TaxTMI 
TaxTMI 
2026 (3) TMI 1125
X X X X Extracts X X X X
X X X X Extracts X X X X
....oceedings were undertaken, and an order of assessment under Section 143(3) was passed on 28.12.2017. 5. Thereafter, Respondent No. 1 issued the impugned notice dated 04.02.2020 under Section 148 of the IT Act seeking to reopen the assessment for the relevant Assessment Year 2015-16. The Petitioner furnished the Return of Income in response to the said notice, following which notice under Section 143(2) and other notices under Section 142(1) were issued by Respondent No. 1. 6. The Petitioner filed objections against the said re-opening proceedings vide its submission dated 23.03.2021 and the said objections were disposed vide order dated 29.07.2021. 7. The Petitioner then approached this Court by filing Writ Petition [bearing Writ Petition No. 2977 of 2021] challenging the validity of the notice issued under Section 148 and also the order disposing objections, on several grounds. 8. This Court disposed of the said Writ Petition vide its final order dated 29.08.2023. The relevant part of the order is extracted below:- "3. The matter is remanded to the Jurisdictional Assessing Officer (JAO), who shall within one week from today make available to petitioner reasons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 148 04.02.2020 2 Date of filing Writ Petition (1st round) [WP 2977/2021] 20.08.2021 3 Stay granted by Hon'ble High Court 31.08.2021 4 General Limitation period to pass the Final order: First proviso to section 153(2) viz. 12 months from the end of the year in which notice u/s. 148 was served. 31.03.2021 However, further extended by TOLA [vide notification no. 74/2021 dated 25.06.2021] 30.09.2021 5 Writ Petition (1st round) disposed of with relevant directions as reproduced in paragraph 8 above. 29.08.2023 7 Exclusion period - Explanation 1(ii) to section 153 [from 31.08.2021 to 29.08.2023] 728 days 8 Limitation period after considering exclusion period [Original limitation period (30.09.2021) + 728 days] 28.09.2023 9 Date of disposing the objections to reopening 21.12.2023 11 Extension as per first proviso to Explanation 1 to section 153 60 days 12 Limitation period after considering the extended period of 60 days from the date of disposing the objections to reopening 19.02.2024 12. It is contended that applying the provisions of the first proviso to Section 153(2) read with....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... support of this rebuttal, reliance was placed on the decision of this Court in the case of Wavy Construction LLP vs. Assistant Commissioner of Income-tax [2025] 170 taxmann.com 174 (Bombay)/[2025] 473 ITR 1 (Bombay)[20-12-2024]. 15. We have heard both the parties at length and have also perused the records produced before us. 16. Undisputedly, for the purpose of applicability of the extended limitation period as prescribed under Section 153(6)(i), the mandate is that "...the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order...". Thus, the extended limitation period as provided under Section 153(6)(i) can be made available only if it is first established that the principal order contains such 'finding' or 'directions'. 17. An identical question arose before this court in the case of Wavy Construction LLP vs. ACIT [2025] 473 ITR 1 (Bombay), wherein during the first round of the Writ Petition, this court had passed the following order (extract from paragraph 7 of the above decision):- "1. Mr. Walve states that an affidavit of one Biju Thomas, Ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n (6) of Section 153 was available for passing the order of re-assessment. 19. This court negated the said contention by holding as under:- "29. To appreciate the issue, as to what has been the interpretation of this provision by the Court is required to be seen. The Constitution Bench of Supreme Court in Murlidhar Bhagwan Das (supra) was considering the facts, where the respondent / assessee was assessed to income-tax under Section 23(4) of the IT Act for the assessment year 1949-50, on the ground that the notice issued under sub-section (2) and (4) of Section 22 of the IT Act had not been complied with. On 27 September 1955, the said assessment was cancelled under Section 27 of the IT Act, but before the said cancellation, it was found that an interest income of Rs. 88,737/- received by the assessee in discharge of the debts due from third parties had escaped assessment as the assessee failed to disclose the same. The Income-tax Officer issued a notice under Section 34 (1) (a) of the IT Act for the assessment year 1949-50 on the ground that such income had escaped assessment. After the assessment of that year was set aside under Section 27 of the Act, the Income-tax O....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iso to Section 34(3) of the IT Act, as it stood at the relevant time, and presently as falling under clause (i) of subsection (6) of Section 153 of the IT Act. The Supreme Court in interpreting the said expressions held that the expression "finding" has not been defined in the IT At. Referring to Order XX Rule 5 of the Code of Civil Procedure, it was observed that a finding is, therefore, a decision on an issue framed in a suit and a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. It was observed that this was to say, the finding shall be one which is necessary for the disposal of the suit. It was held that a "finding", therefore, can only be that which is necessary for the disposal of an appeal in respect of an assessment of a particular year as the Appellate Assistant Commissioner may hold in the facts, 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. In such situation, the finding in that context is that the income does not belong to the relevant year. It was observed that he may inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt the Income-tax Officer may have to initiate the proceedings once again in which case section 34(1) will Il be attracted. The expression "finding or direction", the argument proceeds, is wide enough to take in at any rate a finding that is necessary to dispose of the appeal or direction which Appellate Assistant Commissioners have in practice been issuing in respect of assessments of the years other than those before them in appeal. What does