Income Tax Appellate Tribunal - Lucknow
U.P Forest Corporation, Lucknow vs Assessee on 23 September, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH "B", LUCKNOW
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER
ITA No.824&825/LKW/2014
Assessment Year:2001-02 & 2005-06
U.P. Forest Corporation v. DCIT
Lucknow Range-1, Lucknow
TAN/PAN:AAATU3944K
(Appellant) (Respondent)
Appellant by: Shri. R.B. Shukla, Advocate and Shri. A.R.
Shukla, Advocate
Respondent by: Dr. A. K. Singh CIT (DR)
Date of hearing: 05 08 2015
Date of pronouncement: 23 09 2015
ORDER
PER SUNIL KUMAR YADAV:
These appeals are preferred by the assessee against the orders passed by the ld. Commissioner of Income-tax under section 263 of the Income-tax Act, 1961 (hereinafter called in short "the Act") setting aside the orders of the Assessing Officer passed under section 254 of the Act consequent to the order of the Tribunal.
2. Since common grounds, except difference in date, are raised in these appeals, we extract the grounds raised in I.T.A. No. 824/LKW/2014 as under:-
1. BECAUSE the Id. Commissioner of Income-tax has erred in law and on facts in holding that the order of Assessing Officer dated 08.08.2013, determining the refund payable to appellant for A.Y. 2001-02 passed in consequence to the remand order of the Hon'ble Income-tax Appellate Tribunal dated 10.01.2009 :-2-:
for fresh adjudication of issues involved in the appeal of Department in ITA No. 217/Luc/05 and the appeal of assessee in ITA No. 169/Luc/05 restored to the file of A.O., is erroneous in so far as it is prejudicial to the interests of revenue" u/s 263 of the Act.
2. BECAUSE the Id. Commissioner of Income-tax has erred in law and on facts in invoking jurisdiction u/s 263 on the ground that the Tribunal, in the remand order dated 30.01.2009 received by him in March, 2009, had not set aside the impugned assessment order, therefore, period of limitation u/s 153 (2A) assumed by the A.O. was not applicable to the order dated 8.8.2013 in consequence to such remand order, but it was in the nature of a direction within the purview section 153 (3) (ii) of the Act for which there is no limitation except the Instruction of CBDT No. 1914 dated 2.12.1993 to give appeal effect within 2 weeks of receipt of the appellate order.
3. BECAUSE the Id. Commissioner of Income-tax has erred in law and on facts in invoking jurisdiction under section 263 to set aside the refund order dated 08.08.2013 u/s 240 which was admittedly passed as per law laid down by the apex Court in CIT v. Shelly Products (2003) 26 IITR 367 at page 381-382 (SC) since the Assessing Officer was denuded of an authority to make any variation to the returned income beyond the period of limitation u/s 153 (2A) which had expired on 31.12.2009.
4. BECAUSE, without prejudice to the above, the Id. Commissioner of Income-tax has erred in law and on facts in holding that the Assessing Officer has not properly carried out directions of the Tribunal for computation of income under section 11 (1) (a) of the Act;
:-3-:
(i) without pointing out any specific errors in the refund order passed u/s 240 in consequence to the remand order of the Tribunal;
(ii) without examining the record as required by 1st part of section 263, as to the computation of income u/s 11 for A.Y. 2001-02 apropos audit report in Form 10B prescribed by rule 17B of the IT. Rules as per section 12A (1) (b) of the Act:
and/or
(iii) without making or causing to be made any inquiry in this regard as required by2nd part of section 263 of the Act.
5. BECAUSE the Id. Commissioner of Income-tax has erred in law and on facts in holding that the Assessing Officer has not applied mind without appreciating that an order cannot be deprecated as erroneous on this ground unless it is unsustainable in law.
6. BECAUSE the Id. Commissioner of Income-tax has erred in law and on facts in not appreciating the fact that as per Instruction No. 7 of 2011 dated 24.5.2011 issued by the CBDT, assessments in consequence to the remand orders of the Tribunal are monitored by the Commissioner himself vide relevant para-5 (iv) of the Instruction, it is, therefore, beyond the purview of section 263 of the Act.
7. BECAUSE the Id. Commissioner of Income-tax has erred in law and on facts in invoking jurisdiction u/s 263 of the Act to revive the reassessment proceedings which had admittedly become barred by limitation prescribed by 2nd proviso to section 153 (2A) of the Act just to abort the claim of refund for A.Y. 2001-02 despite having conceded by him before the High Court in WP No. 4051 of 2013 that fresh assessment in :-4-:
consequence to the remand order was not passed within the period of limitation.
8. The appellant most humbly prays that the Hon'ble Tribunal may graciously be pleased to allow the appeal and cancel the order of the Id. C.I.T. u/s 263 of the Act since the refund order passed by A.O. u/s 240 in consequence to the order of Tribunal cannot be revised u/s 263 of the Act as it is neither erroneous since being in accordance with law nor prejudicial to the interest of revenue since being revenue neutral due to eligibility of the appellant to exemption of its income u/s 11 of the Act.
3. The facts in brief relating to the controversy involved in these appeals borne out from the record are that during the assessment year 2001-02, the original assessment was framed by the Assessing Officer denying benefit of exemption under section 11 of the Act, as registration under section 12A of the Act was not available with the assessee. Later on, the matter was travelled to the Tribunal through an appeal filed by the assessee as well as the Revenue and during the course of hearing, the Tribunal has noted that now registration under section 12A of the Act has been granted to the assessee. The Tribunal accordingly remanded the matter back to the Assessing Officer to adjudicate the issue raised through grounds No.4, 5 and 6 relating to the claim of exemption under section 11 of the Act afresh keeping in view exemption available under section 11 of the Act due to grant of registration under section 12A of the Act to the assessee, vide its order dated 30.1.2009.
