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Tikka Brijendra Singh Versus Commissioner of Income Tax, Shimla, Commissioner of Wealth Tax, Shimla

2015 (11) TMI 650 - HIMACHAL PRADESH HIGH COURT

Validity of Wealth Tax Assessments - whether ITAT was justified in holding that the assessment order passed on 7.2.2007 is within the limitation period and hence a valid return ? - Held that:- Assessment in the instant case was made on legal heir of late assessee who alone was declared to be the only legal heir by this court pursuant to dispute between different parties claiming to be legal heir of the assessee. Further assessment has been framed by the Assessing Officer to give effect to the co .....

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proceedings can definitely be held to have been completed within the prescribed time frame.

The provision of sub section (2A) to Section 153, which provision, as discussed above, is not at all applicable to the facts of the instant case.

The order passed by ITAT, holding that the assessment order passed on 7.2.2007 was within limitation period is factually and legally correct and the said order does not suffer form any irregularity, illegality or perversity. Accordingly, b .....

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ge Since common questions of law and facts arise for consideration in these appeals, so they are taken up together and are being disposed of by a common judgment. 2. Out of 20 appeals before the ITAT, 9 appeals were filed by the assesses against the consolidated order of the Commissioner of Wealth Tax (Appeals), Shimla dated 31.12.2009 relating to assessment years 1971-72 to 1979-80 against the order passed under Section 16(3) of Wealth Tax Act, 1951. Further eight appeals were filed by the asse .....

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Act were allowed, whereas remaining appeals under the Income Tax Act as also Wealth Tax Act were partly allowed against which the assessee has filed the present appeals. 4. All these appeals were admitted on the following questions of law: i) Whether in the present facts and circumstances of the case the Ld. ITAT was justified in holding that the assessment order passed on 7.2.2007 is within the limitation period and hence a valid return ? ii) Whether under the present facts and circumstances of .....

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hat if the order is passed setting aside or cancelling an assessment on or after 1.4.1999, but before 1.4.2000, then such an order of fresh assessment was required to be made at any time upto 31.3.2002 whereas in the present assessment, the order was passed much beyond the stipulated period on 8.2.2007 and was thus clearly time barred. In other words, the assessment in all events was required to be completed by 31.2.2002 whereas the same was barred by limitation. 6. On the other hand, Sh.Vinay K .....

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list of events in relation to the proceedings completed by various authorities in the case of the assessee and as has been correctly noted in the impugned order and are reproduced as under: 16.3.1990 Assessment order under Section 16(5) at assessed Wealth of ₹ 1,50,000/- was passed 22.2.1993 CWT(A), Patiala vide order under Section 25 of the Wealth Tax Act set aside the assessment order and directed the Assessing Officer to make assessment de-novo and determine the correct status of the as .....

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ent order was passed under Section 16(5) of the Wealth Tax Act. 17.1.2000 CWT(A),Patiala set aside the assessment made to be framed de-novo. 23.5.2000 Date of demise of Raja Harmohinder Singh, assessee 1.9.2003 Civil suit between legal heirs of assessee and other persons was decreed by Ld. ADJ in favour of four claimants and also status of legal heirs decided. 20.4.2004 The Tribunal in the appeal filed by the Revenue upheld the order passed by CWT(A), Patiala and dismissed the appeal of the Reve .....

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beyance 26.7.2006 Judgment delivered by the Hon ble High Court in appeal in CS between legal heirs of the assessee. 11.12.2006 The interim order of the Hon ble High Court of Himachal Pradesh was vacated 8.2.2007 Assessment completed in the hands of legal heir of late Raja Harmohinder Singh. 8. In so far as the Wealth Tax Assessments initially made are concerned, these were either vacated or set aside by the Commissioner of Wealth Tax (Appeals), Patiala and even the income tax assessment were set .....

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o any person. Raja Harmohinder Singh in the meanwhile expired on 23.5.2000 and thereafter the suit was ultimately decreed in favour of asessee on 1.9.2003. The assessee and his four other L.Rs i.e. Smt.Saroj Devi, Rajiv Kumar, Ragina Singh and Vijay Singh were declared entitled to the property left by Raja Harmohinder Singh. 10. In these proceedings, learned Addl. District Judge (1), Kangra held Bali Ram Sharma, Sneh Lata Sharma and Anil Kumar Shama to be the bonafide purchasers of 47% of re-det .....

