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2018 (5) TMI 237
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....on u/s 153(2A) of the Income Tax Act, 1961. 2. That the learned CIT (A) erred in not annulling/quashing the fresh assessment order dated 12.07.2007 passed in pursuance to the order of the Hon'ble M.P. High Court as the said assessment order is barred by limitation u/s 153(2A) of the Income Tax Act, 1961. That on the facts and in the circumstances of the case, the said assessment order being illegal and bad in law, it is therefore, prayed that the same may very kindly be now annulled/quashed. That the learned CIT(A) also erred in overlooking the fact that in the absence of any stay granted by any court as envisaged under clause (ii) of Explanation 1 to section 153, the period of limitation had to be reckoned from the date of the ITAT order of 11.12.2000. That on the facts and in the circumstances of the case the period of limitation having expired, the assessment order thus barred by limitation is illegal, without jurisdiction and bad in law and hence deserves to be annulled/quashed. 3. Without prejudice to the above, assuming though not admitting, even if the period of limitation is reckoned from the judgment of the Hon'ble M.P. High Court dated 03.01.2005....
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....ment order and demand notice till the date of fresh assessment order irrespective of the fact that the original assessment order had reached finality post ITAT setting it aside and in absence of any challenge to the contrary. That on the facts and in the circumstances of the case the interest charged u/s 220(2) is not only contrary to the provisions of section 220(2) but also to CBDT Circular No.334 of 03.04.1982 and it is prayed that interest u/s 220(2), if any, be charged in accordance with law. 3. Briefly stated, the facts of the case are that this is a second round of litigation. In the earlier ground , the matter travelled up to the stage of Hon'ble Supreme Court. The facts given rise to the present appeal are that in earlier round of litigation, the Tribunal had quashed the assessment on the ground of non-service of the notice u/s 143(2). Aggrieved by this, the Revenue had preferred an appeal to Hon'ble Jurisdictional High Court in I.T.A.No. 22 of 2001. Hon'ble Jurisdictional High Court passed the order in I.T.A. No. 22 of 2001 on 03.01.2005. For the sake of convenience, the relevant contents of the judgement of the Hon'ble High Court is reproduced as under....
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....be completed within six months from the date of this order by AO in accordance with the directions given by Tribunal in the impugned order and final assessment orders be passed." 4. It is pertinent to note that the Revenue further approached to Hon'ble High Court of Madhya Pradesh by way of Miscellaneous Petition No. 654/2005. Hon'ble High Court was pleased to further grant period of six months for completion of assessment. The assessee had approached the Hon'ble Supreme Court by way of Special Leave Petition No. 5740/2007 dated 05.04.2007. 5. Subsequently, the AO framed the assessment order u/s 143(3) read with Section 260A of the Income-tax Act, 1961, vide order dated 12.07.2007. Aggrieved thereby the AO made addition in respect of travelling expenses, disallowances u/s 35D and disallowance of depreciation. Aggrieved by this order, the assessee preferred appeal before the Ld. CIT(A). The assessee apart from challenging the additions on merit, also challenged the assessment order on the ground of limitation. The Ld. CIT(A) partly allowed the appeal. However, in respect of issue of limitation, the Ld. CIT(A) declined to consider it on the ground that the assessmen....
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.... Page 26 to 42 of Paper Book compilation - 1) . C) The appellant then preferred second appeal before this Hon'ble ITAT. During the course of the proceedings, the appellant raised additional grounds regarding validity of assessment made by AO on the ground of non service of the mandatory notice required to be issued u/s 143(2) of the Act within the statutory period. The said appeal was decided by the ITAT vide its order dated 11/12/2000 passed in ITA no 81/IND/2000. The ITAT annulled the entire assessment on the ground that no notice u/s 143(2) was validly served upon the appellant within the statutory period of limitation. Simultaneously, without prejudice to the annulment of assessment, the ITAT also decided the appeal on merits regarding genuineness of claim of depreciation and ultimately setting aside the order passed by CIT(A) , who had confirmed the assessment and the disallowance, restored the matter back to the file of AO with a direction to afford an opportunity of cross examination to the appellant and also to afford an opportunity of hearing against the evidence collected by department behind the back of the appellant. It is further interesting to note that a....
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....urt vide its judgment dated 03/01/05. Hon'ble High Court allowed the appeal of department setting aside the ITAT's finding regarding non service of notice u/s 143(2) and consequently upholding the validity of assessment made by AO on 22/03/99 (copy of High Court's order dated 03/01/05 at Page 66 to 76 of Paper Book compilation - 1 ) Hon'ble High court had specifically observed in Para 19 of its order that - "since no other question is either raised by the appellant except that of notice , we need not to go into any other question. We thus allow the appeal in part and set aside the finding of Tribunal in so far as it relates to service of notice is concerned. We hold that service of notice being proper, the assessment made by AD on 22-03-1999 by Deputy Commissioner Income Tax Circle4-1 Indore is legal & valid, All other findings recorded by the Tribunal are upheld being not under challenge" Since the other part of the ITAT , s order was not under challenge, the same was upheld by the High Court, Hon'ble High Court directed that enquiries as per the direction of ITAT is completed within a period of six month from the date of its order and final o....
