TMI Blog2010 (6) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... H. N. MS. JJ JUDGMENT Ms. H. N. Devani J.- This petition seeks the following substantive reliefs : A. that this hon'ble court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direc- tion under article 226 of the Constitution of India calling for the records of the petitioner's case and after making inquiries and examining the legality thereof be pleased to quash and set aside the notice annexure C dated August 7, 1996, issued under section 148 of the Act ; B. that this hon'ble court be pleased to issue a writ of prohibition or a writ in the nature of prohibition or any other appropriate writ, order or direction under article 226 of the Constitution of India prohibiting the respondent permanently from taking any action pursuant to the notice issued under section 148 of the Act on August 7, 1996. 2. The petitioner is an agriculturist. The petitioner jointly purchased agri- cultural land at Mundra with one Shri Kanji Pethabhai, which was pur- chased by the Gujarat Sheep Development Corporation for a sum of Rs. 5 lakhs. The petitioner filed an application for issue of a certificate under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner prayed for time contending that the notice was illegal. The Assessing Officer issued another letter dated December 10, 1996 fixing the hearing on December 27, 1996. At this stage, the petitioner filed the present petition seeking the reliefs noted hereinabove. 4. Assailing the impugned notice, Ms. Niyati Shah, learned advocate for the petitioner, reiterated the facts stated in the petition. It was submitted that having regard to the statutory provisions contained in sections 147 to 153 of the Act as well as having regard to the decided cases on the issue, it was not open to the Assessing Officer to initiate assessment or reassess- ment proceedings for the assessment year 1983-84. Placing reliance upon the decision of the Andhra Pradesh High Court in the case of CIT v. G.Viswanatham [1988] 172 ITR 401, it was submitted that section 147 of the Act provides for assessment and reassessment of income, which has escaped assessment. The reassessment is, however, subject to the provi- sions contained in sections 148 to 153. Section 149 provides the time limit for issuance of notice, i.e., for initiation of proceedings under section 147. Section 150 is in the nature of a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only lifts the bar of limitation to give effect to orders that may be made by the appellate, revisional or reviewing the Tribunal within the scope of its jurisdiction. A finding in terms of section 150 can only be that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. Reliance was placed upon a decision of the Supreme Court in ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335. 6. Next, it was submitted that the observation made by the Commissioner (Appeals) that the Assessing Officer will, however, be at liberty to bring the long-term capital gain on this transaction to tax in the assessment year 1983-84 cannot be described as a direction. The order of the Commissioner (Appeals) contains neither a finding nor a direction in consequence of which or to give effect to which the reassessment proceedings could be said to have been taken, hence the provisions of section 153(3)(ii) would not be attracted. Reliance was placed upon a decision of the Supreme Court in the case of Rajinder Nath v. CIT [1979] 120 ITR 14. It was further submitted that while considering an appeal in respect of an assessment year, a direction regarding another as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition that pursuant to the order dated February 16, 1996 made by the Commissioner (Appeals) for the assessment year 1984-85, the Assessing Officer has issued notice under section 148 of the Act for reopening assessment for the assessment year 1983-84 in respect of income that had escaped assessment. The prin- cipal contention of the petitioner that the said notice is barred by limitation is required to be examined in the light of the provisions of Chapter XIV of the Act, which makes provision for the "procedure of assessment". Under the scheme of the Income-tax Act, 1961, section 147 defines the power and jurisdiction for making an assessment or a reassessment of escaped income. It categorises the different contingencies and circumstances where an assessment or a reassessment may be made. Section 148 provides for initiation of reassessment proceedings. Section 149 prescribes the time limit within which a reassessment notice may be issued by the Assessing Officer on the assessee concerned. Section 150 which provides for issuance of notice under section 148 at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by any authority in any proceeding under this Act by way of appeal, reference or revision. