TMI Blog2014 (9) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... to have claimed that the construction was spread over to 2-3 years – CIT(A) rendered a finding that the unexplained investment should be allowed to be spread over - That finding is upheld by the Tribunal – thus, the contention of the revenue that there was a finding and that this lead to the reopening of the assessment, has to be upheld - As a matter of fact, the reopening of assessment is a natural consequence of the claim for spread over – thus, the order fo the Tribunal is to be upheld – Decided against assessee. - Writ Petition Nos. 22965 & 22966 of 2014 and MP. Nos. 1 and 1 of 2014 - - - Dated:- 2-9-2014 - V. Ramasubramanian,JJ. For the Petitioners : Mr. R. Sivaraman For the Respondents : Mr. T. Pramod Kumar Chopda ORDER The petitioners have come up with the above writ petitions challenging the orders passed by the respondents, refusing to withdraw the notices for reopening the assessment in respect of the assessment year 2003-2004. 2. Heard Mr.R.Sivaraman, learned counsel for the petitioners. Mr.T.Pramod Kumar Chopda, learned Standing counsel for the department takes notice. 3. The petitioners, along with two others purchased land and building No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the cost of construction could be apportioned or spread over between two years namely assessment years 2003-2004 and 2004-2005 in the ratio of 63.63% and 36.37% respectively. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the Department filed appeals and the petitioners also filed cross objections. The Tribunal, by its order dated 11.10.2012, set aside the orders of the Appellate Authority and remitted the matter back to the file of the Assessing Officers for a fresh consideration on the aspect of cost of construction. 9. It appears that the Department had taken up the matter further and filed a tax case appeal before this Court under Section 260A. It is now pending. At this stage, the respondents issued the notices under Sections 148 read with 150(1) of the Act on 21.3.2014. The petitioners filed objections requesting the respondents to furnish reasons for reopening the assessment. In reply, the respondents furnished reasons. 10. Thereafter, the petitioners filed detailed objections on 11.6.2014. By the said objections, the petitioners requested the respondents to withdraw the notices, on the ground that the notice under Section 148 is barred by tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation may be taken. 13. As seen from a bare reading of the provision, the requirement of Section 150(1) is that to escape the limitation stipulated in Section 149, the reopening of assessment should be in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act. There are two limbs to Section 150(1), either of which should be satisfied for invoking Section 150(1). They are (i) reopening of assessment should be in consequence of an order passed by an authority in any proceeding under the Act by way of appeal, reference or revision or by a court in any proceeding under any other law; alternatively (ii) the reopening of assessment should be for the purpose of giving effect to any finding or direction contained in any order passed by any authority in any proceeding under the Act by way of appeal, reference or revision or by a court in any proceeding in any other law. 14. In the case on hand, the reopening of assessment is proposed to be made in relation to the assessment year 2003-2004. Therefore, the period of six years prescribed under Section 149, is already over. Hence, the Department shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction as estimated by the Departmental Valuation Officer with the State PWD rates and arrived at the addition to be made towards unexplained investment. After doing so, the Commissioner of Income Tax (Appeals) directed the amounts to be spread over for two assessment years namely 2003-2004 and 2004-2005 in the ratio of 63.63% and 36.37% respectively. As against the orders of the Commissioner of Income Tax (Appeals), one set of appeals were filed by the Income Tax Officer and one set of cross objections were filed by the assessees. All the appeals and the cross objections were heard together and by a common order dated 11.10.2012, the Income Tax Appellate Tribunal remitted the matter back to the Assessing Officers for a fresh consideration regarding the cost of construction. 19. It is seen from the order of the Income Tax Appellate Tribunal that the grievance of the Revenue was that the Commissioner of Income Tax (Appeals) should not have adopted the State PWD rates and should not have allowed spreading over of investment for two years. The grievance of the assessees was that the Commissioner of Income Tax (Appeals) ought not to have given any direction other than for the origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are not agreeing with the argument of learned D.R. that CIT (Appeals) had no such power to direct spreading of the unexplained portion of investment, if any, to the period of construction. Nevertheless, in view of the factual situation of the case, we are setting aside the orders of authorities below and remitting the issue back to the file of the A.O. for consideration afresh. The A.O. has to consider the aspect of cost of construction in accordance with law and he has to give an opportunity to the assessees to explain their case and justify the cost of construction as returned by them. 25. From the operative portion of the order of the Income Tax Appellate Tribunal extracted above, it is seen that the Tribunal remitted the matter back to the Assessing Officers for a fresh consideration on the aspect of cost of construction. But at the same time, the Tribunal also rejected the stand taken by the Department that spreading over is not possible. Therefore, the Assessing Officers are now required to do two things namely (a) to arrive at the correct cost of construction and find out whether there is any unexplained portion of investment; and (b) to allow the assessees to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roportion. This is why the Commissioner of Income Tax (Appeals) directed the spreading over at the ratio of 63.63% and 36.37%. The petitioners herein are the beneficiaries of this finding rendered by the Commissioner of Income Tax (Appeals). This finding has been upheld by the Income Tax Appellate Tribunal. Therefore, the contention of the learned counsel for the petitioners that there was no finding or direction and that the Tribunal had set aside the orders of the Commissioner of Income Tax (Appeals), cannot be accepted. 30. In I.T.O. Vs. Murlidhar Bhagwan Das [AIR 1965 SC 342], the Supreme Court held that the expressions 'finding' and 'direction' can be given full meaning and that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and a direction is a direction, which the Appellate or Revisional Authority is empowered to give. In so far as the words 'in consequence of and to give effect to' are concerned, the Supreme Court pointed out that they have to be collated with and cannot enlarge the scope of the finding or direction under the Second Proviso to Section 34(2) of the 1922 Act. Similarly, in B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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