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....rder being challenged by assessee in appeal before CIT (A) , it would be open to assessee to take all relevant grounds including the points raised in SLP that the department was not entitled to the extended period of limitation . (Copy of SLP at Page 79 to 88 and copy of Supreme Court order at Page 89 to 90 of the Paper Book compilation - 1). The observations of Hon'ble Supreme Court in this respect are as under --- "We do not wish to express any opinion on this point at this stage. however, we make it clear that in the event of passing of assessment order being challenged by the assessee in appeal before the Commissioner of Income Tax (Appeals), it would be open to the assessee herein to take all the relevant grounds including the point which has been raised in the present special leave petition, namely, that the department was not entitled to extended period of limitation". H) The appellant further submits that fresh assessment proceedings were started by AO on the basis of extension granted by the Hon'ble High Court. The appellant specifically raised objection regarding bar of limitation vide its letters dated 05/04/07, 25/06107 and 27/05/07 ( Copies of....
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.... to 3 of revised grounds) regarding limitation:- The appellant submits that in the context of above sequence of events , the question for consideration is as to whether the fresh assessment order passed by AO on 12/07/2007 is barred by limitation prescribed u/s 153(2A) . In this respect the appellant submits that in the context of legal position that the IT AT had no power to restrain the AO from completing the fresh assessment j for giving effect to its directions, the limitation for purpose of fresh assessment required to be made u/s 153(2A) would be reckoned from the date of ITAT's order dated 11112/2000 . For the sake of convenience the said provision of section 153(2A) is reproduced herein below ----------------------------------------- Section 153(2A) --- "[(2A) Notwithstanding anything contained in sub-sections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment u/s 146 or in pursuance of an order, under section 250 or section 254 or section 263 or section 264. setting aside or cancelling an assessment, may be made at any time before the expiry of two ....
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....placed upon the decision of Andhra Pradesh High Court in the case of ITO V s Khalid Mehdi khan reported in 110 ITR 79, where the Andhra Pradesh High Court was considering the question regarding powers of IT AT to pass necessary interim order, including stay of proceedings and in that context has held that ----- "Now, it would be seen that neither sub-section (2A) nor any other provision in the Act expressly qualifies or abridges the power of the Tribunal to pass all necessary orders u/s 254(1). However, it is obvious that the provisions contained in sub s. (2A) shall have to be an additional factor which the Tribunal has to take into consideration while passing an order of stay or other orders pending the appeal before it. In other words, while granting stay or any other interlocutory order, the tribunal shall have to keep in mind the period of limitation prescribed in section J53(2A) and pass orders in the light of the same. " It has been specifically observed by the Hon'ble High Court that since the ITAT is not a court, clause (ii) of Explanation 1 may not help the department to exclude the period during which stay granted by Tribunal is in operation . In vi....
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....he proceedings against petitioner was barred by time , the respondent could not take advantage of the direction issued by court. Reliance is also placed on following decisions . a)Decision of Delhi High Court in the case of CIT V s Escorts Farms Pvt Ltd., reported in 280 (Delhi). Their Lordships' have held that - "The decision of Tribunal is correct when it stated that the effect of holding that the assessment was barred by time is that all further proceedings pursuant to the said decision would be infructuous. The ITO gets jurisdiction to pass an assessment order if it is within limitation. If the assessment is barred by time, then any decision on merits would be of no consequence, and for the same reason, the decision, on merits, by the appellate authorities would also be of no consequence and would have to be ignored." CIT Vs Smt Kamala Devi 217 ITR 330 (All) . "In clear' terms it is held that an order of fresh assessment passed by the ITO in pursuance of the order passed u/s 263 setting aside or cancelling the earlier assessment order has to be passed within the period of two years prescribed therein." In the alternative, ass....
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....t passed by the ITO in pursuance of the order passed u/s 263 setting aside or cancelling the earlier assessment order has to be passed within the period of two years prescribed therein." (d) Hopes Textiles Pvt.Ltd. vs. Union of India & Others reported in 205 ITR 508SC - a writ of mandamus can be issued to a statutory authority to compel it to perform its statutory obligations. It cannot issue to compel him to pass an order in violation of statutory provision. The ITO has no power to make reassessment beyond the period prescribed in sub section (2) , unless the case fell under any other sub sections U/s 153 or other provisions extending the period of limitation . In the instant case in absence of any statutory provisions empowering the High Court to extend the statutory limitation prescribed u/s l53(2A) , the extension order cannot be read as overriding the statutory limitation and the assessment would be valid only if it is within the statutory limitation . e) A useful reference may also be made to the decision of Andhra Pradesh High Court in the case of Satyam Computers Services Limited Vs Additional CIT reported in (2013) 356 ITR 17 , where their Lordships' ....
