TMI Blog1996 (1) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... inst two other co-owners, viz., K. Lakshmaiah and K. Ramulu and the time-barring nature of these assessments. In the appeals of K. Srinivasa Rao and K. V. Subba Rao, grounds were also raised questioning the rejection of the assessees' plea regarding the amnesty nature of the returns filed by the assessees for all these years. 3. Let us first consider the grievance of the assessees in all these appeals with regard to the time-barring nature of the assessments completed, since the said issue goes to the root of the matter. 4. Assessees filed returns of wealth for the assessment years 1977-78 to 1982-83 on 30-3-1986. Assessments for these years were originally completed on 25-3-1987. Rejecting the contentions of the assessees against those assessments, the CWT(A) dismissed the appeals of the assessees by his order dated 18-11-1987. When the matters were carried in further appeal, the Tribunal by its order dated 7-4-1988, set aside the orders of the first appellate authority, and directed the framing of the assessments afresh after referring the assets for valuation by Departmental Valuation Cell. The reassessments for the assessment years 1977-78 to 1982-83 were thereafter complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in holding that the assessments were completed within the period of limitation, if the period during which the assessment proceedings were stayed by the High Court, has been excluded. Reiterating the grounds urged in these appeals, it is contended by the learned counsel for the assessees that if the interpretation sought to be placed by the learned Commissioner (Appeals) is accepted, that would amount to placing liberal interpretation on sub-clause (ii) to the Explanation 1 of section 17A(4) of the Act, regardless of the situation that has arisen in these cases. 9. Alternatively, it is contended that for the assessment years 1977-78 to 1982-83, on account of the order of the Tribunal dated 7-4-1988, the time-limit for completion of assessments under section 17A(3) of the Wealth-tax Act, 1957 is 31-3-1991, and similarly, the time-limit for completion of assessments on account of the order of the CWT(A) dated 22-11-1988 for assessment years 1983-84 and 1984-85, in terms of section 17A(3) is 31-3-1991, and as for the assessment years 1985-86 and 1986-87, the assessments in terms of section 17A(1), proviso (a) of the Act, should have been completed by 31-3-1991. While this is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of these notices, it is submitted that the adoption of 22-2-1991 as the date of receipt of communication with regard to vacation of stay by High Court, by the lower authorities is incorrect. It is further submitted that the Assessing Officer having issued the notices dated 25-1-1991 and having thus become aware of the vacation of the stay by the High Court much before the issuance of those notices, there was ample time available with him to complete the assessments, before they get barred by limitation on 31-3-1991. 11. The learned Departmental Representative, on the other hand, strongly supporting the orders of the CWT(A) on this aspect, submitted that interpretation and application sought to be made by the learned counsel for the assessees to the proviso under Explanation 1 is neither correct nor tenable. According to him, the " proviso " in question extends the period of exclusion referred to in clauses (i) to (iv) of the Explanation, but does not reduce the period of exclusion of time in any way. Further, he submitted that the 'proviso' itself having been brought into the statute book with effect from 27-9-1991, it cannot come to the rescue of the assessee in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total period of exclusion in reckoning the limitation would be 294 days + 14 days and if this period of 308 days is added to 31-3-1991, the last date for passing orders of assessment would be 2-2-1992 and since the impugned assessment orders were passed on 31-1-1992, they were not barred by limitation. 15. He also placed reliance on the decision of the Calcutta High Court in the case of India Ferro Alloy Industry (P.) Ltd. v. CIT [1993] 202 ITR 671, and ultimately contended that in any view of the matter, the impugned assessments are not barred by limitation, and the orders of the CWT(A) in that behalf are perfectly in order. 16. In reply, the learned counsel for the assessees distinguished the decisions relied upon by the learned Departmental Representative, and submitted that those decisions have no application to the facts and circumstances of the cases before us. In this context, placing reliance on the decision of the Karnataka High Court in M. K. Srikanta Setly v. CIT [1986] 160 ITR 517, it was submitted that the Law of Limitation has to be construed strictly. Reiterating the contentions urged earlier, it was submitted that it is the actual period of stay that was in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the period of stay expired, it could not be faulted on the ground of limitation. In the instant cases, it is submitted that when the stay was vacated by the order of the Andhra Pradesh High Court dated 28-11-1990, the assessments framed on 31-1-1992 cannot be saved from being barred by limitation, by any of the grounds put forth by the learned Departmental Representative. It is also submitted that even the time taken by the Standing Counsel for the Department for obtaining the certified copy of the order of the High Court, is not liable to be taken into account for extending the period of limitation beyond 31-3-1991. As such, the learned counsel for the assessees concluded that these assessments are liable to be cancelled as time-barred. 17. As already noted above, Shri P. Bala Srinivas, the learned counsel for the assessee, K.V. Subba Rao, filed written submissions before us, reiterating the above contentions. The learned Departmental Representative has also filed written submissions, reiterating the contentions of the revenue discussed above. On one of the dates of hearing of these appeals, the learned Departmental Valuation Officer has filed written submissions, in support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such assessment may be made on or before the 31st day of March, 1991 ; (b) ..................... (2) ...................... (3) Notwithstanding anything contained in sub-sections (1) and (2), an order of fresh assessment in pursuance of an order passed on or after the 1st day of April, 1975 under section 23, section 24 or section 25, 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 section 23 or section 24 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 25 is passed by the Commissioner ; Provided ................ (4) .............. Explanation 1.--In computing the period of limitation for the purposes of this section-- (i) ... (ii) The period during which the assessment proceeding is stayed by an order or injunction of any Court, or (iii) ................. shall be excluded ; Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), (2) and (3) available to the Assessing Officer for making an order of assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners and by virtue of the said order the Writ Petition itself was dismissed, the relief of stay of assessment proceedings granted by the interim order in W.P.M.P. on 8-2-1990, ceases to exist with the passing of the final order on 28-11-1990. Thus, the stay of the assessment proceedings was in force only for the period from 8-2-1990 to 28-11-1990. A copy each of the order of the High Court granting stay of the proceedings, show-cause notice before admission and the judgment dated 28-11-1990 are available on record before us. Thus, the High Court's stay of the assessment proceedings was in force only for the period from 8-2-1990 to 28-11-1990. 