Income Tax Appellate Tribunal - Pune
Standard Meters Mfg Co., Pune vs Assessee on 16 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH " A", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND SHRI G.S. PANNU, ACCOUNTANT MEMBER
ITA No 1665/PN/07
(Asstt. Year: 1992-93)
Standard Meters Mfg. Co., .. Appellant
102/A Hadapsar Industrial Estate,
Pune 411 013
Vs.
Addl. Commissioner of Income-tax, .. Respondent
Cir. 1(2), Pune
Appellant by: Shri Sunil Pathak
Respondent by: Shri S K Ambastha
Date of hearing : 16.11.2011
Date of Pronouncement : 29.11.2011
ORDER
PER G.S. PANNU, AM
This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-I, Pune dated 10.9.2007, which in turn, has arisen from the order of the Assessing Officer passed under section 154 r.w.s 143(3) and section 254 of the Income-tax Act, 1961 (in short "the Act"), pertaining to the assessment year 1992-93.
ITA 1665
2. Earlier, the appeal of the assessee was disposed of by the Tribunal vide its order dated 30.9.2010. Subsequently, the Tribunal vide its order dated 8.07.2011 in M.A No 57/PN/2011 directed the Registry to fix the appeal for hearing to adjudicate an Additional Ground raised by the assessee, which was 2 inadvertently not disposed of in its order dated 30.9.2010. It transpires that at the time of original hearing of appeal, apart from other Grounds, the assessee had raised an Additional Ground whereby it was canvassed that the order passed by the Assessing Officer under section 154 read with section 143(3) and 254 of the Act dated 24.4.2007 was null and void. The said Ground had remained un- adjudicated and, therefore, the Tribunal directed in its order dated 8.7.2011 to fix the appeal for hearing to dispose of the said Additional Ground. Accordingly, rival parties have been heard in the captioned proceedings with respect to the following revised Additional Ground of appeal:
"On the facts and in law, the order dated 24.4.2007 making an addition of Rs 3,38,024/- is barred by limitation as per section 153(2A) of the Act and hence, be declared null and void."
3. The sum and substance of the arguments put-forth by the assessee is that the impugned order dated 24.4.2007 is barred by limitation in terms of section 153(2A) of the Act and is therefore liable to be declared as null and void. In order to appreciate the arguments put-forth, following facts are relevant. Initially, the assessee had preferred an appeal against the order of the Commissioner of Income-tax (Appeals) for the assessment year 1992-93 before the Tribunal vide ITA No 603/PN/96 which was party allowed. In the said appeal, the assessee had agitated two Grounds, namely, an addition of Rs 5,00,000/- on account of discrepancy in stock and Rs 3,38,024/- relating to addition on account of entries in the credit side of the diary seized. In so far as the addition of Rs 5,00,000/- on account of discrepancy in stock is concerned, the same was deleted by the Tribunal, while addition of Rs 3,38,024/- was set aside and the issue restored back to the file of the Assessing Officer for consideration afresh. Para 6 of the order of the Tribunal dated 28th September, 2003 in ITA No 603/PN/96 is as under:
"6. Having heard both the sides, we find that there is some discrepancy with regard to the words 'loan' and 'known'. According to the assessee, the figures represent receipts from known person and the income mentioned in the diary generated from sale of scrap which were advanced to different partners. After going through the orders of the revenue authorities, we find that the facts pertaining to this issue are not very clear which require 3 reconsideration particularly in view of the fact that the rectification application filed by the assessee is still pending before the AO. In view of aforesaid circumstances, we set aside this issue and restore the same to the file of the AO for considering afresh in accordance with law along with application u/s 154 pending before him. We hold accordingly."
Subsequently, the Assessing Officer vide order dated 24.4.2007, which is subject-matter of dispute before us, has found it expedient to sustain the addition of Rs 3,38,024/- relating to credit entries noted in the diary seized during search. The pertinent issue raised in the aforesaid Additional Ground is that the order of the Assessing Officer dated 24.4.2007 is barred by limitation in view of the provisions of section 153(2A) of the Act. The provisions of section 153(2A) read as under:
"(2A) Notwithstanding anything contained in sub-ss. (1) and (2), in relation to the st assessment year commencing on the 1 day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under s. 250 or s. 254 or s. 263 or s. 264, setting aside or cancelling an assessment, maybe made at any time before the expiry of one year from the end of the financial year in which the order under s. 250 or s. 254 is received by the Chief CIT or CIT or, as the case may be, the order under s. 263 or s. 264 is passed by the Chief CIT or CIT:
Provided that where the order under s. 250 or s. 254 is received by the Chief CIT or CIT or, as the case may be, the order under s. 263 or s. 264 is passed by the Chief CIT or st st CIT, on or after the 1 day of April, 1999 but before the 1 day of April, 2000, such an st order of fresh assessment may be made at any time upto the 31 day of March, 2002."
4. As per assessee, in this case the issue relating to the addition of Rs 3,38,024/- was set aside to the file of the Assessing Officer by the Tribunal vide order dated 28.9.2003 and, therefore, the fresh order was liable to be passed by the Assessing Officer before the expiry of one year from the end of the financial year in which the said order was received by the Commissioner. It was, therefore, contended that the order passed by the Assessing Officer on 24.4.2007 is contrary to the provisions of section 153(2A) of the Act and, therefore, the same is liable to be declared as null and void.