4. Following the said order of the Tribunal during assessment year 2001-02, the Tribunal has issued similar directions to the Assessing Officer while disposing of the appeal of the assessee pertaining to assessment year 2005-06 vide its order dated 4.6.2009. :-5-:
5. Consequently the Assessing Officer, vide his order dated 8.8.2013 passed under section 254 of the Act in both the assessment years separately, computed the refund due to the assessee. The orders of the Assessing Officer were considered by the ld. Commissioner of Income- tax as erroneous and prejudicial to the interest of the Revenue on the ground that the Tribunal has directed the Assessing Officer to examine the claim of exemption under section 11 of the Act, but the Assessing Officer, instead of making compliance of the directions of the Tribunal, has recomputed the amount of refund. The ld. Commissioner of Income-tax accordingly issued show cause notice to the assessee and in response thereto, the assessee has taken a stand that the order passed by the Assessing Officer under section 254 of the Act is barred by limitation, as he was required to pass consequential order within a period of one year from the end of the financial year in which the order passed under section 250 or 254 of the Act is received by the Principal Chief Commissioner or Chief Commissioner or Commissioner, as the case may be.
6. In the instant case, the orders were passed by the Tribunal on 30.1.2009 and 4.6.2009 for assessment year 2001-02 and 2005-06 respectively. The ld. Commissioner of Income-tax has examined the provisions of section 153 of the Act and he was of the view that where the Assessing Officer is required to pass an order pursuant to the order of the Tribunal, provisions of section 153(2A) of the Act would not apply, rather the Assessing Officer is required to pass an order under section 153(3)(ii) of the Act, for which no time limit is prescribed. It was observed by the ld. Commissioner of Income-tax that wherever assessment is set aside, cancelled or annulled by the appellate forum and the matter is restored to the Assessing Officer, the provisions of section 153(2A) of the Act would apply and the Assessing Officer is :-6-:
required to pass an order within a time frame for the purpose of limitation, but whenever the Assessing Officer is required to act in accordance with the directions of the appellate forum, the provisions of section 153(3)(ii) of the Act would apply.
7. In the instant case, the Tribunal has not set aside the order of the Assessing Officer and the Tribunal has rather directed the Assessing Officer to examine the claim of exemption under section 11 of the Act in the light of the fact that registration under section 12A of the Act is granted with retrospective effect. Therefore, the provisions of section 153(3)(ii) of the Act would apply and not the provisions of section 153(2A) of the Act. The relevant observations of the ld. Commissioner of Income-tax in I.T.A. No. 824/LKW/2014 are extracted hereunder for the sake of reference:-
"4.1 The main contention of the assessee is that no order of fresh assessment was made by the A.O. in pursuance of the directions of Hon'ble ITAT dated 30.01.2009 within the time limit as prescribed under section 153(2A) of the I.T. Act and, therefore, the same attained finality. This submission of the assessee is not found acceptable in as much as the limitation laid down as per provisions of section 153(2A) of the Act is not attracted/applicable in respect of the directions given by the Hon'ble ITAT in its order dated 30.01.2009 A perusal of the findings of Hon'ble ITAT clearly reveals that the Hon'ble ITAT neither cancelled nor set-aside the Assessment made u/s 143(3) on 31.03.2004, but partly allowed the appeal of the assessee and thereby directed the Assessing Officer to recompute the income in accordance with the provisions of section u/s 11 of the I.T. Act amongst other issues. Some other grounds raised by the assessee in appeal before the Hon'ble ITAT were also dismissed by it. Thus, the Hon'ble ITAT vide its order dated 30.01.2009 neither cancelled nor annulled or set- :-7-:
aside the entire assessment order but gave certain statutory directions to re compute the income as per the provisions of section 11 of the I.T. Act. Provisions of section 153(2A) of the Act were thus not applicable while giving effect to the directions of Hon'ble ITAT. The limitation in giving effect to the directions of Hon'ble ITAT u/s 254 of the Act is, therefore, governed by the provisions of section 153(3)(ii) of the Act whereby the re- assessment following the directions of Hon'ble ITAT can be completed at any time, if the entire assessment has neither been cancelled nor set-aside. The provisions of section 153(2A) and 153(3) (ii) of the Act provide as under:
153[(2A] Notwithstanding anything contained in sub-sections (1) 17 [, (1A), (1B) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment may be made at any time 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 Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner:
153 (3] The provisions of Sub-section (1) and (2) shall hot apply to the following classes of assessments, reassessments and recomputation which may, [subject to the provisions of Section (2A),] be computed at any time-
"(i)........."
"(ii) Where 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 :-8-:
under Section 250, 254, 260, 262, 263, or 264 for in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act)".
A bare reading of the above provisions makes it clear that where the Hon'ble ITAT has given any finding or directions for recomputation or making reassessment and has not cancelled or set-aside an assessment, then provisions of section 153(3)(ii) of the Act will be applicable and such an order giving effect to the directions of Hon'ble ITAT u/s 254 of the Act can be passed any time as per provisions of section 153(3)(ii) of the Act. The limitation of re-assessment or order u/s 254 was, therefore, governed as per the provisions of section 153(3)(ii) of the Act. The A.O. passed an order u/s 254 of the I.T. Act on 08.08.2013 and the order so passed was not hit by any statutory limitation. However, the A.O. failed to recompute the income of the assessee in accordance with the directions of Hon'ble ITAT. It is this lapse, on the part of A.O., which rendered the order to be erroneous and prejudicial to the interest of revenue.
4.2 The reliance placed by the assessee on the decisions viz., {CIT Vs Shelly Prducts (2003) 261 ITR 367 ( SC) and Harihar Nath Agarwal P. Family Trust Vs ACIT, 264 ITR 612 (Alld) is not tenable in as much as the assessee's case is distinguishable on facts and the nature of proceedings. In both the judgments relied upon by the assessee, the Hon'ble Courts have ruled that "If the assessing authority, on an earlier assessment made being set-aside or nullified in appropriate proceedings, cannot make a fresh assessment, it amounts to deemed acceptance of the return of income furnished by the assessee..." Thereby, the Hon'ble Courts allowed the claim of refund as per section 240 of the Act. However, in the proceedings before me, the facts are entirely different. The Hon'ble ITAT had not set-aside or :-9-:
nullified/cancelled the original assessment made by the AO but certain issues were restored back to the file of A.O for fresh adjudication in view of exemption available u/s 11 of the Act. Accordingly, the provisions of section 153(2A) regarding the limitation were not applicable in giving effect to the directions of the Hon'ble ITAT.
