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2026 (2) TMI 797
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....ssment year 2015-16. 2. That on the facts & circumstances of the case and in law, the CIT(A) did not appreciate that the directions issued under section 150(1) of the Act are beyond the scope and powers of section 150(1) of the Act read with Explanation (2) to section 153(6) of the Act. 3. That on the facts & circumstances of the case and in law, the CIT(A) did not appreciate that a finding/direction within the meaning of section 150 of the Act can be issued only where the income of a particular assessment year is taxable, for another assessment year and / or the income assessed in the hands of person "A" is liable to be assessed in the hands of person "B" i.e. person other than "A". 4. That on the facts & circumstances of the case and in law, the CIT(A) did not appreciate that since no incrementing material was found during search allegedly conducted on the Appellant, therefore, direction to initiate proceedings under section 147 of the Act, for the assessment year 2015-16 was beyond the scope of powers of the CIT(A)-the appellate authorities under the Act. 5. That on the facts & circumstances of the case and in law, the CIT(A) did not appreciat....
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....Murlidhar Bhagwan Das: [1964] 52 ITR 335 (SC) ii. Munish Chander Khurana vs ITO: ITA No.9687/Del/2019 (Del Trib) iii. DCIT vs Sh Vaibhav Banka Aakarshan: [2025] 176 taxmann.com 362 (Jpr Trib) iv. G.S. Atwal & Co (Engg.) Pvt Ltd vs DCIT: ITA No.1937/Kol/2019 (Kol 16 Trib) v. ITO vs Sri Biswajit Chatterjee: ITA No.565/Kol/2013 (Kol Trib) vi. Marubeni India (P) Ltd vs CIT: [2010] 236 CTR 234 (Del) 4. On the other hand the Ld. DR strongly supported the orders of the Ld. CIT(A). 5. Heard rival submissions, perused the orders of the authorities below. The issue as to whether the Ld. CIT(A) is empowered to give directions to the AO to initiate reassessment proceedings u/s. 148 of the Act, came up for consideration before the coordinate Bench of ITAT Jaipur in the case of DCIT Vs. Sh. Vaibhav Banka Aakarshan reported in 176 taxmann.com 362 and the Tribunal held that such directions is beyond the scope of powers of Ld. CIT(A). While holding so the Tribunal observed as under :- 13. Now coming to the cross objection filed by the assessee against the appeal filed by the revenue. As the appeal of the assessee was allowed by the id. CIT....
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....of 2021)-Instruction regarding". The learned assessing officer is directed to implement the law and ratio of the judgement of AbhisarBuildwell (supra) and the said Instruction No. 1 of 2023 dated 23-08-2023 and section 150 of the Act, in the case of the appellant appropriately as per the facts of the case and as per above findings. Accordingly this ground of appeal is adjudicated in above terms. For statistical purposes this ground is hereby treated as allowed" Before us the Id. AR of the assessee submitted that the appeal of the assessee has decided considering the two dmark judgment of apex court in the case of Abhishar Buildwell and U. K. Paints (supra). Thus, the issue before us is to be decided considering the following records placed on record: 1. Decision of the apex court in the case of Abhisar Buildwell & U. K. Paints. 2. Miscellaneous Application filed by Revenue before the apex court 3. CBDT's Instruction No. 1 of 2023 dated 23-08-2023 As is evident the cross objection of the assessee hinges on the provision of section 150, 251, Miscellancous application filed by the revenue before the apex court and CBDT's in....
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....ls) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit.) (2) The 72 (Joint Commissioner (Appeals) or the] Commissioner (Appeals) 72[, as the case may be.] shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation-In disposing of an appeal, the Joint Commissioner (Appeals) or the Commissioner (Appeals), may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the - Joint Commissioner (Appeals) or the) Commissioner (Appeals), as the case may be.1 by the appellant, The law is settled by the decision of the apex court in the case of AbhisarBuildwell and U.K. paints (supra) a....
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....ought in the present application and as and when such review application is filed the same can be heard in the open court. 3. In view of the above and without further entering into the merits of the application and/or expressing anything on merits on the prayers sought in the present application, the present application is not entertained and we relegate the Revenue to file an appropriate review application seeking the reliefs which are sought in the present application and as and when such review application is filed the same be heard and decided and disposed of in the open court. At the cost of repetition, we observe that as we have not entered into the merits of the present application and we relegate the Revenue to file an appropriate review application, the review application be decided and disposed of in accordance with law and on its own merits." 4.1.iii. Following the dismissal of the Revenue's Miscellaneous Application in Abhisar Buildwell Pvt. Ltd (supra), wherein the Hon'ble Supreme Court expressly relegated the Department to file a formal review petition-no such review was pursued. Instead, the CBDT issued Instruction No. 1/2023 dated ....
