Income Tax Appellate Tribunal - Mumbai
Assistant Commissioner Of Income Tax vs Bakhtawar Construction Co. (P) Ltd. on 28 July, 1999
Equivalent citations: [2000]74ITD442(MUM)
ORDER
S. C. Tiwari, A.M.
1. As common issues are involved in these two appeals and were argued together by the common authorised representative of the assessee and the Departmental Representative, the same are decided by this consolidated order for convenience.
2. These two appeals have been filed by the Revenue in which the decision of the learned CIT(A) in respect of the applicability of the time-limit laid down by the provisions of s. 153(2A) of the Act has been challenged.
3. The facts of the case leading to these appeals, in brief, are that the AO completed the assessments for the asst. yrs. 1984-85 and 1985-86 on 19th March, 1987 and 29th March, 1988 respectively. Aggrieved by certain additions to the declared income made in these assessment orders the assessee preferred appeals before the learned CIT(A), who as per his orders dt. 9th June, 1988, and 1st December, 1988, gave certain directions to the AO. The AO thereafter made orders under s. 250, r/w s. 143(3) of the Act for these two assessment years on 30th January, 1992 and 20th January, 1992 respectively. The assessee challenged these orders before the CIT(A), Central-I, Mumbai, who by his consolidated impugned order upheld the assessee's objection that the orders passed by the AO in January, 1992, for these two assessment years were barred by limitation. According to the assessment order (sic) the limitation under s. 153(2A) did not apply. He dealt with this issue in the order dt. 20th January, 1992, for the asst. yr. 1985-86 in the following words :
"I do not agree with him. In terms of s. 251, which prescribes the powers of CIT(A), the CIT may confirm, reduce, enhance or annul the assessment, or he may set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by him. In the instant case, in his appellate order, dt. 1st December, 1988, the CIT(A) has allowed reliefs to the assessee, either partially or fully on 10 grounds; has confirmed addition made by AO on one ground; has partly set aside the finding on one point, and has given certain directions, in respect of 3 grounds. The time-limit under s. 153(2A) would apply to assessments fully set aside and not where on certain issues it is partly set aside. In essence such setting aside on certain issues is like giving directions to the AO to decide a point in a particular fashion after verification or making inquiries. There is no time-limit for such directions. The time-limit prescribed would apply only in the assessment is fully 'set aside'.
4. The learned CIT(A) did not agree with the concept of "partial" set aside and "full" set aside brought in by the AO. According to him the powers of the CIT(A) including both the power to set aside the assessment altogether for making the assessment de novo as well as to set aside the assessment on a specific issue with a direction to the AO to redecide that issue in the light of his directions. In either case the time-limit for completion of assessment was governed by the provisions of s. 153(2A). As the orders made by the AO under s. 250, r/w s. 143(3) had been made after the expiry of two years from the end of the financial year in which the orders under s. 250 of the learned CIT(A) had been received by the CIT, both the orders in question were barred by limitation. Aggrieved by these orders of the learned CIT(A), the Revenue is in appeals before us.
5. During the course of hearing before us the learned Departmental Representative argued that provisions of s. 153(2A) operate when the order under s. 250 is passed setting aside or cancelling an assessment. In the instant case the learned CIT(A) while deciding the assessee's appeal for the asst. yr. 1984-85 by order dt. 9th June, 1988, did not mention the word "set aside" anywhere in the order so as to construe that the assessment was set aside. In any case from the orders passed by the learned CIT(A), it was clear that neither for the asst. yr. 1984-85 nor for the asst. yr. 1985-86 the assessment order was set aside as a whole. The learned CIT(A) only gave directions in respect of some aspects of the assessment order and directed the AO to decide those aspects once again in accordance with the directions given.
6. The learned authorised representative of the assessee argued that formerly there was no time-limit for passing orders in pursuance of the orders passed by various appellate authorities. Provisions of s. 153(2A) have been brought into to ensure that the appellate orders are complied with in good time so that the assessments reached finality expeditiously. For this reason it is necessary to construe the provisions of s. 153(2A) strictly and the distinction drawn by the AO between the assessment set aside should not be accepted. The learned authorised representative of the assessee relied on the judgment of the Hon'ble Madhya Pradesh High Court in the case of Gulabchand Motilal vs. CIT (1988) 174 ITR 117 (MP).
