified in taking the period o....