the expression "finding" in the proviso to sub-section (3) of section 34 of the Act mean? "Finding" has not been defined in the Income-tax Act. Order XX, rule 5, of the Code of Civil Procedure reads: "In suits in which issues have been framed, the court shall state its finding or decision, with the reasons therefore, upon each separate issue, unless the finding upon any one or more of the issues is sufficient for the decision of the suit." Under this Order, a "finding" is, therefore, a decision on an issue framed in a suit. The second part of the rule shows that such a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. That is to say, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such context, the Supreme Court considered as to what could be the meaning required to be attributed to the expressions "finding" and "direction". It was held that the finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. As regards the expression "direction" in Section 153(3)(ii) of the IT Act, it was observed that it was well settled that it must be an express direction necessary for the disposal of the case before the authority or Court. It must also be a direction which the authority or Court is empowered to give while deciding the case before it. It was thus held that the expressions "finding" and "direction" in section 153(3)(ii) of the IT Act must be accordingly confined and more particularly considering the fact that section 153(3)(ii) was not a provision enlarging the jurisdiction of the authority or Court and it was a provision which merely raises the bar of limitation of making an assessment order under section 143 or section 144 or section 147. The relevant observations of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and N. K. T. Sivalingam Chettiar v. CIT. [1967] 66 ITR 586 (SC) (SC). The question formulated by the Tribunal raises the point whether the Appellate Assistant Commissioner could convert the provisions of section 147(1) into those of section 153(3)(ii) of the Act. In view of S. 153(3)(ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point." 34........... 35. It is also not possible to say that the order of the Appellate Assistant Commissioner contains a direction that the excess should be assessed in the hands of the coowners. What is a "direction" for the purposes of section 153(3)(ii) of the Act has already been discussed. In any event, whatever else it may amount to, on its very terms the observation that the Income Tax Officer "is free to take action" to assess the excess in the hands of the co-owners cannot be described as a "direction". A direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the Income Tax Officer whether or not to take action it cannot, in our opinion, be described as a direction. Therefore, in our judgme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs are not entitled for any fresh notice. 8. The Supreme Court in Rajinder Nath v. CIT, [1979] [1979] 2 Taxman 204/120 ITR 14 (SC) (SC) (SC); [1979] taxman 204 (SC) and ITO v Murlidhar Bhagwan Das [1964] [1964] [1964] 52 ITR 335 (SC) (SC) (SC), has held that a finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for disposal of a particular case. Similarly, a direction must be an expressed direction necessary for disposal of the case before the authority of court and must also be a direction which the authority of court is empowered to give while deciding a case before it. Thus, it is evident that the order dated March 7, 2012 passed by learned Single Judge of this court neither contains any finding nor any direction. 9. The proceedings were stayed for a period from December 8, 2011 to March 7, 2012, i.e., for a period of 103 days and if the period of 103 days is added, and a period of 60 days as prescribed in the proviso to Section 153(4) is added, the draft order ought to have been passed by the Assessing Officer upto May 6, 2012, whereas, in the instant case, the draft order has been passed on July 5, 2012 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ching to this conclusion, we are supported by what has been held by the Supreme Court in Murlidhar Bhagwan Das (supra) when the Supreme Court observed that the words "in consequence of or to give effect to" do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. It was further observed that if the scope is limited in such event, the said words also must be related to the scope of the findings and directions." 21. In the present case also, on perusal of paragraph 3 and 4 of the order of this court dated 29.08.2023 (as reproduced in paragraph 8, above) it can be observed that this Court held that: (a) The matter was remanded back to the Jurisdictional Assessing Officer; (b) The said Officer shall provide the Petitioner with the copy of reasons recorded within a period of one week. (c) The Petitioner was granted liberty to file objections to reopening against such reasons recorded. (d) Within 4 weeks thereafter, the said officer was then required to pass the order disposing the objections. (e) Further, it was stated that no order of assessment was to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is that an order which clause (i) of sub-section (6) talks about, is necessarily required to be an order which not only guides, but controls the course of such assessment, reassessment or recomputation, and not otherwise. In fact, this court in its order dated 29.08.2023, specifically in paragraph 5 thereof, stated "We clarify that we have not made any observation on the merits of the matter." Thus, even otherwise the said order dated 29.08.2023 of this court nowhere provided any 'findings' or 'directions' on the impugned case. 24. Thus, considering the above, we are not persuaded to accept the contention of revenue that this case would fall within the provisions of section 153(6)(i). In fact, the order dated 29.08.2023 passed by this Court on the petitioner's writ petition do not, in any manner, record a finding or issue directions as understood in terms of clause (i) of sub-section (6) of Section 153. Accordingly, the revenue cannot avoid the consequence of limitation in the present case, being triggered by the first proviso to Section 153(2) read with first proviso to Explanation 1 to Section 153. 25. We therefore hold that applying the first proviso to Section 153(2)....