4.3 The Hon'ble Bombay High Court in the case of C.I.T. v. Mrs. Ratanbai N.K. Dubhash reported in (198) 230 ITR 495 (Bombay) has explained the scope of "setting aside the assessment", "cancellation of assessment" and "annulment of assessment" and the time limit for making fresh assessment in pursuance to the order setting aside the assessment. The Hon'ble Court has observed that " On a conjoint reading of Sections 143, 144B, 251 and 1531 of the Act, it becomes abundantly clear that if an assessment .is set aside by the appellate authority, the extended time-limit is available for making a fresh ^assessment in pursuance of the direction of the appellate authority, but in the case of annulment, no such extended time is available."
4.4 It may be mentioned that provisions of Section (2A) of Section 153 envisage a situation where a fresh assessment is to be made after earlier assessment as a whole is set aside or cancelled and not to a situation where specific directions have been given by the Appellate Authority as in the instant case. If there is a case of mere setting aside of the assessment order and allowing the Assessing Officer to make a fresh assessment then limitation prescribed under Section 153(2A) would apply and where the assessment or reassessment recomputation is to be made in pursuance of finding or direction made in the Appellate/Revisional order then provisions of Section 153(3)(ii) would apply and such assessment, reassessment or :-10-:
recomputation could be made at any time. The distinction between section 153(3) and 153(2A) is 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. The extended period is available only in a case where the Assessing Officer acts upon "finding or direction of an appellate authority". Section 153(2A) applies to the situation where the assessment order is set aside or cancelled" by a superior authority.
4.5 The assessee's submissions have been carefully considered with reference to the relevant provisions of law. A perusal of clause (ii) of sub-section (3) of section 153 reveals that where the re-assessment is made in consequence of or to give effect to any finding or direction contained in an order u/s 254, the re assessment may be completed at any time and the time limitation prescribed under other sub-sections of section 153 do not apply to this class of re assessment. Had the Hon'ble ITAT simply set-aside or cancelled the assessment in the case of the appellant u/s 254 of the Act, the time limits for completion of fresh assessment as provided in sub-section (2A) of section 153 read with its second proviso would have been applicable. In that case the fresh assessment order should have been passed by 31st December, 2009. However, a perusal of the order u/s 254 passed by Hon'ble ITAT on 30.01.2009 clearly shows that it had first given a clear finding on various grounds raised by the assessee and had, thereafter, given directions in Para 26, 27 & 29 to the A.O. to reframe the assessment and compute the income in accordance with the exemption available u/s 11 of the I.T. Act. Thus the Hon'ble ITAT had not simply set-aside the original assessment leaving it open to the A.O. to reframe the assessment in any manner he likes. Instead the Hon'ble ITAT :-11-:
mandated the A.O. by its categorical directions and left nothing to the discretion of the A.O. The order passed u/s 254 by the Hon'ble ITAT thus falls in the category specified in sub section (3) of section 153. The intention behind not prescribing any time limit for the categories of assessment or re-assessment specified in sub-section (3) of section 153 is obvious since no time limit is logically required to be prescribed when the A.O. is required only to give effect/comply with the direction/finding contained in an order u/s 250, 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than byway of appeal or reference under the Income Tax Act. In such cases obviously there is absolutely no room or scope for an assessing officer to use his own discretion. It is well settled by various courts that the expression "direction" in section 153 (3)(ii) of the Act is intended to mean an express direction necessary for the disposal of the case before the authority or court. Similarly, "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. It has been held by various courts including the Hon'ble Supreme Court (refer Rajinder Nath Vs. CIT (1979) 120 ITR 14, 18-19) that section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or Court. It is a provision which merely raises the bar of limitation for making an assessment order u/s 143 or section 144 or section 147. In the case; of Rajinder Nath Vs. CIT (supra), it was held by the Hon'ble Supreme Court that a direction by a statutory authority is in the nature of an order requiring positive compliance, but when it is left to the option and discretion of an Assessing Officer whether or not to take action, it cannot be described as a direction. In the case of Khalsa Provisions Vs. CIT (1982) 135 ITR 817 (Del.) & M/s Basu Distributors Pvt. Ltd Vs Income Tax Officer 292 ITR 29 (Delhi HC), it was held that in a case where the Appellant Asstt. Commissioner/ITAT set-aside the :-12-:
assessment and intended the income Tax Officer to do a fresh assessment on the lines indicated in the order, there was a clear direction to that effect. In view of above, it is held that the purpose of section 153(3) is to lift the bar of limitation to make an effective order of assessment. In the instant case, there was a clear finding as well as a direction given by the Hon'ble ITAT and therefore, the Assessing Officer in accordance with the provisions of section I53(3)(ii) of the Act was Well within his powers to pass an order u/s 254 of the I.T. Act at any time in consequence of the finding/direction given by the I.T.A.T. Therefore in view of the above facts and settled principles of law, the objection of the assessee that the re-assessment had become barred by limitation is not tenable and is, therefore, rejected.
5. The assessee further contends that the order dated 08.08.2013 passed u/s 254 of the Act by the A.O. was not a fresh assessment order but an order u/s 240 proviso (a) determining the refund payable to the assessee and the A.O was denuded of power to make fresh assessment since no such fresh assessment as required u/s 153(2A) was admittedly passed within the period of limitation.
5.1.The above contentions raised by the assessee are not tenable in view of the provisions of section 153(3)(ii) of the Act, which envisage the A.O. to make reassessment/recomputation following the directions of Hon'ble ITAT u/s 254 at any time. Thus, there was no bar of limitation before the A.O. to pass an order u/s 254 of the I.T. Act. Accordingly, the A.O. passed an order u/s 254 of the IT. Act on 08.08.2013 well within the limitation. However, while passing such order u/s 254, the Assessing Officer failed to compute the income of the assessee in accordance with the directions of Hon'ble ITAT and simply :-13-:
revised the assessed income at Nil. The said order passed u/s 254 by the A.O. on 08.08.2013 was bad in law and erroneous in so far as it was prejudicial to the interest of revenue.
