TaxTMI 
TaxTMI 
2026 (9) TMI 1809
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....waroop, Rajagopalan.R. and Ms.Dwadarshini For the Appellants in WA Nos.1241, 1243, 248, 3233, 375, 253, 262, 292 and 249 of 2024 and For Respondents in WA Nos.3427, 3443, 3446, 3440, 3438, 3442 of 2023 and 1139, 1133, 1134, 1130, 1117, 1118, 1121, 1125, 1126, 1128, 1135 and 1137 of 2024 : Mr.AR.L.Sundaresan, Addl. Solicitor General, assisted by Mr.A.P.Srinivas, Sr.Standing Counsel and Mr.A.N.R.Jayapratap, Jr.Standing Counsel COMMON JUDGMENT THE CHIEF JUSTICE Since both sets of writ appeals arise out of and are directed against the very same common order dated 19.09.2023 passed by the learned Single Judge in W.P.No.1498 of 2022 and batch cases, and turn upon an identical question of law, namely, the true and correct method of computing limitation under Section 153B of the Income-tax Act, 1961 ("the Act") read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ("TOLA"), they were heard together and are disposed of by this common judgment. 2. For convenience, the parties are referred to as "the assessee" and "the Revenue". FACTUAL MATRIX: 3.1. The assessee's premises were searched under Section 132 of the Act on 05.07.2....
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....vision", fell on 30.09.2020; that this date, falling within the window prescribed under Section 3(1) of TOLA (20.03.2020 to 31.03.2021), stood extended in the first instance to 30.09.2021; and that it was only thereafter that the benefit of the exclusion of the stay period under Explanation (i) to Section 153B of the Act (computed at 16 months and 24 days, i.e., 288 days pendente lite the writ petitions plus 53 days pendente lite the writ appeals) was to be superimposed, producing a terminal date of 20.04.2023. On this reasoning, the assessment orders dated 28.01.2022/29.01.2022, having been passed well before 20.04.2023, were held to be within time, and the challenge to the assessments (and consequential penalty orders) for Assessment Years 2013-14 to 2018-19 was rejected. 3.5. It is this bifurcated conclusion that has given rise to the cross-appeals now before us - the assessee's appeals (WA Nos.3427, 3443, 3446, 3440, 3438, 3442 of 2023 and 1139, 1133, 1134, 1130, 1117, 1118, 1121, 1125, 1126, 1128, 1135 and 1137 of 2024), assailing the confirmation of the assessments for AYs 2013-14 to 2018-19; and the Revenue's appeal (WA Nos.1241, 1243, 248, 3233, 375, 253, 262, 29....
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....ading strengthens rather than displaces that plain meaning. (iv) On facts, the interim stay first granted on 18.12.2019 was extended from date to date and stood unextended and, therefore, lapsed on 23.07.2020, when the matter was taken up for hearing but no further extension was granted. Reliance is placed on Ashok Kumar & Ors. v. State of Haryana [AIR 2007 SC 1411], and Arjan Singh v. Punit Ahluwalia [AIR 2008 SC 2718], for the settled proposition that an interim order extended only up to a specified date, and not thereafter renewed, ipso facto expires on that date and there is no room for any bona fide belief that it continues until formally vacated. On this basis, the stay endured for 218 days (18.12.2019 to 23.07.2020). (v) Applying that 218-day exclusion to the "main provision" date of 30.09.2020, the terminal date for completion of assessment. computed strictly under Section 153B of the Act, Explanation included, and without reference to TOLA at all, works out to 07.05.2021. On this date being tested against the window prescribed under Section 3(1) of TOLA, viz., a time-limit "specified... under the specified Act" which "falls during the period from the 20th....
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....r extending clause. Reliance is placed on K.M. Sharma v. ITO [2002] 254 ITR 772 (SC); New Noble Educational Society v. CCIT [2022] 448 ITR 594 (SC); R. Rudraiah v. State of Karnataka [(1998) 3 SCC 23]; and Hope Textiles Ltd. v. Union of India [(1994) 205 ITR 508 (SC)]. THE CONTENTIONS OF THE REVENUE 5. Mr.AR.L.Sundaresan, learned Additional Solicitor General of India appearing on behalf of the Revenue, resisted the assessee's appeals and pressed the Revenue's own appeals, principally contending as follows: (i) Section 153B(1) of the Act, read with the second proviso, prescribed 18 months (549 days) from the end of the financial year in which the last search authorisation was executed (01.04.2019), producing 30.09.2020 as the "statutory" date; since this date itself falls squarely within the window prescribed under Section 3(1) of TOLA (20.03.2020 to 31.03.2021), TOLA is attracted on this date alone, and the period stands extended, by virtue of Section 3(1) of TOLA and successive notifications, to 30.09.2021. (ii) The language of Section 3(1) of TOLA speaks of "any time limit has been specified in, or prescribed or notified under, the specified Act wh....