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.... 1961 Act) do not confer on the appellate authorite a power to make Act, analogous to Section 250/254 of the appeal, especially as the Act provides separate, the mechanisms (like Section 34 of 1922 Act, now Section 147) to deal with escaped income. Accordingly, the Apex Court held that; "It was not contended, nor was it possible to contend, that by reason of the reference to the said provisions the powers and jurisdiction conferred on the respective authorities, tribunals or courts referred to therein were enlarged or modified by a reference in the proviso or that the proviso could be read of construed as amending those sections conferring on those bodies wider or different powers or jurisdiction. Learned counsel for the department expressly disclaimed any such submission. Therefore, the scope of the proviso cannot ordinarily exceed the scope of the jurisdiction conferred on an authority under the said provisions." We also take note that the apex court has dealt with the provision of section 150 ice. Provision for cases where assessment is in pursuance of an order on appeal and section 149 ie. Time limit for notices under section 148 the Act. While dealing with th....
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.... assessee to file his income-tax return and pay tax accordingly 5. On 31-3-1994, the appellant was served with impugned notices under section 148 of the Act for 16 assessment years, ie, 1968-69 to 1971-72 and the assessment years 1981-82 10 1992-93. 6. The appellant, in the High Court, assailed the notices issued under section 148 for reassessment the assessment years 1968- 69 to 1971-72 and for the year 1982-83 on the ground that the proposed reassessment for those assessment years had already become harred by time under section 149 of the Act, for which in the relevant periods maximum period of four years or seven years limitation was prescribed depending upon the quantum of liability towards tax 7. The High Court by the impugned judgment accepted the contention of the department that the provisions of section 150(1) of the Act, as amended with effect from 1-4-1989, could be resorted to for reassessment to levy tax on the increased amount of interest earned by the appellant in the relevant assessment years. It was held that bar of limitation prescribed under section 149 of the Act was not attracted by virtue of the provisions of section 150(1) because n....
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....nt is proposed on the basis of any order passed by any 'authority in any proceedings under the Act by way of appeal, reference or revision' or 'by Court in proceedings under any other law' sub-section (1) of Section 150 would not be available to the departments where the period of limitation or such assessment or reassessment has expired at the time it is proposed to be reopened. In sub-section (1) of section 150, by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989, the words or by a Court in any proceeding under any other law' were inserted which are shown in bracket with underline in the section reproduced above. 10. The main question that has been raised on behalf of the learned counsels appearing for the parties is whether the provisions of sub-section (1) of section 150 as amended can be availed for reopening assessments, which have attained finality and could not be reopened due to bar of limitation, that was attracted at the relevant time to the proposed reassessment proceedings under the provisions of section 149, 11. The submission made on behalf of the appellant is that neither the provisions of sub-section (1) nor sub-section (2) can ....
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....pplicable prior to 1-4-1989, would amount to give subsection (1) a retrospective operation which is neither expressly nor impliedly intended by the amended sub-section. 15. On behalf of the assessee before the High Court and in this Court reliance has been placed on the provisions contained in sub-section (2) of section 150. It is submitted that the provision contained in sub-section (2) of section 150 is in the nature of clarification or Explanation to sub-section (1). Sub-section (2) makes it clear that the embargo of period of limitation lifted under sub-section (1) for proposed reassessments based on order in proceedings under appeal, reference or revision as the case may be would not apply to assessments which have attained finality due to bar of limitation applicable at the relevant time. 16. The High Court rejected the above contention of the assessee on the ground that on the amendment introduced with effect from 1-4-1989 in sub-section (1), which enables reopening of assessment based on any order of Court in any proceedings in any law', there is no corresponding amendment made in subsection (2) of section 150 to bar reassessment based on order of cour....