6. The assessee further contends that the exemption of its income on computation of its income u/s 11 in Form-10B is a fait accompli as per law. Reliance in this regard was placed on the judgment of Hon'ble Supreme Court in the case of CIT Vs Krishi Utpadan Mandi Samiti 348 ITR 566 (SC).
6.1 The above contention of the assessee is not acceptable. Registration u/s 12A of the Act does not grant any blanket exemption of income u/s 11 of the Act; but it is a precondition for claiming exemption u/s 11 of the Act and only such income will be excluded from tax which has been; derived by the assessee from its property held under trust and is applied for charitable purposes. Section 11 of the I.T. Act envisages the manner of computation of income by the Assessing Officer. Therefore, the Assessing Officer while passing the order u/s 254 of the Act on 08.08.2013, should have computed the income of the assessee in accordance with the provisions of section 11 of the I.T. Act and should have given effect to the findings & directions of Hon'ble ITAT as given it its order dated 31.01.2009.
7. The assessee has raised further objection that the Commissioner cannot initiate proceedings u/s 263 of the Act with a view to starting fishing and roving inquiries in the matters or orders which had already concluded. That apart, the show-cause notice dated 23.7.2014 is against the well-accepted policy of law that there must be a point of finality in all legal proceedings. The assessee has upon the judgments in the cases of viz. Sirpur Paper Mills Ltd. Vs Income Officer 114 ITR :-14-:
404 and Parashuram Pottery Works Co. Ltd Vs Income Tax 106 ITR 1.
7.1 The objection of the assessee is not tenable. The case laws cited by the in its support are entirely distinguishable on facts and law. The Hon'ble ITAT vide order dated 31.01.2009 had given certain findings and directions to the Assessing Officer to recompute the income of the assessee in accordance with exemption available u/s 11 of the I.T. Act and, therefore, the A.O. while passing the order u/s 254 of the Act dated 08.08.2013 ;has, without application of mind, revised the income at Nil. Such order passed by the A.O. u/s 254 dated
8.8.2013 was, therefore, erroneous as the A.O did not adjudicate the issue of exemption u/s 11 of the Act in accordance with the directions of Hon'ble ITAT and also prejudicial to the interest of revenue as the A.O. failed to make assessment of income as per the provisions of section 1:1 of the Income Tax Act. Vie Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd 243 ITR 83 POOO) SC have justified the exercise of jurisdiction by the CIT u/s 263 of the Act where the A.O. has passed an order of assessment without application of mind erroneously and observed that "... In the instant case, the Commissioner noted that the ITO passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the ITO failed to apply his mind to the case in all perspective and the order passed by him was erroneous. .........On these facts, the conclusion that the order of the ITO was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under section 263(1) was justified..." (emphasis supplied). :-15-:
7.2 Further, to determine the question in hand, let me first a look at the statutory provision: "263. Revision of orders prejudicial to Revenue. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers - any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment." The object of the provision is to correct an erroneous order prejudicial to the interest of revenue, as the department has no right to file an appeal against the order of the Assessing Officer. While the power is not meant to be substitute for the power of the Assessing Officer to make assessment, the same can certainly be exercised when order of the Assessing Officer is found to be erroneous and prejudicial to the interest of the revenue.
Whether or not order is erroneous has to be decided from cases to case. Interpretation of section 263 has been subject matter of consideration in various decisions. In Malabar Industrial Co. ltd. vs. CIT (2000) 243 ITR 83, it was observed: "There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer. It is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind...". The Division Bench of the High court of Madras in Venkatakrishna Rice Co. vs. CIT (1987) 163 ITR 129 (Mad) have interpreted "prejudicial to the interests of the :-16-:
Revenue". The Hon'ble High Court held: "In this context, (it must) be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration." (emphasis supplied). The reliance is also placed on various judgments of Hon'ble courts where the action of Commissioner of Income Tax in exercising jurisdiction under section 263 of the I.T. Act have been upheld as under:
(i) CIT vs. Jawahar Bhattacharjee [2012] 341 ITR 367 (Gauhati) (HC) (FB) Non application of mind to relevant material or an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of order being erroneous.
(ii) In the case of CIT vs. Bhagwan Das [2005] 272 ITR 367 (All.) (HC), the Hon'ble Allahabad High Court have held that non-application of mind by the Assessing Officer was prejudicial to the interest of the revenue.
(iii) Areas where Assessing Officer didn't apply mind - section 263 proceedings valid. CIT vs. Hindustan Lever Ltd. [2012] 343 ITR 161 (Bom.) (HC).
7.3. In view of the above facts and law, the Commissioner of Income Tax has the valid right to exercise jurisdiction under section 263 of the I.T. Act when any order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue. The plea of the assessee to drop the proceedings under section 263 of the Act is, therefore, rejected.
8. Since, the Assessing Officer has passed an order under section 254 dated 8.8.2013 without application of mind and without giving effect to the directions of Hon'ble ITAT in as much as the Assessing Officer failed to compute the income of :-17-:
the assessee in accordance with the provisions of section 11 of the Act, the order in question is found to be erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Income-tax Act, 1961.
9. In view of the factual and legal position as discussed above, the order passed by the Assessing Officer under section 254 of the I.T. Act dated 8.8.2013 is set-aside and accordingly the Assessing Officer is directed to make a fresh assessment considering the computation of income as per the provisions of section 11 of the Act and adjudicate properly the issues restored back by the Hon'ble Tribunal with certain directions in accordance with law after providing fair and reasonable opportunity to the assessee."
8. Similar order was passed by the ld. Commissioner of Income-tax for assessment year 2005-06 also.
9. Having set aside the order of the Assessing Officer, the ld. Commissioner of Income-tax directed the Assessing Officer to make a fresh assessment considering the computation of income as per provisions of section 11 of the Act and adjudicate properly the issue restored back by the Tribunal with certain directions, in accordance with law after providing fair and reasonable opportunity to the assessee.