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....ble High court permitting the department to complete assessment within a further period of six months from the date of said order. Such direction has always to be read subject to the statuary limitation prescribed by section 153(2A). Gulabchand Motilal Vs CIT reported in 174 ITR 117 (MP) , their lordships' have held that ----- " it therefore follows that to give full effect to the fiction introduced by Explanation 2 to section 153 and to the object for insertion of sub section (2A) in section 153 it must be held that where fresh assessment is being made for a particular assessment year , in pursuance of a finding or direction incorporated in an order u/s 250 , 254,263 or 264, passed in proceedings relating to another assessment year then the fresh assessment would be deemed to have been made for the purpose of section 150 and 153, in consequence of or to give effect to any finding or direction setting aside or cancelling the assessment for that particular year." f) Bhatia Motors Vs CIT reported in 288 ITR 31 (MP) ---where fresh assessment proceedings has not been stayed by an order or injunction of any court, a fresh assessment order pursuant to an ap....
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....by this Hon'ble Tribunal uninfluenced by the extension granted by Hon'ble High Court." Written submissions submitted by the Ld. Departmental Representative : ITA No. 356/IND/2012 and 390/IND/2012 1.The AO passed assessment order for AY 1996-97 U/S 143(3) on 22.03.1999. 2. Hon'ble CIT(A) passed order in appeal by dismissing the appeal filed by the appellant and confirming the assessment order dated 22.03.l999, on 31.01.2000. 3. The Hon'ble Tribunal vide order dated 11.12.2000 annulled the assessment on the ground of substituted service of notice u/s 143(2) within prescribed time. Hon'ble Tribunal also decided the appeal on merits and restored the matter back to AO for giving opportunity of cross examination to the assessee, but barred AO from making any further assessment unless, the order passed by it is reversed on the legal grounds. The relevant or portion of the order of IT AT is report as under :-. "Since the assessment order has been annulled on the legal ground, the AD is refrained from doing fresh assessment as per our directions given while deciding original ground nos. 1 to 3 until and unless our ord....
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....liberty to take all grounds including of limitation before CIT(A). on 05.04.2007 8. The AO passed fresh assessment order in consequence of High court order dated 03.01.2005 on 12.07.2007, which is well within limitation allowed by the Hon'ble High Court. 9. The CIT(A) passed the order dismissing the appeal filed by the appellant, on 19.03.2012, inter alia on the issue of limitation, vide page 30 to 32 of his order. 10. In consequence of inter alia 4th Substantial Question of Law raised before the Hon'ble High Court, the order of the Hon'ble ITAT dated 11.12.2000 regarding annulment of the assessment order has been reversed. Therefore, limitation provided u/s 153 (2A) does not come into operation. On the contrary, as provided in the Sec. 153(3) of Income Tax Act 1961 (as updated by finance Act of 2007 and not the Act of 2016) there is no time limit for following direction of higher authority/Courts including direction of Hon'ble ITAT and Hon'ble High Court. The sec. 153(3) reads as under: "(3) The provisions of sub-sections (1) [ (IA), (IB)] and (2) shall not apply to the following classes of assessments, reassessments....
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....nt provisions, which speaks as under :- "Time limit for completion of assessment, reassessment and recomputation. Section - 153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of TWENTY-ONE months from the end of the assessment year in which the income was first assessable. (2) No order of assessment, reassessment or recomputation shall be made under Section 147 after the expiry of nine months from the end of the financial year in which the notice under Section 148 was served. (3) Notwithstanding anything contained in sub-sections (1) and (2), an order of fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner or Commissioner. (4) Notwithst....
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....order, finding or direction referred to in sub-section (5) or sub-section (6) is to be given by the AO, within the time specified in the said sub-sections, and such order has been received or passed, as the case may be, by the income-tax authority specified therein before the 1st day of June, 2016,the AO shall give effect to such order, finding or direction, or assess, reassess or recompute the income of the assessee, on or before the 31st day of March, 2017. (8) Notwithstanding anything contained in the foregoing provisions of this Section, sub-section (2) of section 153A or subsection (1) of Section 153B, the order of assessment or reassessment, relating to any assessment year, which stands received under sub-section (2) of section 153A, shall be made within a period of one year from the end of the month of such revival or within the period specified in this Section or subsection (1) of Section 153B, whichever is later. (9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputaiton may before the 1st day of June, 2016." 11. ....
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....05 allowed the appeal of department and set aside ITAT'S order regarding annulment of assessment, other questions not gone into by High Court as not under challenge. AO directed to complete enquiry as per ITAT's order within 6 months and pass final assessment order. 19.01.2007 The Hon'ble High Court allowed department's application for extension of period for completion of assessment. The department allowed to complete assessment within further period of six months from the date of High Court's order. Ex-parte order without notice to the assessee. 05.04.2007 Appellant challenged the said order dated 19.01.2007 before Supreme Court and Supreme Court without expressing any opinion on merits, observed that in the event of passing of assessment order by A.O. the appellant is at liberty to take all grounds including of limitation before CIT(A). 12.07.2007 The AO passed fresh assessment order in consequence of order dated 11.12.2000 passed by ITAT. 19.03.2012 The CIT(A) passed the order dismissing the appeal filed by the appellant which is impugned by appellant in the present appeal. 12.02.2013 During the pendency of above appeal before CIT(A), apprehending ....