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2016 (5) TMI 805 - SUPREME COURT

2016 (5) TMI 805 - SUPREME COURT - [2016] 384 ITR 186 - Time barred assessment u/s 153 - Time-limit for completion of assessments and reassessments - HC excluded the period during which the draft assessment was forwarded to the IAC till the date of receiving the instructions from the IAC under Section 144B of the Act - Held that:- From the reading of Section 153, the period (not exceeding 180 days) commencing from the date on which the ITO forwards the draft order under sub-Section (1) of Sectio .....

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f the Inspecting Assistant Commissioner will be applicable. Sub-section (4) nowhere provides that, if some directions by the Inspecting Assistant Commissioner are issued as provided under sub-section (2), then provisions requiring approval or sanction of the Inspecting Assistant Commissioner will not be applicable.

In the instant case, we find that it is not the IAC who exercises the powers or performs the functions of the ITO, even when such a power was conferred upon him, concurrent .....

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exercise those functions including passing assessment order. It is still open to the ITO to assume the jurisdiction and pass the order in case the IAC does not exercise those powers in respect of the assessment year. Provisions of Section 144B would not apply only if the IAC exercises powers or performs the functions of an ITO. What is important is the actual exercise of powers and not merely conferment of the powers that are borne out from the bare reading of sub-Section (4) of Section 125B. < .....

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into account the earlier judgment of the Co-ordinate Bench of the High Court in CIT vs. Shree Digvijay Woollen Mills Ltd. [1993 (12) TMI 13 - GUJARAT High Court ] which has taken the view that we have expressed above.

Appeal filed by the assesee against the judgment of the Allahabad High Court is dismissed affirming the view in the said case which is reported as Commissioner of Income tax vs. Saraya Sugar Mills P. Ltd. [2010 (11) TMI 685 - Allahabad High Court ] - Civil Appeal No (S). .....

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Income Tax Appellate Tribunal (hereinafter referred to as ITAT ) holding that the assessment order dated 01.09.1984 passed by the Assessing Officer in respect of Assessment Year 1981-82 was time barred. We may mention at the outset that in terms of Section 153 of the Income Tax Act, 1961 (hereinafter referred to as the Act ), time limit for completion of the assessment to be made under Sections 143 or 144 of the Act is at any time after the expiry of two years from the end of the Assessment Yea .....

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g to the aforesaid Assessment Year and forwarded to the Inspecting Assistant Commissioner, Central Range-II, Ahmedabad (hereinafter referred to as the IAC ) on 13.03.1984 (i.e. before 31.03.1984). The IAC issued instructions under Section 144B of the Act on 31.08.1984 and based on that the Assessing Officer framed the assessment on 01.09.1984 under Section 143(3) of the Act read with Section 144B of the Act. 3. The position that was taken by the Revenue was that the period from 13.03.1984 to 31. .....

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ax Officer, Central Circle, Jamnagar (hereinafter referred to as the ITO ) to the IAC. This order was passed specifically in the case of the respondent herein which became effective from 01.09.1983. It was their submission that once, by virtue of the aforesaid order dated 29.08.1983 passed by the CIT, the IAC is conferred concurrent jurisdiction, along with ITO, empowering him to make assessment order in the case of the assessee, there was no question of forwarding the draft assessment order by .....

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ITO. 4. The Assessing Officer was not amused by the aforesaid contention of the assessee and repelled the same resulting in framing of the assessment order dated 01.09.1984. However, the ITAT found force in the said submission of the assessee and allowed the appeal thereby setting aside the assessment order. The High Court, as pointed out above, has upheld this view of the ITAT, resulting in the dismissal of the appeal of the appellant. 5. Before proceeding further, we may mention that in the a .....

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ng views and to decide as to which High Court has correctly decided the issue of limitation. 6. We have already stated, in detail, the facts of Civil Appeal No. 2984 of 2008. Before we embark upon our detailed discussion on the issue, we would like to place on record the relevant provisions of the Act which have bearing on the issue. As mentioned above, Section 153 prescribes limitation of two years for making assessment under Section 143 or Section 144 of the Act. Avoiding those portions of the .....

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est. . . . (3) The provisions of sub-sections (1) and (2) shall not apply to the following classes of assessments, reassessments and re-computations which may, subject to the provisions of sub-section (2A), be completed at any time - ... (ii) where the assessment, reassessment or re-computation is : made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263 or 264 or in an order of any court in a .....

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-section (4) of that section, or, in a case where no objections to the draft order are received from the assessee, a period of thirty days, or (iva) the period (not exceeding sixty days) commencing from the date on which the Income-tax 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. . . . shall be excluded. . . ." 7. Section 123 of the Act lays down the jurisdiction o .....

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asses of persons or the same incomes or classes of income or the same cases or classes of cases, they shall have concurrent jurisdiction and shall perform such functions in relation to the said area or persons or classes of persons or incomes or classes of income or cases or classes of cases as the Commissioner may, by general or special order in writing, specify, for the distribution and allocation of the work to be performed. 8. Section 124, on the other hand, deals with the jurisdiction of th .....

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sses of income or the same cases or classes of cases, they shall have concurrent jurisdiction and shall perform their functions in relation to the said area, or persons or classes of persons, or incomes or classes of income, or cases or classes of cases, in accordance with such general or special orders in writing as the Commissioner or the Inspecting Assistant Commissioner authorised by the Commissioner in this behalf may make for the purpose of facilitating the performance of such functions. ( .....

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rises under this section as to whether an Income-tax Officer has jurisdiction to assess any person, the question shall be determined by the Commissioner; or where the question is one relating to areas within the jurisdiction of different Commissioners, by the Commissioners concerned or, if they are not in agreement, by the Board. (5) No person shall be entitled to call in question the jurisdiction of an Income-tax Officer - (a) after the expiry of one month from the date on which he has made a r .....