10. Aggrieved, the assessee has preferred these appeals against the respective orders of the ld. Commissioner of Income-tax. The main contention raised by the ld. counsel for the assessee is that the Assessing Officer was required to pass a consequential order pursuant to the directions of the Tribunal within the period prescribed as per provisions of section 153(2A) of the Act and since the Assessing Officer has not passed an order within the specified period, the order passed by the Assessing Officer under section 254 of the Act on 8.8.2013 in both :-18-:
the years are not valid orders and has no legal sanctity. Therefore, no cognizance of the same can be taken by the ld. Commissioner of Income-tax to initiate action under section 263 of the Act.
11. So far as merit of the order is concerned, there is no dispute that the Assessing Officer has not passed the order consequent to the directions of the Tribunal, as the Tribunal has directed the Assessing Officer to adjudicate the issue relating to exemption under section 11 of the Act in the light of registration under section 12A of the Act. But, the Assessing Officer has passed an order recomputing the quantum of refund. The ld. counsel for the assessee has vigorously argued that since the order passed by the Assessing Officer is barred by limitation and has no legal sanctity, no cognizance of the same can be taken by the ld. Commissioner of Income-tax. Therefore, the orders passed by the ld. Commissioner of Income-tax under section 263 of the Act deserve to be set aside.
12. On the point of limitation, the ld. counsel for the assessee has placed reliance upon the following judgments:-
1. CIT vs. Shelly Products and Another, 261 ITR 367(SC).
2. Harihar Nath Agarwal P. Family Trust vs. ACIT, 264 ITR 612 (All).
3. Instruments and Control Co. vs. Chief CIT, 349 ITR 571 (Guj).
4. CIT vs. Bhan Textile Pvt. Ltd., 300 ITR 176 (Del).
5. CIT vs. S. P. Mishra, 297 ITR 352 (All).
6. Raghava Health Care Ltd. vs. DCIT, 307 ITR (AT) 133.
7. Gulabchand Motilal vs. CIT, 174 ITR 117.
8. CIT vs. Smt. Kamala Devi, 217 ITR 330 (All).
:-19-:
9. K.M. Sharma vs. Income Tax Officer, 254 ITR 772 (SC).
10. P. Srivastava and Sons. CIT, 111 ITR 326 (All).
11. CIT vs. Lucknow Development Authority, 98 DTR 183 (All).
12. CIT vs. Krishi Utpadan Mandi Samiti, 348 ITR 566 (SC).
13. The ld. D.R., besides placing reliance upon the orders of the ld.
Commissioner of Income-tax, has invited our attention to certain judgments referred to by the assessee and the relevant provisions of the Act with the submission that the provisions of section 153(2A) of the Act would apply only in those cases where an order for fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, is to be passed and as per sub-section (2A), the time limit is prescribed and the Assessing Officer is required to pass an assessment order at any time before the expiry of one year from the end of the financial year in which the order passed under section 250 or section 254 is received by the Principal Chief Commissioner or Principal Commissioner or Chief Commissioner or Commissioner, etc. But wherever 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 under section 250, 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, provisions of sub-section (3) (ii)of section 153 of the act would apply and no time limit is prescribed for completing the assessment, reassessment or recomputation, pursuant to the directions.
14. In the instant case, the Tribunal has not set aside the assessment order. The Tribunal has directed the Assessing Officer to re-adjudicate :-20-:
the issue of claim of exemption under section 11 of the Act in the light of registration under section 12A of the Act granted to the assessee. Since these directions were given without setting aside or cancelling the assessment, the provisions of sub-section (3) (ii) of section 153 of the Act would apply and the Assessing Officer was not required to pass an order within a particular time limit. Therefore, the order passed under section 254 of the Act by the Assessing Officer is not barred by limitation and the ld. Commissioner of Income-tax can take cognizance of the same while initiating action under section 263 of the Act. Undisputedly, the Assessing Officer has not passed an order in terms of the directions issued by the Tribunal; rather he has computed the quantum of refund. Therefore, the ld. Commissioner of Income-tax has rightly held the order passed under section 254 of the Act as erroneous and prejudicial to the interest of the Revenue. In the light of these facts, the order of the ld. Commissioner of Income-tax deserves to be upheld.
15. Having given a thoughtful consideration to the rival submissions in the light of the orders of the lower authorities and the documents placed on record, we find that vide order dated 30.1.2009, the Tribunal had not set aside or cancelled the assessment order, as it was not passed on incorrect facts. During the pendency of appeal, registration under section 12A of the Act was granted to the assessee and the Tribunal has directed the Assessing Officer to adjudicate the issue of grant of exemption under section 11 of the Act keeping in view the exemption available under section 11 of the Act and registration under section 12A of the Act is granted to the assessee. For the sake of reference, we extract the directions given by the Tribunal to the Assessing Officer as under:-
"28. Regarding these grounds, the common contention of both the parties was that the issues be remanded back to the :-21-:
Assessing Officer to be adjudicated afresh keeping in view the exemption available under section 11 of the Act and registration under section 12A to the assessee."
16. This order of the Tribunal dated 30.1.2009 was followed in assessment year 2005-06 and similar directions were given by the Tribunal to the Assessing Officer vide its order dated 4.6.2009. Pursuant to the directions of the Tribunal, the Assessing Officer was required to adjudicate the issue of grant of exemption under section 11 of the Act keeping in view the registration granted under section 12A of the Act, but the Assessing Officer instead of acting as per the directions of the Tribunal, has computed the quantum of refund. Therefore, there is no iota of doubt in our mind to hold that the Assessing Officer has not acted in accordance with the directions of the Tribunal and has computed the quantum of refund. Therefore, the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue, because while granting exemption under section 11 of the Act, the Assessing Officer is required to examine the fulfillment of requisite conditions prescribed under section 13 of the Act.