7. We have carefully considered the rival submissions. At the outset, we may state that the Madhya Pradesh High Court judgment in the case of Gulabchand Motilal (supra) has been given on an altogether different issue and has no bearing on the matter before us. The dispute in this appeal is on the scope and impact of provisions of s. 153(2A). These provisions inserted by the Taxation Laws (Amendment) Act, 1970 w.e.f. 1st April, 1971, are as under :
"153(2A) Notwithstanding anything contained in sub-ss. (1) 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 under s. 146 or in pursuance of an order, under s. 250, s. 254, s. 263 or s. 264, setting aside or cancelling an assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order under s. 146 cancelling the assessment is passed by the AO or 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".
8. At the time the provisions of s. 153(2A) were introduced the provisions of s. 153(1) and s. 153(2) expressly provided that no order of assessment shall be made under s. 143 or s. 144 or under s. 147 after the expiry of the prescribed time-limit. At the same time provisions of s. 153(3) saved the following "classes of assessments, reassessments and recomputations" from the rigours of the provisions of s. 153(1) and s. 153(2) :
(i) where a fresh assessment is made under s. 146;
(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 ss. 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 s. 147.
9. Simultaneously on the introduction of the provisions of sub-s. (2A), the provisions of sub-s. (3) were amended inasmuch as, the expression "subject to the provisions of sub-s. (2A)" was inserted.
10. On a plain reading of sub-s. (2A) of s. 153, it is seen that "an order of fresh assessment "in pursuance of an order under s. 146, or 250 or 254 or 263 or 264 setting aside or cancelling an assessment" may be made at any time before the expiry of the prescribed time-limit. Thus, the essential ingredients of the provisions of s. 153(2A) are :
(i) an order setting aside or cancelling an assessment; and in pursuance.
(ii) an order of fresh assessment.
11. In the absence of either of the two ingredients, provisions of s. 153(2A) would not be attracted. On the facts of the case before us in these two appeals the orders passed by the learned CIT(A) in 1988-89 did not require the AO to make an order of fresh assessment in substitution of the assessment order earlier made. The directions of the learned CIT(A) were confined to the AO making such modifications to the assessment orders already made as called for in compliance to the directions of the learned CIT(A). The learned CIT(A) did not set aside or cancel the assessment order as a whole which were originally made and did not direct for an order of fresh assessment but only directed fresh consideration of some aspects and such modifications as would be called for on reconsideration of those specific aspects. In these circumstances we are of the view that the provisions of s. 153(2A) did not apply at all.
12. We are strengthened in the view taken by us by the striking difference between the language of sub-s. (2A) and sub-s. (3) of s. 153. While the provisions of sub-s. (2A) have been made applicable to "an order of fresh assessment under s. 146 or in pursuance of an order under s. 250, under s. 254, under s. 263 or under s. 264 ......" The provisions of s. 153(3) applied to a much wider category viz. the "assessments, reassessments or recomputations made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under ss. 250, 254, 260, 262, 263 or 264 ......." Thus provisions of sub-s. (2A) appear to cover only fresh assessment and not every assessment, reassessment or recomputation to be made under sub-s. (3) in pursuance of an appellate order. In short, the provisions of sub-s. (2A) of s. 153 envisage only a situation where a fresh assessment is to be made after the earlier assessment as a whole is set aside or cancelled.
13. In passing, we may mention that insofar as provisions of sub-s. (2A) of s. 153 go they do not prohibit an assessment after the expiry of the specified time-limit. The concept of limitation appear to have been derived from the fact that the provisions of sub-s. (3) of s. 153 are made subject to the provisions of sub-s. (2A). However, it would appear that even in the absence of the provisions of s. 153(3) an order in consequence of or to give effect to any finding or the direction contained in an order of appellate authority could be made at any time irrespective of the time-limit laid down under s. 153(1) or as the case may be under s. 153(2). It is now well settled that when the statute lays down the period of limitation for passing an order that requirement is fulfilled as soon as the order is passed within that period. If the order is set aside on appeal and the appellate order directs a fresh order to be passed, then there is no requirement of law that the consequential order to give effect to the appellate order must also be passed within the statutory period of limitation. Reference in this behalf is invited to the Supreme Court judgments-Director of Inspection of Income-tax (Investigation) vs. Pooran Mall & Sons (1974) 96 ITR 390 (SC) and JT 1995 (1) SC 155.
14. In view of the discussions in the foregoing paragraphs, we hold that the orders under s. 250, r/w s. 143(3) made by the AO in relation to the asst. yrs. 1984-85 and 1985-86 are not barred by limitation. Accordingly, we reverse the orders of the learned CIT(A) for both the assessment years and restore the orders of the AO.
15. In the result, both the appeals filed by the Revenue are allowed.