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken." 11. On a plain reading of the provisions of section 150, it is apparent that under sub-section (1) thereof, the time limit stipulated under section 149 is removed in case notice for reassessment is issued in consequence of or to give effect to any finding or direction contained in any order passed by any authority by way of appeal, reference or revision. Sub-section (2) thereof makes it clear that the reassessment permissible under sub-section (1) of section 150 cannot be made by the Department, where the period of limitation for assessment or reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion contained in the said order." 13. On a plain reading of sub-section (3) of section 153 of the Act, it is apparent that the same lifts the bar of limitation laid down under sub-sec- tion (1) and sub-section (2) thereof in respect of the classes of assessments, reassessments or recomputations enumerated thereunder. Thus, in the light of the provisions of section 153(3)(ii) the normal time limit for com- pletion of assessments or reassessments, as contained in section 153(1) or section 153(2), shall have no application where the assessment is made on the assessee or any person in consequence of or to give effect to any find- ing or direction contained in an order under sections 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 the Act. 14. The language employed in Explanation 2 to section 153 makes it abun- dantly clear that under the said provision, when an order in appeal, revi- sion or reference is made whereby any income is excluded from the total income of an assessee for an assessment year, then an assessment of such income for another assessment year shall be deemed to be one made in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the transfer of the property in question took place on March 6, 1983. The long-term capital gain arising on the sale was, therefore, liable to be taxed in the assessment year 1983-84 and not in the assessment year 1984-85. The addition made by the Assessing Officer in this regard in the assessment year 1984-85 is therefore, deleted. The Assessing Officer will, however, be at liberty to bring the long-term capital gain on this transaction to tax in the assessment year 1983-84 as per the law keeping in view the time limit prescribed in Explanation 2 below to section 153 read with section 153(3)." 17. It is not disputed that the order made by the Commissioner (Appeals) has been made in exercise of appellate jurisdiction. The operative part of the order indicates that the Commissioner (Appeals) has held that the long-term capital gain arising on the sale was liable to be taxed in the assessment year 1983-84 and not in the assessment year 1984-85. Conse- quently, the addition made by the Assessing Officer for the assessment year 1984-85 came to be deleted. Liberty has also been reserved for the Assessing Officer to bring the long-term capital gain on the transaction to tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference or revision, Explanation 2 to section 153(3) contains a deeming provision which provides that where by an order referred to in clause (ii) of sub-section (3) any income is excluded from the total income of an assessee for an assessment year, then an assessment of such income for another assessment year shall for the purposes of section 150 and sec- tion 153 be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order. 20. In the circumstances, though notice has been issued under section 148 of the Act in the light of the findings recorded by the Commissioner (Appeals), considering the language of Explanation 2 to section 153, it is apparent that the very fact that income for the year 1984-85 has been excluded from the total income of the assessee for the said year would be sufficient for the Assessing Officer to make assessment of such income for another assessment year, which for the purposes of section 150 and section 153 would be deemed to be one made in consequence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of M. K. Thakker v. CIT [1992] 197 ITR 110 is concerned, it is apparent that in the said case, the court has not considered the pro- visions of Explanation 2 to section 153. The decision of the Supreme Court in the case of Rajinder Nath v. CIT [1979] 120 ITR 14, also does not carry the case of the assessee any further inasmuch as on a plain reading of the order of the Commissioner (Appeals), it is apparent that the finding recorded by the Commissioner (Appeals) is to the effect that the long-term capital gain is liable to be taxed and that the sale in question took place in the assessment year 1983-84. Thus, the contention that there is no finding or direction within the meaning of section 153(3)(ii) of the Act is contrary to the facts of the case. 23. From the facts noted hereinabove, it is apparent that in consequence of and with a view to give effect to the finding contained in the order made by the Commissioner (Appeals) in appeal for the assessment year 1984-85, the Assessing Officer has issued notice under section 148 for assessing the income which was excluded from the total income of the petitioner for the assessment year 1984-85, to assess such incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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