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im, refer the matter for determination under sub-section (4) before assessment is made. (7) Notwithstanding anything contained in this section or in section 130A, every Income-tax Officer shall have all the powers conferred by or under this Act on an Income-tax Officer in respect of any income accruing or arising or received within the area for which he is appointed. 9. Likewise, Section 125 of the Act prescribes the powers of the Commissioner with respect to specified areas, cases, persons etc. .....

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ontained in Chapter XIV, namely, Sections 144A and 144B of the Act. Section 144A authorises the IAC to issue directions in certain cases and Sections 144B provides that in certain cases reference is to be made to the IAC by the ITO before framing the final assessment order. Under Section 144A, the IAC may, on his own motion or on a reference being made to him by the ITO or on the application of an assessee, call for and examine the record of any proceedings in which the assessment is pending and .....

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and the amount of such variation exceeds the amount that can be fixed by the Board under sub-Section (6) thereof. In such a situation, the ITO is under obligation to first forward a draft of the proposed order of assessment to the assessee who can file his objections within 7 days thereof and if the objections are received, the ITO is to forward the draft order together with the objections to the IAC. The IAC, after considering the draft order and the objections, is empowered to issue such dire .....

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r, as pointed out in the earlier portion of this judgment, as per the assessee when the IAC was vested/empowered with same powers as that of ITO, by specific order of the CIT in respect of the respondent/assessee itself and with the conferring of said powers the IAC and ITO had concerned jurisdiction over the assessee, there was no reason to send the draft assessment order by the ITO to the IAC. To appreciate this contention, we at this stage, reproduce the provisions of Section 125A of the Act .....

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e exercised or performed concurrently by the Inspecting Assistant Commissioner. (2) Where under sub-section (1), an Inspecting Assistant Commissioner exercises concurrent jurisdiction with one or more Income-tax Officers in respect of any area, or persons or classes of persons, or incomes or classes of income, or cases or classes of cases, the Income-tax Officer or Income-tax Officers shall exercise the powers and perform the functions under this Act in relation-thereto as the Inspecting Assista .....

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, shall be issued before an opportunity is given to the assessee to be heard. Explanation. - For the purposes of this sub-section, no instruction as to the lines on which an investigation connected with the assessment should be made shall be deemed to be an instruction prejudicial to the assessee. (4) Where an order is made under sub-section (1) and the Inspecting Assistant Commissioner exercises the powers or performs the functions of an Income-tax Officer in relation to any area, or persons or .....

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respect of such areas or of such persons or classes of persons or of such incomes or classes of income or of such cases or classes of cases as per the direction of the Commissioner. Where there are two or more Inspecting Assistant Commissioners, they are having concurrent jurisdiction and are required to exercise their powers and perform their functions as per the order in writing made by the Commissioner specifying for the distribution and allocation of the work to be performed. (ii) Similarly, .....

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e Income-tax Officer shall have jurisdiction in respect of any person carrying on business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area and in respect of any other person residing within the area. Sub-section (4) provides as to who shall decide the dispute arising with regard to the .....

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pect of any specified case or class of cases or of any specified person or class of persons, be exercised by the Inspecting Assistant Commissioner. By an order of the Commissioner under section 125(1)(a), the Income-tax Officer is divested of his jurisdiction to deal with the specified case or class of cases or specified person or persons. Hence, even though the Income-tax Officer is having jurisdiction in respect of any specified case or person, the Commissioner is empowered to direct that the .....

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the Commissioner may, be general or special order in writing, direct that all or any of the powers or functions conferred on, or assigned to, the Income-tax Officer or Income-tax Officers by or under this Act in respect of any are, or persons of classes of persons, or incomes or classes of income, or cases or classes of cases, shall be exercised or performed concurrently by the Inspecting Assistant Commissioner. Sub-section (2) of section 125A also empowers the Inspecting Assistant Commissioner .....

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ding under the Act. The proviso clarifies that no instructions which are prejudicial to the assessee shall be issued before an opportunity is given to the assessee to be heard. 13. Thrust of the counsel for the assessee was on sub-Section (4) of Section 125A with the submission that on the conferment of the concurrent jurisdiction, provisions of the Act requiring approval and the sanction of the IAC are not applied and, therefore, the provisions of Section 144B seize to apply and should not have .....

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not remain an Officer higher in status than ITO insofar as assessment of the assesse is concerned and for this reason also no such reference to the IAC was called for. 14. These arguments are without any force and the result which the respondent/assessee wants does not flow from the reading of Section 125A of the Act. A bare reading of sub-Section(4) of Section 125A of the Act provides that where- (a) an order is made under sub-section (1), and (b) the Inspecting Assistant Commissioner exercises .....

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n of the Act requiring the approval or sanction of the Inspecting Assistant Commissioner will not be applicable only in those cases where both the aforementioned conditions (a) and (b) are satisfied. It would mean that, even though an order is made under section 125A(1) empowering the Inspecting Assistant Commissioner to perform the functions of an Income-tax Officer, yet if he has not exercised the power or performed the function of an Income-tax Officer, the provisions requiring approval or sa .....

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tly with the ITO. The significant feature of Section 125A of the Act is that even when the IAC is given the same powers and functions which are to be performed by the ITO in relation to any area or classes or person or income or classes of income or cases or classes of cases, on the conferment of such powers, the ITO does not stand denuded of those powers. With conferment of such powers on the IAC gives him concurrent jurisdiction which means that both, ITO as well as the IAC, are empowered to e .....

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