Madhya Pradesh High Court
Commissioner Of Income Tax vs Shri Tarachand Khushiram on 18 April, 2006
Author: Chief Justice
Bench: Chief Justice
JUDGMENT A.K. Patnaik, C.J.
1. This is a reference under Section 255(1) of the Income Tax Act, 1961 (for short 'the Act').
2. The facts as stated in the statement of case drawn up by the Income Tax Appellate Tribunal, Indore Bench, (for short the Tribunal) are that on the basis of a Departmental survey, notices under Section 148 of the Act were issued to the assessee/respondent for the Assessment Years 1979-80, 1980-81, 1981-82 and 1982-83. In pursuance to the said notices, the assessee. filed returns of income on 25.3.1986 and thereafter filed revised returns on 8.12.1986 and claimed that the returns have been filed under the Amnesty Scheme. The proceedings of assessment were taken up on 10.3.1987 and additions of Rs. 2500/-, Rs. 3500/-, Rs. 4500/- and Rs. 4500/- were made for the Assessment Years 1979-80, 1980-81, 1981-82 and 1982-83 and it was stated in the assessment orders chat the assessee had agreed to the additions. The assessment orders, however, were nor served on the assessee. The assessee then received show cause notices on 4.7.1988 under Section 221 of the Act for the Assessment Years 1979-80, 1980-81 and 1981-82 by which he was required to show cause as to why penalty should not be levied on him for non-payment of the assessed tax. The assessee replied in his letter dated 14.7.1988 to the Assessing Officer that the assessment orders have not been received by him. The assessee also received notices dated 26.7.1988 to show cause as to why penalties under Sections 273(2)(b) and Section 271(1)(a) of the Act and Section 10(1) of the C.D.S. Act should not be levied. The assessee in his reply dated 5.8.1988 informed the Assessing Officer that the assessment orders have not been served upon him.
3. Thereafter, the assessment orders for the Assessment Years 1979-80, 1980-81 and 1981-82 were served on the assessee on 26.8.1988 and the assessment order for the Assessment Year 1982-83 was served on him on 16.5.1989. These orders were accompanied by show cause notices for levy of penalty under Section 271(1)(a) of the Act and the date of said notices were stated to be 30.11.1987, but the date of hearing was shown as 20.9.1988
4. The assessee filed appeals before the Deputy Commissioner of Income Tax (Appeals) against the aforesaid assessment orders pleading that the counsel for the assessee had never agreed to the additions and that the assessment orders were illegal inasmuch as they were dispatched by the Department very late and that since the returns were tiled under the Amnesty Scheme, the Assessing Officer was not entitled to make any addition. The aforesaid contention of the assessee was not accepted by the Deputy Commissioner of Income Tax (Appeals) and the appeals of the assessee were dismissed.
5. The assessee then filed second appeals before the Tribunal and the Tribunal in its order dated 8.10.1993 in ITA Nos 507 "to 510/IND/1992, held that assessments were barred by limitation. The Commissioner of Income Tax, MP, then filed reference applications Nos. 332 to 335/IND/1993 before the Tribunal and the Tribunal has referred the following question of law to this Court for opinion Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that the assessments were barred by limitation."
6. Mr. Sanjay Lal, learned Counsel appearing for the applicant- Department, submitted that the order-sheet of the Assessing Officers shows that the assessee's counsel had agreed to addition of Rs. 2500/-, Rs. 3500/-, Rs. 4500/- and Rs. 4500/- for the Assessment Years 1979-80, 1980-81, 1981-82 and 1982-83 and, therefore, the Tribunal should not have quashed the assessments. We are afraid, we cannot go into this question as this question has not been specifically referred to us by the Tribunal under Section 256(1) of the Act. The only question referred to us by the Tribunal is whether in the facts and circumstances of the case, the Tribunal was justified in holding that the assessments were barred by limitation. Mr. Sanjay Lal next submitted that the assessment orders were all dated 30.11.1987 and, therefore, the assessments were not barred by limitation.
7. Mr. Mukesh Agrawal, learned Counsel appearing for the Assessee, on the other hand, submitted that it will be dear from the finding in para 5 of the appellate order dated 8.10.1993 that the Tribunal had come to the conclusion that the assessments were not completed on 30.11.1987 because even though the hearing of the assessments took place on 10.3.1987, the assessment orders were not served on the assessee until 26.8.1988. He cited the decision of the Supreme Court in State of Andhra Pradesh v. M. Ramakishtaiah & Co. (1994) 93 STC 406, wherein it has been held that in absence of any explanation whatsoever by the Department for the inordinate delay in service of orders of assessment on the assessee, the Court must presume that the order was not made on the date it purported to have been made and must have been made after the expiry of the period of four years prescribed for passing such an order in revision.