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.... (i) the provisions of clause (a) or clause (b) of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted; ... Explanation.-In computing the period of limitation under this section- (i) the period during which the assessment proceeding is stayed by an order or injunction of any court; or ... shall be excluded" [emphasis supplied] 7. Section 153B(1) of the Act, so far as material, and the second proviso thereto (as applicable to searches conducted after 01.04.2019, reducing the ordinarily prescribed 21-month period to 18 months), together prescribe the outer time-limit for completion of assessment pursuant to search. In the present case, it is common ground between the parties, and so recorded by the learned Single Judge, that this "main provision" date works out to 30.09.2020. The Explanation to Section 153B of the Act commences with the words "In computing the period of limitation under this section -" and thereafter sets out several categories of periods that "shall be excluded", including, materially "(i) The period during which the assessment is staye....
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....ference to the bare "main provision" contained in Section 153B(1), reserving the Explanation-based exclusions for later, cumulative addition atop the TOLA-extended date? 11. We have given this question our anxious and considered attention. 12. The opening words of the Explanation - "In computing the period of limitation under this section" - are neither surplusage nor decorative. The Supreme Court in Plantation Corporation of Kerala Ltd (supra) held thus: "4. The High Court appears to have been carried away by the fact of some assumed similarity of the purpose of expenditure envisaged in Section 5(j) and those covered by Explanation 2 and from the further fact of retrospective effect having been given to the said explanation with effect from 1-4-1951, to presume that in doing so the legislative intention indicated was to avoid refunds being made on account of the Supreme Court judgment reported in Travancore Rubber & Tea Co. Ltd. case which, in turn, concerned Section 5(j) of the Act. This in our view is fallacious and cannot be so presumed. The decision of the Supreme Court declaring the position of law on the scope of Section 5(j) might have been the occasion for t....
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....stated in the Explanation, that his failure to return his correct income was not due to fraud or neglect, he shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof and, consequently, be liable to the penalty provided by that section. No express invocation of the Explanation to Section 271 in the notice under Section 271 is, in our view, necessary before the provisions of the Explanation therein are applied. The High Court at Bombay was, therefore, in error in the view that it took and the Division Bench in the impugned judgment was right." [emphasis supplied] 14. Thus, the opening words of the Explanation perform the specific interpretive function, recognised in Plantation Corporation of Kerala Ltd (supra) and K.P.Madhusudhanan (supra), of yoking the Explanation inextricably to the computation of the very period of limitation that Section 153B(1) of the Act creates. An Explanation so worded does not operate as an independent, sequential add-on to be reckoned only after the "main" period has been ascertained and, where necessary, externally extended; it operates, from the very outset, as part of the definitional exercise of ....
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.... full and harmonious effect to every part of the provision as held in Grasim Industries Ltd. v. Collector of Customs [(2002) 4 SCC 297]; Easland Combines v. Collector of Central Excise [(2003) 3 SCC 410]; A.N. Roy v. Suresh Sham Singh [(2006) 5 SCC 745]; and Deewan Singh v. Rajendra Pd. Ardevi [(2007) 10 SCC 528]. 18. Moreover, we are unable to accept a construction of a beneficial, emergency, pandemic-era relaxation statute, which has been enacted to relax time-limits that would otherwise have been rendered impossible or difficult of compliance on account of the COVID-19 lockdown, as a vehicle for producing a net expansion, running into years, of the period of limitation available to the Revenue for completing search assessments, achieved by the simple expedient of adding, rather than first netting off, periods of court-ordered stay. Limitation provisions under a taxing statute, more so where they operate to the prejudice of the assessee by prolonging the period during which assessment (and consequent liability) may be fastened, must, as repeatedly held, be strictly and not liberally construed, and an assessee cannot be visited with an extension of time not clearly and unambigu....
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....2012-13, 2019-20) or the second basket (2013-14 to 2018-19), since in neither basket does the properly computed, Explanation-adjusted period of limitation fall within the TOLA window. 22. For the years in the first basket, no exclusion under Explanation (i) being available at all (no stay having been obtained at the threshold), the main-provision date of 30.09.2020 itself does fall within the TOLA window; but even so, and as correctly held by the learned Single Judge in relation to those years, the extension it earns is only up to 30.09.2021, a date still well short of 28.01.2022/ 29.01.2022, the date on which the impugned assessment orders for those years came to be passed. The learned Single Judge's conclusion, that the assessments for Assessment Years 2011-12, 2012-13 and 2019-20 are barred by limitation, is correct and calls for no interference. The appeals of the Revenue in W.A.Nos.1241, 1243, 248, 3233, 375, 253, 262, 292 and 249 of 2024 must accordingly fail. 23. For the years in the second basket, applying the method set out above, the composite, Explanation-adjusted date falls outside the TOLA window. TOLA is, for these years, simply inapplicable; and the last da....