17. But in this case, the sole dispute is with regard to the validity of the order passed under section 254 of the Act. According to the assessee, this order of the Assessing Officer is barred by limitation and has no legal sanctity, therefore, no cognizance of the same can be taken for initiating action under section 263 of the Act in view of the provisions of section 153(2A) of the Act, which prescribes time limit for passing an order consequent to the directions of the appellate forum; whereas the Revenue's stand is that the order is to be passed by the Assessing Officer pursuant to the directions of the Tribunal as per provisions of section 153(3)(ii) of the Act, in which no time limit is prescribed for passing an order. Therefore, now the issue before us is, whether in :-22-:
such type of situation, which part of section 153 of the Act would apply for passing an order consequent to the directions of the Tribunal? Before dwelling on the issue, we feel it appropriate to extract section 153 of the Act as under:-
"TIME LIMIT FOR COMPLETION OF ASSESSMENTS AND REASSESSMENTS (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of--
(a) two years from the end of the assessment year in which the income was first assessable; or
(b) one year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section (4) or sub-section (5) or section 139, whichever is later.
Provided that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2004 or any subsequent assessment year, the provisions of clause (a) shall have effect as if for the words "two years", the words "twenty-one months" had been substituted.
Provided further that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2005 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA-(i) was made before the 1st day of June, 2007 but an order under sub-section (3) of that section has not been made before such date ; or(ii) is made on or after the 1st day of June, 2007, :-23-:
Provided also that that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2009 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA is made, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years" the words "three years"
had been substituted.
(1A) No order of assessment shall be made under section 115WE or section 115WF at any time after the expiry of 5twenty-one months from the end of the assessment year in which the fringe benefits were first assessable. (1B) No order of assessment or reassessment shall be made under section 115WG after the expiry of 5nine months from the end of the financial year in which the notice under section 115WH was served.
(2) No order or assessment, reassessment or recomputation shall be made under section 147 after the expiry of 1one years from the end of the financial year in which the notice under section 148 was served:
Provided that where the notice under section 148 was served on or before the 1st day of April, 1999, but before the 1st day of April, 2000, such assessment, reassessment or recomputation may be made at any time up to the 31st day of March, 2002.
Provided further that where the notice under section 148 was served on or after the 1st day of April, 2005, the provisions of this sub-section shall have effect as if for the words "one year", the words "nine months" had been substituted.
:-24-:
Provided also that where the notice under section 148 was served on or after the 1st day of April, 2006 and during the course of the proceedings for the assessment or reassessment or recomputation of total income, a reference under sub-section (1) of section 92CA-
Provided also that where the notice under section 148 was served on or after the 1st day of April, 2010 and during the course of the proceeding for the assessment or reassessment or recomputation of total income, a reference under sub-section (1) of section 92CA is made, the provisions of this sub-section shall, notwithstanding anything contained in the second proviso, have effect as if for the words "one year", the words "two years" had been substituted.
(2A) Notwithstanding anything contained in sub-sections 4(1), (1A), (1B) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time 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 Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner :
Provided that where the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner, on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such an order of fresh assessment may be made at any time up to the 31st day of March, 2002.
:-25-:
Provided further that where the order under section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of April, 2005, the provisions of this sub-section shall have effect as if for the words "one year", the words "nine months" had been substituted.
Provided also that where the order under section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of April, 2006, and during the course of the proceedings for the fresh assessment of total income, a reference under sub-section (1) of section 92CA-(i) was made before the 1st day of June, 2007 but an order under sub-section (3) of section 92CA has not been made before such date ; or(ii) is made on or after the 1st day of June, 2007, Provided also that where the order under section 254 is received by the Chief Commissioner or Commissioner or, as the case may be the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of April, 2010, and during the course of the proceeding for the fresh assessment of total income, a reference under sub-section (1) of section 92CA is made, the provisions of this sub-section shall, notwithstanding anything contained in the second proviso, have effect as if for the words "one year" the words "two years" had been substituted.
(3) The provisions of sub-sections 4(1), (1A), (1B) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, subject to the provisions of sub-section (2A) be completed at any time--
:-26-:
(ii) where 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 under section 250, 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act;
(iii) where in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147.
Explanation -- 1. In computing the period of limitation for the purposes of this section
(i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-
heard under the proviso to section 129, or
(ii) the period during which the assessment proceeding is stayed by an order or injunction of any court, or (iia) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub- clause (via) of clause (23C) of section 10, under clause (i) of the proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer ;
(iii) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 ; and (a) ending with the last date on which the assessee is required to furnish a report of such audit under that sub-section ; or(b) where such direction is challenged before a court, ending with the date on :-27-:
which the order setting aside such direction is received by the Commissioner, or
(iv) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer, or (iva) the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of section 158A and ending with the date on which the order under sub-section (3) of that section is made by him, or
(v) in a case where an application made before the Income-tax Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Chief Commissioner or Commissioner under sub-section (2) of that section, or shall be excluded.
(vi) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Commissioner under sub-section (3) of section 245R, or
(vii) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Commissioner under sub-section (7) of section 245R, or.
(viii) the period commencing from the date on which a reference or first of the references for exchange of information :-28-:
is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Commissioner or a period of one year, whichever is less,
(ix) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer, Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections 4(1), (1A), (1B), (2) and (2A) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
Explanation -- 2. Where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order.
Explanation -- 3. Where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding :-29-:
or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed."
18. Sub-section (2A) of section 153 of the Act is a non-obstantive clause, which says notwithstanding anything contained in sub-sections 4(1), (1A), (1B) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and it prescribes time limit for passing an order for fresh assessment in pursuance of an order under section 250, 254 or section 263 or section 264, setting aside or cancelling an assessment. The time limit is 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 Principal Chief Commissioner or Principal Commissioner, etc. From a bare reading of this sub-section, it appears that wherever assessment is set aside or cancelled and the Assessing Officer is required to reframe the assessment, provisions of sub-section (2A) would apply. But as per sub-section (3)(ii) of section 153 of the Act subject to provisions of sub-section (2A) of the Act, the assessment, reassessment or recomputation is to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act at any time and no time limit is prescribed.