22. We are not in agreement with the first limb of the assessees' cases that since the stay granted by the High Court was vacated on 28-11-1990 itself or as the case may be on 15-1-1991 or 22-2-1991 as claimed by the Revenue, there was ample time for the Department to complete the assessments by the prescribed date, viz., 31-3-1991 and as such the assessments made on 31-1-1992 are barred by limitation. In view of the unambiguous provisions of Explanation 1(ii) below section 17A which specifically provides that the period during w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered by the CWT(A) in the impugned orders or the date of 15-1-1991 stated by the learned Departmental Representative, as the dates of receipt of communication with regard to vacation of stay by the Commissioner, Guntur, for the purposes of computation of period of limitation are incorrect. In any event, these dates, are of no relevance, since we are not inclined to exclude any further period beyond the actual period of stay, as contemplated by Explanation 1(ii) to section 17A of the Act, taken in the communication of the order of vacation of stay as claimed by the learned Departmental Representative. 24. In the case of C. B. Gautam, the Supreme Court, considering the effect of stay orders, on the period stipulated under section 269UD of the Income-tax Act, 1961, held as follows-- " Where there are stay orders inhibiting the authorities from taking further proceedings, the period referred to in section 269UD(1) shall be reckoned with reference to the date on which the respective stay order is vacated. " [Emphasis supplied] Even as per the Hon'ble Supreme Court, it is the date on which the stay order is vacated, that is relevant, and not the date on which the communication of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tipulated. Further, the date on which the certified copy of the judgment is received by the Standing Counsel would be relevant only for the purposes of recknoing the period of limitation to file an appeal against the said judgment, and the said date is of no significance in determining the point at issue before us. Further, section 40 of the Wealth-tax Act itself, albeit in the context of computation of periods of limitation prescribed for an appeal, prescribes exclusion of the time required for obtaining a copy of the order appealed against. The said section in that behalf reads as follows-- " 40. In computing the period of limitation prescribed for an appeal under this Act or for an application under section 27, the day on which the order complained of was made and the time requisite for obtaining a copy of such order shall be excluded. " In this view of the matter, we reject this alternative contention of the learned Departmental Representative. 28. Even the change in the incumbency of the Assessing Officer during the financial year 1991-92, in our considered opinion, does not call for extension of period of limitation beyond the actual period of stay of the proceedings by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on it, as held by the Karnataka High Court in the case of M. K. Srikanta Setty, the Law of Limitation has to be construed strictly. The Karnataka High Court in that case observed as follows-- " The fixation of periods of limitation must always be, to some extent, arbitrary, and may frequently result in hardship. But, in construing such provisions, equitable considerations are out of place and the strict grammatical meaning of the words is the only safe guide. Section 3 of the Voluntary Disclosure of Income and Wealth Act, 1976, provides for making a declaration in accordance with the provisions of section 4 of the Act before the first day of January, 1976, i.e., on or before December 31, 1975. The time specified in section 3 of the Act for making a declaration is an absolute period which cannot be extended or condoned by any one under any circumstances. The words 'make' and 'made' in sections 3 and 4 of the Act mean that a declaration under the Act should be filed or presented on or before December 31, 1975 and not beyond that. The Court is bound to place a strict construction on the period of limitation stipulated by section 3 of the Voluntary Disclosure of Income and W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult of the satisfaction of statutory authorities result in evil or civil consequences, the affected persons must be informed as a principle of natural justice or as part of the rule of audi alteram partem. Therefore, without information to the assessee, the Revenue cannot take the assessment proceedings out of the normal period limitation. Assessment must be completed within the normal period prescribed under the Act. The income-tax authorities have been empowered to complete the assessment proceedings within the larger period of eight years where there has been concealment of income. Whenever assessees are informed of concealment of income, from that date the assessment proceedings 'fall' in the larger period of eight years. Such information to the assessee or service of notice also must fall within the normal period of limitation prescribed under the Act. " 34. Similarly, considering the applicability of provisions of section 37A of the Estate Duty Act, to the cases where application was made for grant of representation or a succession certificate and the account or the copy of the application delivered to the Controller is required by section 56 of the said Act, the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns prescribing limitation have to be construed strictly and literally, and in the absence of a provision for condonation of delay, neither the Commissioner nor any other appellate authority could condone the delay irrespective of the reasons that led to the said delay. As held by the Karnataka High Court in the case of M. K. Srikanta Setty, any hardship to be caused is totally irrelevant and must be ignored by the Court. Applying the ratio of these judicial pronouncements, we have to hold that the period of limitation under section 17A which expires in all these cases on 31-3-1991, is liable for extension in terms of Explanation 1(ii) to section 17A, only by the actual period for which the proceedings in these cases have been stayed by the High Court and nothing more. 37. Even though the learned Departmental Representative contended that at least with regard to assessment years 1985-86 and 1986-87, for which original assessments itself were completed on 31-1-1992 in the cases of K Sambasiva Rao and Subbarao, where assessments have been completed under section 16(5) or on the filing of returns only in 1991, are not barred by limitation, since they have been completed within time p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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