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....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 reopen assessments, which have not already been closed and attained finality due to the operation of the bar of limitation under section 149. 19. This Court took similar view in the case of S.S. Gadgil (supra) in somewhat comparable situation arising from the retrospective operation given to section 34(1) of the Indian Income-tax Act, 1922 as amended with retrospective effect from 1-4-1956 by the Finance Act, 1956. In the case of S.S. Gadgil (supra) admittedly under clause (iii) of the proviso to section 34(1), as it then stood, a notice of assessment or reassessment could not be issued against a person deemed to be an agent of a non-resident under section 43, after the expiry of one year from the end of the year of assessment. The section was amended by section 18 of the Finance Act, 1956, extending this period of limitation to two years from the end of the assessment year. The amendment was given retrospective effect from 1-4-1956. On 12-3-1957, the ITO issued a notice calling upon the assessee to show cause as ....
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....ssion aforesaid, the appeal is allowed. The judgment of the Delhi High Court dated 24-5-1996 is hereby set aside. As prayed in the petition, the impugned notices issued by the respondent of the Income-tax Department under sections 148 and 142 against the appellant for the assessment years 1968-69 to 1971-72 and 1981-82 are hereby quashed. The appeal stands allowed with costs. The above view is also get support by a decision of Nagpur Bench of this ITAT in the case of M.B. Traders v. Assit. CIT [2011] 9 ITR(T) 453/[2010] 132 TTJ 490 (Nagpur) wherein the coordinate bench held that; 9. After an in-depth study of the entire case record, on a patient hearing of both the sides and after reading the case law cited at length, our observations and findings on the matter are as follows. Before giving our observation and finding, it has been deemed proper to quote ss. 150 and 151 as it is, as under: "150. (1) Notwithstanding anything contained in s. 149 the notice under s. 148 may be issued at any time of the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order....
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.... as had been meant and interpreted from a perusal of s. 147 of the IT Act. The direction of higher authority should not be interpreted as a blanket direction by the AO But that should be accompanied by the direct satisfaction of the AO with regard to the escapement income. The appellate authorities or higher authorities cannot interfere on this power of the AO. It means the direction of the higher authorities and that of the appellate authorities must be acted upon by the AO with utter satisfaction. Taking initiation of reassessment proceeding without satisfaction of the AO, simply on the basis of the blanket direction, will not justify the action of initiation of reopening proceeding. In this particular case as has been rightly pointed out by the learned Authorised Representative from p. 13 of the paper book filed, the AO has simply acted upon, te, initiated reopening proceeding on the basis of the direction of the CIT(A) and has totally ignored his part of the job te, his satisfaction, as is evident from p. 13 of the paper book filed by the learned counsel which is quoted below for better appraisal of facts: "Assessee filed the return of income of Rs. 39,720 on 25th Jan.....
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....t or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of the Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. The Income-tax Officer has also, before issuing such notice, to record his reasons for doing so. Section 149 prescribes the time limit for the notice. The time limit in ag falling under clause (1) of sub 149 prescribes, with which we are not concemed, shall be years from the end of the utersection (1) of section 149ncaves falling under clause (b) of section however, the time limit for the notice is four years from the end of the relevant assessment yeaf be Ad (a) of section 147 of the Act of 1961 corresponds to clause (ur) of subsection (1) of section 34 of the A of 1922. The language of clause (a) of section 147 read with sections 148 and 149 of the Act of 1961 as also the corresponding provisions of the Act of 1922 makes it plain that two conditions have to be satisfied before the Income-tax Officer acquires jurisdiction to issue notice un....
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....or assessment will differ from case to case, In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inference as regards certain other facts; and ultimately from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable: See Calcutta Discount Co. v. Income-tax Officer [1961] 41 ITR 191, 201 (SC). As further observed in that case: "Does the duty, however, extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative, Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably dra....
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.... be specified without taking into account the initial depreciation because such depreciation in terms of clause (vi) of section 10(2) of the Act of 1922 could not be deducted in determining the written down value for the purpose of that clause. The case of the appellant is that in determining the amount of depreciation at the time of the original assessment for the two assessment years in question, the Income-tax Officer relied upon the written down value of the various capital assets as obtaining in the records of the department. This stand has not been controverted. When an Income-tax Officer relies upon his own records for determining the amount of depreciation and makes a mistake in doing so, we fail to understand as to how responsibility for that mistake can be ascribed to an omission or failure on the part of the assessee. It also cannot be disputed that initial depreciation in respect of items of capital assets in the shape of new machinery, plant and building installed or erected after the 31st day of March, 1945, and before the 1st day of April. 1956, is normally claimed and allowed. It seems that the Income-tax Officer in working the figures of depreciation for certain it....
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....rial facts. It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity, So far as the income-tax assessment orders are concerned, they cannot be reopened on the score of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, this cannot be....