Meaning thereby, wherever an order is passed consequent to the findings or the directions of the appellate forum without setting aside or cancelling the assessment, there is no time limit for compliance of the directions or findings of the appellate forum.
19. On this issue, our attention was invited to various judicial pronouncements.
:-30-:
20. In the case of Instruments and Control Co. vs. Chief CIT (supra), it has been held by the Hon'ble Gujarat High Court that sub-section (2A) of section 153 of the Act, was introduced with effect from April 1, 1971. Correspondingly, the words "subject to the provisions of sub-section (2A)" were added in sub-section (3) of section 153 of the Act. Subsection (2A) uses significantly different language from that used in sub-section (3) inasmuch as sub-section (2A) refers to an order of fresh assessment in pursuance of an order, under section 250 , 254 , 263 or 264 , setting aside or cancelling an assessment, whereas clause (ii) of sub-section (3) uses the expression "assessments, reassessments, or recomputation made in consequence of or to give effect to any finding or direction contained in an order under section 250 , 254 , 260 , 262 , 263 or 264 of the Act". Their Lordships have further held that sub- section (2A) would cover cases where the Assessing Officer is required to pass a fresh order of assessment when such fresh assessment is necessitated on account of an order setting aside or cancelling the assessment. In comparison, clause (ii) of sub-section (3) of section 153 would apply where there is a need for an assessment, reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed under section 250, etc. Significantly, after April 1, 1971, the provisions of sub-section (3) of section 153 of the Act are made subject to the provisions of sub-section (2A) of section 153 of the Act. Under the circumstances, the class of cases of fresh assessment to be made pursuant to order under section 250, etc., would fall under section (2A) of section 153 of the Act and the period of limitation prescribed therein would operate.
21. In the case of CIT vs. Bhan Textile Pvt. Ltd. (supra), the Hon'ble Delhi High Court has held that operative words in section 153(2A) of the Act are " an order . . . . . setting aside or cancelling an assessment" and :-31-:
so far as the applicability of section 153(3)(ii) of the Act is concerned, that relates to giving effect to a finding or direction, inter alia, by the Commissioner of Income-tax (Appeals) or the appellate authorities. What this means is that the Assessing Officer must comply with the finding or direction given by the appellate authority without necessarily disturbing the assessment order.
22. Again in the case of CIT vs. S. P. Mishra (supra), the Hon'ble jurisdictional High Court has held that section 153 of the Act, provides the limitation during which the reassessment order can be made, if the case is covered by the provisions of sub-section (1) and sub-section (2) . Sub-section (3) of section 153 of the Act excludes the applicability of the period of limitation in the circumstances more precisely indicated in clauses (ii) and (iii) thereof. Having relied upon the judgment of the Hon'ble Apex Court in the case of Rajinder Nath v. CIT, 120 ITR 14, in which the Hon'ble Supreme Court has interpreted the words "in consequence of or to give effect to any finding or direction contained"
as incorporated in clause (ii) of sub-section (3) of section 153 of the Act and held that clause (ii) of section 153(3) of the Act is limited in meaning. Their Lordships of the jurisdictional High Court has held that as section 153(3)(ii) of the Act, there must be disposal of a particular case in respect of a particular assessee and in relation to the particular assessment year.
23. Similar views were expressed by the Visakhapatnam Bench of the Tribunal in the case of Raghava Health Care Ltd. vs. DCIT (supra), in which it was held in the light of the judgment of the Hon'ble Apex Court in the case of Murlidhar Bhagwan Das, 52 ITR 335 that there is a fine distinction between the application of section 153(2A) and section 153(3)(ii) of the Act. Section 153(2A) of the Act would apply when a fresh assessment is required to be made in pursuance of an order under :-32-:
section 250 or 254 or 263 or 264, setting aside or cancelling an assessment. Whereas section 153(3)(ii) of the Act would apply in a case where an assessment or 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 under section 250, 254, 260, 262, 263 or 264 etc. and subject to section 153(2A), and there is no time limit for passing such order under section 153(3)(ii) of the Act. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:-
"There is a fine distinction between the application of section 153(2A) and section 153(3)(ii) of the Income-tax Act, 1961. Section 153(2A) of the Act would apply when a fresh assessment is required to be made in pursuance of an order under section 250 or 254 or 263 or 264 , setting aside or cancelling an assessment. Whereas section 153(3) of the Act would apply in a case where an assessment or 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 under section 250, 254, 260, 262, 263 or 264 etc. and subject to section 153(2A) , there is no time limit for passing such orders. Both these sections will come into operation only in respect of matters sent to the file of the Assessing Officer. Under section 153(2A), the fresh assessment order has to be passed on the same assessee for the same assessment year, whereas under section 153(3)(ii) of the Act, the assessment, reassessment or recomputation may be passed for any assessee and also for any assessment year. This proposition becomes clear on a combined reading of Explanations 2 and 3 to section 153 and section 153(3)(ii) of the Act. The provision of section 153(3) of the Act is subject to section 153(2A) , and where the assessment or reassessment :-33-:
made to give effect to the finding or direction results in a "fresh assessment", the time limit prescribed under section 153(2A) shall apply even if the finding or direction is made by an order passed under section 260 or 262 of the Act, though both these sections do not find place in section 153(2A) . Fresh assessment would mean a situation where the earlier assessment as a whole is set aside or cancelled. When several additions have been made by the Assessing Officer and the appellate authority sets aside one or some of the issues to the file of the Assessing Officer, that situation would not give rise to a "fresh assessment" and in that case section 153(3)(ii) of the Act would apply."
