TaxTMI 
TaxTMI 
2018 (9) TMI 144
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....FFICER. 4 THAT THE LEAREND CIT (APPEALS) HAS ERRED IN NOT PROVIDING PROPER AND ADEQUATE OPPORTUNITY TO THE APPELLANT." 2.1 The grounds of appeal taken by the assessee in I.T.A. No. 812/Lkw/2017 are reproduced below: "1. That the learned CIT (Appeals) has erred in confirming the ad-hoc disallowance made by the assessing officer of Rs. 6,38,422.00 out of sales promotion expenses. 2. That the addition / disallowances made by the assessing officer and confirmed by learned cit (appeals) is highly excessive and arbitrary. 3. That the Learned CIT (appeals) has erred in not providing proper and adequate opportunity to the appellant." 3. At the outset, Learned A. R. invited our attention to the legal ground taken in ITA No. 811/Lkw/2017 and submitted that the notice issued u/s 148 of the Act was barred by limitation and in this respect our attention was invited to the copy of the assessment order, wherein the Assessing Officer had mentioned in his order that on the basis of appellate order passed by Learned CIT(A) dated 22.12.2015, the assessee was required to explain the cash credit u/s 68 of the Act to the extent of Rs. 1,56,660/- relevant to F.Y. 2003-04. The Learned A.R. submi....
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....uchers despite specific direction. 7. We have heard the rival parties and have gone through the material placed on record. We first take ITA No.811/Lkw/2017. The limited issue to be decided in this appeal is as to whether the reassessment proceedings initiated by the Assessing Officer during the F.Y. 2015-16 for reopening the case relating to 2003-04 is legal or not. This question has already been decided by the Third Member in the case of Emgeeyar Pictures (P.) Ltd. vs. DCIT, 70 taxmann.com 45 (Chennai-TM). The Hon'ble Third Member has discussed the issue in detail and has decided the issue in favour of the assessee by holding as under: "3. According to the Ld. counsel, in fact, when the appeal came before this Tribunal for the assessment years 2003-04 and 2004-05, this Tribunal found that the transfer took place in the year 2000. Therefore, the capital gain cannot be taxed for the assessment years 2003-04 and 2004-05. There is neither a finding that the capital gain has to be taxed in the assessment year 2001-02 nor any direction to assess the same in the assessment year 2001-02. Therefore, according to the Ld. counsel, the Assessing Officer cannot take the benefit of Sect....
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....e six-year period expired on 31.03.2008. Therefore, issue of notice under Section 147 r.w.s. 150 of the Act on 10.06.2011 is beyond the period of limitation. 5. The Ld. counsel for the assessee further submitted that Section 150(2) of the Act clearly says that if the time limit expired at the time of the order which was subject matter of appeal, then provisions of Section 150(1) of the Act is not applicable. In this case, according to the Ld. counsel, the order of the Tribunal was passed on 31.05.2010. The limitation period had already expired, therefore, no order can be passed under Section 150(1 ) of the Act in the guise of reopening under Section 147 of the Act. The Ld. counsel has also placed this reliance on the judgment of the Apex Court in K.M. Sharmav. HO [2002] 254 ITR 772/122 Taxman 426. Therefore, according to the Ld. counsel, the Assessing Officer ought not to have reopened the assessment in the guise of giving effect to the order of the Tribunal for the assessment years 2003-04 and 2004-05. 6. The Ld. counsel further submitted that the CIT (Appeals), referring to the contention of the assessee that there was no specific finding or direction of the Tribunal in the o....
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....3(2) of the Act. Referring to sub-section (2) to Section 153, the Ld. D.R. pointed out that if any income was excluded from the total income of the assessee for an assessment year, then for assessing tl at income for another assessment year should be considered as one made consequent to the order giving effect to the finding or direction contained in the order the higher authority. Therefore, according to the Ld. D.R., when the Assessing Officer passed an order giving effect to the order of the Tribunal for assessment years 2003-04 and 2004-05, it has to be deemed that the order of the assessment was passed giving effect to the finding contained in the order of this Tribunal. Therefore, according to the LI, D.R., the CIT (Appeals) has rightly confirmed the order of the Assessing Officer. 8. We have considered the rival submissions on either side and perused the relevant material on record. Initially the assessee filed the return of income for assessment year 2001-02 on 25.04.2005 consequent to-the notice issued under Section 148 of the Act, disclosing the loss of Rs. 56,758/-. However, the Assessing Officer reopened the assessment under Sec ion 147 of the Act and determined the l....
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....sing Officer cannot take any advantage on the basis of the order of this Tribunal dated 31.05.2010 by invoking Section 150(1) of the Act. This Tribunal is of the considered opinion that the Assessing Officer can pass an order under Section 150(1) of the Act provided the appellate/revisional order was passed within the period of limitation available for reopening the assessment. In this case, on the date 0f appellate order, i.e. 31.05.2010, the limitation period had expired. Therefore, the order passed tjy the Assessing Officer by issuing notice for reopening the assessment on 10.06.2011 is barred by limitation. 11. We have carefully gone through the judgment of the Apex Court in KM. Sharma (supra). The Apex Court, after considering the provisions of Section 150(2) of the Act, found that sub-section (2) of Section 150 puts embargo on reopening assessments, which have attained finality on expiry of period of limitation. The Apex Court also found that sub-section (2) of Section 150 makes it clear that reassessment permissible under Section 150(1) of the Act would not be available to Department when the period of limitation for such assessment or reassessment has expired at the time ....