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sessee also filed an appeal before this court being RFA No.310/2003 for modification of the aforesaid judgment and decree. 11. Before the aforesaid appeals could come up for final hearing, both the parties to the appeal settled the dispute amicably outside the court themselves and stated that they have no objection in case the suit was fully decreed in favour of assessee herein. In the suit, filed between the L.Rs of Raja Harmohinder Singh, three persons Sh.,Bali Ram, Sneh Lata Sharma and Anil K .....

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Singh which was negated by the trial court and even this court held that Ajay Singh had no right, title and interest to the assets of Raja Harmohinder Singh. The second issue which was decided in RFA No. 271 of 2003 was that three persons aforesaid were held entitled to 47% share of re-determined compensation under Section 28A of the Land Acquisition Act. It was thus held that the plaintiff in RFA No.310/2003 i.e. the assessee alone to the exclusion of the aforesaid three person was not entitled .....

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dera Singh has been reduced in appeal from Rs. Two crores to Rs. Twelve lacs. Reply to this application has been filed by the appellant in which the appellant has disputed his tax liability. Because of the pending litigation between the parties before the Tax Authorities and the fact that the tax liability of Raja Harmohindra Singh has been disputed, I am not inclined to pass any order on the aforesaid application of the Revenue. The application accordingly is dismissed. However, the revenue is .....

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ants to whom the assessee had sold his rights. Lastly, the issue of contradictory claims of L.Rs of original assessee, i.e. Raja Harmohinder Singh was also finally decided which laid to rest by this court vide aforesaid judgments. 14. Earlier to this, the assessee filed CWP No. 1251 of 2005 wherein he pointed out that his predecessor-in-interest, i.e. Raja Harmohinder Singh was the Karta of Joint Hindu Family and had received different awards under the Land Acquisition Act and certain awards had .....

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as per the findings earlier recorded by the Addl. District Judge, Kangra. It was further prayed that till the final status of late Raja Harmohinder Singh is decided, the matter be not carried forward by the tax authorities. 15. On 1.12.2005, this court directed the Assessing Officer and Chief CIT, Palampur not to take decision on the notices issued to the assessee. 16. The Income Tax department, through the ACIT, filed an application in CWP No.1251 of 2005, wherein it was pointed out that pursua .....

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er was also vacated by observing as under: "In the present writ petition, the main dispute was with regard to the status of the legal representatives of Raja Harmohinder Singh father of the petitioner which was to be adjudicated upon in RFA No. 271 of 2003 and RFA No. 310 of 2003. Admittedly, these two appeals have been decided and the status of the parties has also been decided by this Court. We have been informed that Special Leave Petition against the judgment of this Court is pending be .....

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he ground that till and so long conflicting claims of the L.Rs of the assessee were pending adjudication before the competent court of jurisdiction, issue of service of notice on the L.Rs would also be open to debate and the proceedings cannot be thus concluded. ITAT also referred to in its order various interim orders passed initially by the Addl. District Judge, Kangra and thereafter this court to reject the contention of the assessee. The plea of the assess was also rejected on the ground tha .....

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hus: "17A Time-limit for completion of assessment and reassessment.- (1) No order of assessment shall be made under section 16 at any time after the expiry of two years from the end of the assessment year in which the net wealth was first assessable: [Provided that, (a) where the net wealth was first assessable in the assessment year commencing on the 1st day of April, 1987, or any earlier assessment year, such assessment may be made on or before the 31st day of March, 1991; (b) where the n .....

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tituted] (2) No order of assessment or reassessment shall be made under section 17 after the expiry of [one year] from the end of the financial year in which the notice under sub-section (1) of that section was served: [Provided that where the notice under sub-section (1) of section 17 was served on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such assessment or reassessment may be made at any time up to the 31st day of March, 2002:] [Provided further that where the .....

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t, may be made at any time before the expiry of [one year] from the end of the financial year in which the order under section [23A] 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 that where the order under section 23A 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, on or after the .....