8. Para 5 of the Appellate Order dated 8.10.1993 of the Tribunal, in which the Tribunal has given the reasons for coming to the conclusion that the assessments were barred by limitation, is quoted hereunder:
Para 5. The Income Tax Act, though no where mentions that the order of the assessment should be communicated to the assessee or that the notice of demand in pursuance thereof should be served on him within the period of limitation, but the circumstances obtaining, in this case, do indicate that the assessments were not completed on 30.11.1987. The last date of hearing was 10.3.1987. The assessee through letters given on 14.7.1988 and 5.8.1988 repeatedly draw the attention of the A.O. that the assessment orders and the demand notice were not received, but they were served upon the assessee on 26.8.1988 and 16.5.1989. Such state of affairs do throw suspicion that the assessment orders were not in existence before they were dispatched. Such suspicion is reinforced by the fact that the show cause notices as to why the penalty under Section 271(1)(a) should not be levied were dated 30.11.1987 and the date of hearing was given 20.9.1988. Similar is the position for other show cause notices under Section 273(2) of the Act and Section 10 of the CDS Act. To give a date of hearing after interval of merely one year is not an impossibility but is improbability. In all these notices, date of hearing was given on 20.9.1988, which shows that the date of notices dated 30.11.1987 has not been correctly stated, which has been ante dated. Thus, when the notices have been ante dated, there is a reason to believe that the assessment orders also did not bear the correct date. In this view of the matter, it is held that the assessments are barred by limitation. The onus to prove that the assessment has been completed within the period of limitation is on the department. The circumstances obtaining in this case, do show that the department has failed to substantiate that the assessments were completed within the period of limitation. In this connection, reference may be made to the observations of the jurisdictional High Court in the case of CIT v. Miss Swaran Taneja at pages 352 and 353 186 ITR 348. The assessments are, therefore, quashed.
It will be clear from the findings in para 5 of the Appellate Order quoted above that the Tribunal came to the conclusion that the assessments are barred by limitation on various facts: the date of hearing of assessment was on 10.3.1987, the assessee through letters dated 14.7.1988 and 5.6.1988 repeatedly drew the attention of the Assessing Officer that the assessment orders and the demand notices were served upon by the assessee only on 26.8.1988 and 16.5.1989 and the show cause notices for imposition of penalty under Sections 271(1)(a) and 273(2) of the Act and Section 10 of the CDS Act though dated 30.11.1987 fixed the date of hearing as 20.9.1988. On these facts, the conclusion of the Tribunal that the assessments were barred by limitation cannot be held to be incorrect.
9. In State of Andhra Pradesh v. M. Ramakishtaiah & Co. (supra), the Supreme Court on somewhat similar facts held:
As stated above, the order of the Deputy Commissioner is said to have been made on January 6, 1973, but it was served upon the assessee on November 21, 1973, i.e. precisely 101/2 months later. There is no explanation from the Deputy Commissioner why it was so delayed. If there had been a proper explanation, it would have been a different matter. But, in the absence of any explanation whatsoever, we must presume that the order was not made on the date it purports to have been made. It could have been made after the expiry of the prescribed four years' period.
10. In any case, the aforesaid decision of the Tribunal that the assessments were barred by limitation, is a decision purely on facts. It is settled position of law that in a reference under Section 256 of the Act, the High Court cannot disturb the findings of fact arrived at by the Tribunal. In Patnaik & Co. Ltd. v. Commissioner of Income Tax, Orissa (1986) ITR 365, the Supreme Court held:
It is now well settled that the appellate Tribunal is the final fact-finding authority under the Income Tax Act and that the Court has no jurisdiction to go behind the statements of fact made by the Tribunal in its appellate order. The Court may do so only if there is no evidence to support them or the appellate Tribunal has misdirected itself in law in arriving at the findings of fact. But even there, the Court cannot disturb the findings of fact given by the appellate Tribunal unless a challenge is directed specifically by question framed in a reference against the validity of the impugned findings of fact on the ground that there is no evidence to support them or they are the result of a misdirection of law. There is a long line of cases decided by this Court laying down this preposition. See India Cements Ltd. v. CIT , Hazarat Pirmahomed Shah Saheb Roza Committee v. CIT , CIT v. Greeves Cotton & Co. Ltd. , CIT v. Sri Meenakshi Mills Ltd. , CIT v. Madan Gopal Radhey Lal , Hogghly Trust (P.) Ltd. v. CIT , CIT v. Imperial Chemical Industries (India) (P.) Ltd. , and Aluminimum Corporation of India Ltd. v. CIT .
11. We are, thus, of the opinion that the Income Tax Appellate Tribunal was justified in holding that the assessments are barred by limitation and the reference is answered in affirmative and in favour of the assessee.