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.... not reading the whole of the amended sub-section (1) into subsection (2) and coming to the conclusion that the reassessment proposed on the basis of the order of the court in proceedings under the Land Acquisition Act could be commenced even though the original assessments for pie relevant years in question have attained finality on the expiry of the period of limitation under section 149 of the Apt. On a combined reading of sub-section (1) as amended with effect from April 1, 1989, and sub-section (2) of section 150 as it stands, in our view, a fair and just interpretation would be that the authority under the Act has been empowered only to re-open assessments, which have not already been closed and attained finality due to the operation of the bar of limitation under section l49.' 12. We have also carefully gene through the judgment of Karnataka High Court in Spences Hotel (R) Ltd. (supra). In the case before Karnataka High Court, it found that Section 150(1) of the Act begins with the words "notwithstanding anything contained u r Section 149". Therefore, the notice issued to the assessee, pursuant to the finding of the Tribunal with regard to escaped income for assessme....
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....ar 1991 and doing business there. After receiving the interest on the Compensation amount on 21.08.2001, the assessee filed revised return on 14.01.2001 for assessment years 1995-96 to 2001-02. The Assessing Officer reopened the assessment by issuing notice under Section 148 for the assessment years 1989-90 to 1994-95. The assessee challenged the notice before the Allahabad High Court on the ground that the assessments cannot be reopened. The Allahabad High Court, by placing judgment of Apex Court in K.M. Sharma (supra), found that the words "or by a court hi any proceeding under any other law" were inserted by Direct Tax Laws (Amendment) Act, 1987 with effect from 01.04.1989. The Allahabad High Court found that the notice was issued after 01.04J1989, i.e. after the amended Act came into effect from 01.04.1989 and accordingly, rejected the contention of the assessee. 15. We have also carefully gone through the judgment of Madras High Court in Vellore Electric Corporation (supra). In the case before the Madras High Court, the issue arose for consideration was whether the period of limitation prescribed for reopening the assessment was applicable even for an order passed by the Ass....
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....may be necessary to comply with an order of the higher authority. For the said purpose, the records of the proceedings must be before the appropriate authority. It must examine the records of the proceedings. If there is no proceeding before it or if the assessment year in question is also not a matter which would fall for consideration before the higher authority, section 150 of the Act will have no application. 62. In ITO v. Murlidhar Bhagwan Das [1964] 52 ITR335 (SC)? it was held (page 339): "The proceedings would! be in time, if the second proviso to section 34(3) of the Act could be invoked. The question, therefore, is what is the tme meaning of the terms of the second proviso to section 34(3) of the Act. if, reads: 'Provided further that nothing in this section limiting the time within which any action may be taken, or any order, assessment or reassessment may be made, shall apply to a reassessment made under section 27 or to the assessment or reassessment made on the assessee or any person. In consequence of or to give effect to any finding o|* direction contained in an order under section 31, section 33, section 33A, Ejection 33B, section 66 section 66A. Prima ....
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....ction (1) thereof." 64. In regard to the question that what would be meaning of the term "finding" or "direction", it was held (page 345): "A 'finding', therefore, can be only that which is (necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression direction cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commissioner can give under section 31. Under that section he can give directions, inter alia, under section 31(3)(b), (c) or (e) or section 31(4). The expression directions in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other tribunals can issu....
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....in an appellate, revisional or any other order. Explanation 2 says that where an appellate, revisional or other order excludes any .income from the total income of the assessee for an assessment year, the assessment of such income for another assessment year shall, for the purposes of both section 150 and section 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the order. Similarly, Explanation 3 says that where by an appellate, revisional or other order my income is excluded from the total income of one person and held to be the income of another person, the assessment ojf income of such other person shall, both for the purposes of section 150 and section 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the[ order, provided, of course, such other person was given an opportunity of being heard before the said order was made. What is, however, clear is that Explanations 2 and 3 do not purport to obliterate jor remove the restriction contained in sub-section (2) of section 150. They, no doubt, refer to section 150, but for a limited purpose, mentioned above. A review ....
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....a higher proceeding on the ground that it is not the income of that year, steps may be taken under Section 147 to assess it as the income of another year, without any limitation applying to the issue of notice under section 148 or to the completion of the assessment or reassessment. .... "With great respect, we think that this observation overlooks the provisions I contained in sub-section (2) of section 150. However, inasmuch as the case before us is not one falling under Explanation 2 to section 153, we do not think it necessary to refer the matter to a larger Bench." 19. By respectfully following the judgment of the Apex Court in KM. Sharma (supra) and the 'c| Corporation (supra), this Tribunal is of the judgment of Madras High Court in Vellore Elects considered opinion that the order of the Assessing Officer is barred by limitation, therefore, the same cannot stand in the eyes of law. Accordingly, the orders of the lower authorities are set aside. 19. In the result, the appeal of the assessee is allowed." 8. We further find that this issue is covered in favour of the assessee by the order of I.T.A.T. Jaipur Bench in the case of Ramesh Chand Soni, HUF vs. Income Tax Off....