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e words "nine months" had been substituted.] (4) The provisions of sub-sections (1) and (2) shall not apply to the assessment or reassessment made on the assessee or any other person in consequence of, or to give effect to, any finding or direction contained in an order under section 23, section 24, section 25, section 27 or section 29 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, and such assessment or reassessment may, subjec .....

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which the 187 [Assessing Officer] received the declaration under sub-section (1) of section 18C and ending with the date on which the order under sub-section (3) of that section is made by him, or] (iii) in a case where an application made before the Wealth-tax Settlement Commissioner under section 22C is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which such application is made and ending with the date on which the order under subsection ( .....

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d of limitation shall be deemed to be extended accordingly:] [Provided further that where a proceeding before the Settlement Commission abates under section 22HA, the period of limitation referred to in this section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, shall, after the exclusion of the period under sub-section (4) of section 22HA, be not less than one year; and where such period of limitation is less than one year, it shall be .....

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an opportunity of being heard before the said order was passed.]" "Section 153 of Income Tax Act Time limit for completion of assessments and reassessments. 153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of- (a) two years from the end of the assessment year in which the income was first assessable ; or (b) one year from the end of the financial year in which a return or a revised return relating to the assessment year commen .....

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ch assessment, reassessment or recomputation may be made at any time up to the 31st day of March, 2002 : (2A) Notwithstanding anything contained in subsections (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 in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year .....

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on 264 is passed by the Chief Commissioner or Commissioner on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such an order of fresh assessment may be made at any time up to the 31st day of March, 2002. (3) The provisions of sub sections (1) and (2) shall not apply to the following classes of assessment, reassessment and recomputations which may, (subject to the provisions of sub section (2A) be completed at any time- (i) (***) (iI) where the assessment, reassessment o .....

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he purposes of this Section- (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129, or (ii) the period during which the assessment proceeding is stayed by an order or injunction of any court, or (iia) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause .....

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e to get his accounts audited under sub-section (2A) of section 142 and ending with the last date on which the assessee is required to furnish a report of such audit under that sub-section; or (iv) [***] (iva) the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of section 158A and ending with the date on which the order under sub-section (3) of that section is made by him, or (v) in a case where an applicati .....

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ction 245Q and ending with the date on which the order rejecting the application is received by the Commissioner under sub-section (3) of section 245R, or (vii) the period commencing from the date on which an application is made before the Authority for Advance Rulings under subsection (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Commissioner under sub-section (7) of section 245R, shall be excluded: Provided that where immediately a .....

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excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order. Explanation 3.-Where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of one person and held to be the income of another person, then, .....

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) of the Act would apply to those cases where fresh assessment is required to be made in pursuance of an order of the appellate authorities passed under section 250 or 254 or 263 of 264 of the Act setting aside or canceling an assessment, meaning thereby wherever assessment order is cancelled or set aside by the appellate authority and the Assessment Officer is required to pass a fresh assessment order pursuant to the directions of the appellate authorities within the prescribed period under sub .....

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aforesaid legal position, we now proceed to examine as to whether it is the provisions as contained in sub section (2A) of Section 153 of the Act which would be attracted to the present case as is contended by the learned counsel for the assessee or it would be sub section 3(ii) of Section 153 which would be applicable as per the contention of the learned Senior counsel for the revenue. 23. It would be noticed that assessment in the instant case was made on legal heir of late assessee who alone .....

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on 17A(4) of Wealth Tax Act/153(3) of the Income Tax Act and could be passed at any time and the provisions of sub section (1), (1A), (1B) and (2) of the said section, had no application to the facts of the instant case and, therefore, the assessment proceedings can definitely be held to have been completed within the prescribed time frame. 24. The matter can be looked at from a different angle. It is not in dispute that till and so long conflicting claims of the legal heirs of the original asse .....

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CWP No. 1251 of 2005 challenging therein the notice issued by the Assessing Officer dated 27.10.2005 for finalization of the assessment proceedings relating to various orders under the Wealth Tax Act and Income Tax Act. It is also pertinent to observe here that though the assessee made extensive pleadings before this court, but, no where did he question the validity of the notice of hearing issued by the Assessing Officer and further did not even raise the plea that the notice issued by the Asse .....

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