5. On the other hand, the argument put-forth by the Revenue s to the effect that section 153(2A) of the Act is not applicable as made out by the Assessing Officer in para 3.2 of the impugned order, which reads as under:
"3.2 In this regard it has to be noted here that the provisions of section 153(2A) is not applicable in this case being provisions of this section is only applicable when an order of 4 fresh assessment in pursuance of an order u/s 250 or section 254 or section 263 or section 264, setting aside or canceling an assessment is required to be made and specifies time limit may be made at any time before the expiry of one year from the end of financial year in which the order under section 250 or section 254 is received by the Chief Commissioner or, as the case may be, whereas in the case of assessee Hon'ble ITAT has not cancelled or set aside the assessment but set aside the issue relates to the addition of Rs 3,38,014/- representing credit side of the diary notings, to considered a fresh with direction given in the order itself that "with law along with the application u/s 154 pending before the AO. Thus since the assessment is not cancelled or set aside by the Hon'ble ITAT the provisions of section 153(2A) is not applicable as stated by the assessee."
In terms of the aforesaid, the argument set-up by the Revenue is that section 153(2A) of the Act is only applicable in a case where an order of fresh assessment is required to be made, whereas in this case the Tribunal vide its order dated 28.9.2003 has neither cancelled nor set aside the assessment but has merely set aside an issue relating to addition of Rs 3,58,024/- for fresh consideration in accordance with law. In other words, as per the Revenue since the assessment is neither cancelled nor set aside by the Tribunal, section 153(2A) is not applicable, but it is section 153(3) of the Act which would be applicable in terms of which there is no time limit provided for making the impugned order.
6. On the aspect of applicability of limitation placed in section 153(2A) of the Act in a case where only certain issues have been set aside and not the entire assessment, the appellant has placed reliance on the decision of Agra Bench of the Tribunal in the case of Pooran Singh v. ACIT 100 TTJ 1121 (Agra). In terms of the said decision, even setting aside of assessment on some of the issues would qualify to be "setting side" of an assessment within the meaning of section 153(2A) of the Act. The Tribunal was dealing with the applicability of section 153(2A) of the Act in a situation where only two issues were sent back to the Assessing Officer and not the entire assessment and in this background, in para 14 it has been concluded as under:
"14. In view of the aforesaid discussion, we are of the view that the setting aside the assessment will include therein even the assessment, which has been set aside on some of the issues because an assessment can be regarded to be completed only when the total taxable income is deet3ermined an tax to be paid by the assessee is worked out. Until and unless, part of the issues are not decided, the total income of the assessee cannot be determined and the AO cannot raise the demand for the tax payable by the 5 assessee. The setting aside the assessment could be borne out of the order of the st authorities. We, therefore, hold that the orders passed by the AO on 31 Aug., 1995 are barred by limitation as the limitation as laid down under s. 153(2A) will apply to the facts th of the case before us. Accordingly, we quash the orders dt. 30 Aug., 1995 passed by the AO for the asst. yrs. 1984-85 to 1986-87. Since the orders passed by the AO stands quashed, the other grounds taken by the assessee on merit do not survive."
7. In the present case, it is undeniable that the Tribunal vide its order dated 28.9.2003 set aside the addition of Rs 3,38,024/- and restored the issue back to the file of the Assessing Officer for considering afresh in accordance with law. In our considered opinion merely because the entire assessment was not cancelled or set aside by the Tribunal, it would not take the case outside the purview of the time limit prescribed for completion of an assessment and re-assessment under section 153(2A) of the Act. A perusal of section 153(2A) makes it clear that where an order of fresh assessment in pursuance to an order under section 250 or section 254 or section 263 or section 264 is required to be made, it has to be passed before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Commissioner or as the case may be the order under section 263 or section 264 is passed by the Commissioner. In the present case, as the facts show, the order passed on 24.4.2007 is beyond the limitation prescribed under section 153(2A) of the Act.
8. In so far as the plea of the Revenue that the period of limitation prescribed under section 153(3) would govern such a situation and not section 153(2A) is concerned, the said argument, in our view, is misplaced. Section 153(3) applies to an assessment, re-assessment or re-computation which is required to be made "in consequence of or to give effect to any finding or direction" contained in an order under section 250, section 254, or section 263 etc. The point of distinction between section 153(3) and 153(2A) is the fact that provisions of section 153(3) are to operate only in a situation where assessment, reassessment, or re-computation is necessary to give effect to any finding or direction contained in an appellate order. Quite clearly, in the present case the Tribunal in its order dated 28.9.2003 has not given any finding or direction so as to trigger the provisions of section 153(3) of the Act , while factually speaking, the 6 Tribunal set-aside the issue and restored the same back to the file of the Assessing Officer for consideration afresh in accordance with law. Therefore, in our view, the case made out by the assessing Officer that the order dated 24.4.2007 is saved because of the extended limitation provided under section 153(3) is misplaced on facts in the instant case.
9. On the contra, it is section 153(2A) of the Act, which would come into operation as a result of the order of the Tribunal dated 28.9.2003 with regard to the issue of the addition of Rs 3,58,024/- and therefore, the order of the Assessing Officer dated 24.4.2007 passed in pursuance to section 254 of the Act is barred by limitation having regard to the explicit provisions of section 153(2A) of the Act. The impugned order is hereby set aside and the additional Ground raised by the assessee is allowed.
10. In the result, the captioned proceedings are allowed.
Decision pronounced in the open Court on the 29th Day of November, 2011.
Sd/- Sd/-
(SHAILENDRA KUMAR YADAV) (G.S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated: 29 th November, 2011
B Copy to:-
1) Appellant
2) Respondent
3) The CIT (A)-I, Pune
4) CIT-I, Pune
5) DR, "A" Bench, ITAT, Pune.
6) Guard File
true copy By Order
Sr. PS, I.T.A.T., Pune