TMI Blog2001 (8) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... ses by the Joint Commissioner for reasons to be recorded in writing shall be excluded while computing the period of limitation for assessment. The core question is whether the impugned deferment order is valid in law and can be availed of by the assessing authority to gain time for making assessment. It is not in dispute that but for the deferment order, the assessment gets time-barred. It may be mentioned that the period of limitation for making the assessment is four years from the date of expiry of the relevant year. The learned single Judge observed that the time spent during the period of operation of stay order in Writ Petition Nos. 4734 and 4735 of 1988 can be excluded and the order of deferment passed by the Joint Commissioner cannot be assailed. It is common ground that irrespective of operation of the stay order, the time for making assessment is not available, when once the deferment order is found to be invalid. 3.. The learned single Judge referred to the view taken by him in Writ Petition No. 36529 of 1997 regarding the applicability of the order of the stay granted in an earlier writ petition and directed that till the writ appeal against the said judgment is disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not valid in the absence of notices to the assessee. After the decision of the Supreme Court, the impugned deferment order deferring the assessments for the years 1980-81 to 1985-86 was passed on December 3, 1998 with effect from July 31, 1989, until further orders . Writ petitions giving rise to these writ appeals were then filed. The order of stay continued during the pendency of the writ petitions which were disposed of by the impugned judgment dated July 5, 1999. Along with this judgment, Writ Petition Nos. 17218-17224 of 1997 which are the subject-matter of Writ Appeal Nos. 6422-6428 of 1999 as well as Writ Petition No. 2704 of 1997 which was the subject-matter of Writ Appeal No. 6430 of 1999 were disposed of with the observation that if the assessments are to be framed in the light of the judgment in Writ Appeal No. 4442 of 1998 (against Writ Petition No. 36529 of 1997), an opportunity should be given to the petitioners at that stage. 6.. We shall now refer to the details pertaining to the two deferment orders dated July 31, 1989 and December 3, 1998. In the preamble to the order, it is mentioned that the Deputy Commissioner (CT) requested that the assessments relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the first and invalid deferment order was passed. 8.. It must be noted that the impugned order of deferment, if it is effective from the date of passing the order would not have the effect of saving the limitation. That is the reason why the Joint Commissioner chose to give retrospective operation to the deferment order so as to date it back to 1989. The question is whether it is legally permissible to do so. It is true that in a case violation of principles of natural justice, a notice can be given and a fresh order can be passed in conformity with principles of natural justice. But, where the question of limitation for making the assessment is involved, the point is whether such deferment order could be passed even after the expiry of the period of limitation giving notional retrospectivity thereto. In other words, for the question when the power to pass a deferment order can be exercised even after the expiry of period of limitation. The answer should be, in our view, clearly in the negative. Deferment of assessment has the effect of enlarging the period of limitation which did not expire by the time the deferment order is contemplated to be passed. When once the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n section 12(5). Therefore, it is crucial that such an order should come into existence after hearing the assessee and before the time under section 12(5) has expired....... 10.. We are in agreement with the view expressed in the two decisions referred to above. 11.. The learned single Judge has referred to the decision in Guduthur Bros. v. Income-tax Officer, Special Circle, Bangalore [1960] 40 ITR 298 (SC). The facts of the case and the provision considered therein are materially different and the ratio has no bearing on the present case. The Supreme Court was of the view that the notice proposing to levy penalty which was issued earlier was during the course of assessment proceedings and the subsequent action taken in conformity with the principles of natural justice will relate back to the time when the first notice was issued. The decision of the Supreme Court rendered in the context of section 28(1)(a) of the Income-tax Act, 1922 has no bearing on the present case. 12.. The next question is whether the order of stay granted by this Court in W.P. Nos. 4734 and 4735 of 1988 which was in force from March 30, 1988 to February 9, 1998 can be pressed into service by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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