24. This issue was also examined by the Hon'ble M.P. High Court in the case of Gulabchand Motilal vs. CIT (supra), in which it was held that prior to the insertion of sub-section (2A) in section 153 of the Act by the Taxation Laws (Amendment) Act, 1970, where an assessment was set aside or cancelled under section 146 or on appeal, revision or reference the Income-tax Officer could complete the fresh assessment any time because such a case was governed by sub-section (3) of section 153, which provided that the provisions of sub-sections (1) and (2) of section 153 would not apply to cases covered by section 153(3) of the Act. This resulted in delay and harassment to the assessee and, hence, sub- section (2A) was inserted in section 153 by the Taxation Laws (Amendment) Act, 1970, introducing a time limit and by virtue of sub- section (2A) of section 153 of the Act, assessments covered by sub- section (2A) of section 153 of the Act have to be completed within the time limit prescribed by that provision. In order to give full effect to the fiction introduced by Explanation 2 to section 153 of the Act, and to the object of insertion of sub-section (2A) in section 153 of the Act, it must be held that where fresh assessment is being made for a particular :-34-:
assessment year, in pursuance of a finding or direction incorporated in an order under section 250, section 254, section 263 or section 264 of the Act, passed in proceedings relating to another assessment year, then the fresh assessment would be deemed to have been made, for the purpose of section 150 and section 153, in consequence of or to give effect to any finding or direction setting aside or cancelling the assessment for that particular year.
25. We have also carefully perused other judgments referred to by the parties and we find that they are not directly on the issue in dispute.
We, therefore, now proceed to adjudicate the issue in dispute in the light of the aforesaid various judicial pronouncements.
26. From a careful reading of the judgments referred hereinabove, we find that there is a fine distinction between the application of section 153(2A) and 153(3)(ii) of the Act. Section 153(2A) of the Act would apply to those cases where fresh assessment is required to be made in pursuance of an order of the appellate authorities passed under section 250 or 254 or 263 or 264 of the Act setting aside or cancelling an assessment, meaning thereby wherever assessment order is cancelled or set aside by the appellate authority and the Assessing Officer is required to pass an fresh assessment order pursuant to the directions of the appellate authorities within the period prescribed under sub-section (2A) of section 153 of the Act. But wherever an assessment, reassessment or recomputation is to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263 or 264 of the Act or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, no time limit is prescribed for passing such order by the Assessing Officer. The main distinction in these provisions are that for invoking the provisions of sub-section (2A) :-35-:
of section 153 of the Act, earlier assessment which was subject matter of the appeal before the appellate authorities is either set aside or cancelled by the appellate authorities and the Assessing Officer is required to frame fresh assessment in pursuance to the directions of the appellate authorities. But as per section 153(3)(ii) of the Act earlier assessment which was subject matter of appeal before the appellate authorities was not to be set aside or cancelled, rather appellate authorities issue directions for assessment or reassessment or recomputation of the income of the assessee in terms of the directions without setting aside or cancelling the assessment which is subject matter of appeal before them. Under this sub-section, any order or direction of a court in proceedings otherwise than by way of appeal or Reference under this Act is also required to be complied with by the Assessing Officer not only relating to the assessment year in dispute, but also for other assessment years. The language used in both the sub-sections are different, but wherever the case falls within sub-section (2A) of section 153 of the Act, sub-section (3)(ii) would not apply.
27. Keeping in view the aforesaid legal position, we now examine the facts of the case. In the instant case, the Tribunal vide order dated 30.1.2009 directed the Assessing Officer to adjudicate the issue relating to the claim of exemption under section 11 of the Act and keeping in view registration under section 12A of the Act granted to the assessee without setting aside or cancelling the assessment order. It is also obvious from the record that when original assessment was framed, registration under section 12A of the Act was not available to the assessee, therefore, there was no question of adjudication of claim of exemption under section 11 of the Act and the Assessing Officer has computed the income as per the relevant provisions of the Act. Since the Assessing Officer has acted in accordance with law, the assessment order cannot be called to be illegal or irregular and that is why the :-36-:
Tribunal has not set aside or cancelled the assessment order. But on account of change of circumstances, the Tribunal has directed the Assessing Officer to adjudicate the issue of claim of exemption under section 11 of the Act in the light of registration under section 12A of the Act granted to the assessee. Since the Tribunal has neither set aside nor cancelled the assessment order and issued directions for compliance to the Assessing Officer, the case of the assessee certainly falls under clause (ii) of sub-section (3) of section 153 of the Act and for this sub- section, no time limit is prescribed under the Act. Therefore, it cannot be said that the order passed by the Assessing Officer was barred by limitation. But from a careful perusal of the order passed by the Assessing Officer, we find that the Assessing Officer has simply computed the quantum of refund instead of adjudicating the claim of exemption raised under section 11 of the Act in the light of grant of registration under section 12A of the Act to the assessee as per the directions of the Tribunal. While allowing benefit of section 11 of the Act, the Assessing Officer is also required to examine whether the conditions prescribed under section 13 of the Act is fulfilled or not. But the Assessing Officer did not do this exercise and has computed the refund claimed by the assessee. Therefore, the order of the Assessing Officer is certainly erroneous and prejudicial to the interest of the Revenue which was rightly set aside by the ld. Commissioner of Income- tax.
28. Now we will deal with the alternative argument of the assessee that the order under section 254 of the Act pursuant to the directions of the Tribunal, is barred by time and it has no legal sanctity in the eyes of law and is merely a piece of paper. If that be the case, this order of the Assessing Officer computing quantum of refund cannot be executed and more so it cannot be enforced. If refund is not granted to the assessee, the same may be recovered from the assessee. We, however, have :-37-:
already held in the foregoing paragraphs that the assessment orders passed by the Assessing Officer vide his order dated 8.8.2013 are not barred by time, as no time limit is prescribed for passing an order under section 153(3)(ii) of the Act. We accordingly find no infirmity in the orders of the ld. Commissioner of Income-tax, who has rightly set aside the orders of the Assessing Officer, as it was not passed in compliance of the directions of the Tribunal. We accordingly confirm the orders of the ld. Commissioner of Income-tax in both the assessment years.
29. In the result, both the appeals of the assessee are dismissed.
Order was pronounced in the open court on the date mentioned on the captioned page.
Sd/- Sd/-
[A. K. GARODIA] [SUNIL KUMAR YADAV]
ACCOUNTANT MEMBER JUDICIAL MEMBER
DATED:23rd September, 2015
JJ:101109
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT
5. DR
Assistant Registrar