TMI Blog2007 (11) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... nded limit as provided under Section153(1)(b) of the Income Tax Act, 1961 is not available in this case." 2. The assessee is a company carrying on business in trading of steel bars and hiring of cylinders etc. On 24.02.1987, a search was conducted under Section 132 of the Income Tax Act, both in its business premises and the residential premises of its directors. According to the department, valuable incriminating material was found including introduction of certain bogus credits by the assessee. The jurisdiction over the assessee's case was originally with the Income Tax Officer, Company Circle, Hyderabad before whom the assessee had filed a return of income, for the assessment year 1986-87, declaring a total income of Rs.1900/-. According to the Revenue, the assessee was one among a group of companies whose activities were largely confined to Visakhapatnam. In order to facilitate a detailed and coordinated investigation the Chief Commissioner of Income Tax, Hyderabad, under Section 127(2) of the Income Tax Act, passed order dated 28.07.1988 transferring the asessee's case from the file of the Assistant Commissioner, Company Circle, Hyderabad to the file of the Asst. Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the additions for de-novo consideration on merits by the appropriate assessing authority, secondly that the assessment order dated 07.05.1990 was not barred by limitation in view of clause (ii) of Explanation 1 to Section 153(3) since the period, during which the order of interim stay passed by the High Court was in force, was required to be excluded while computing the period of limitation, thirdly that it was a case where penalty proceedings had also been initiated against the assessee under Section 271(1)(C) of the Income Tax Act and in that view of the matter the limitation got extended to eight years as per clause (b) of sub-section(1) of Section 153 of the Income Tax Act. The Commissioner of Income Tax (Appeals), however, observed that though the assessment was not barred by limitation, the assessment was completed hurriedly to save limitation resulting in denial of reasonable opportunity to the assessee. Consequently the assessment order was set aside and the matter was restored to the assessing officer to redo the assessment after giving reasonable opportunity to the assessee and to carry out the directions given by him in the appellate order for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the expiry of limitation period under Section153(1)(a) to get the extended time limit of 8 years u/s 153(1)(b) to complete the assessment? 3. Whether, on the facts and in the circumstances of the case, the I.T.A.T. is correct in law in observing that the CIT (Appeals) Visakahaptnam, appellate order setting aside the assessment for the A.Y. 1986-87 on other grounds is only a passing remark and not binding on the Assessing Authorities as the assessment was annulled on the ground of jurisdiction? 4. Whether on the facts and in the circumstances of the case, the ITAT is correct in law in holding that the period between passing the interim suspension order by the Andhra Pradesh High Court in W.P.M.P.No.19396 of 1988 dated 10.10.1988 and final order in W.P.No.15267 of 1988 dated 13.12.1989 on the C.C.I.T's order u/s127(2) cannot be taken as extended period as laid down u/s.153(3)(ii) for completion of assessment? 8. The Tribunal was of the opinion that a referable question of law did arise for consideration out of its order dated 25.05.1993 and, accordingly proceeded to draft the statement of the case and to refer the question stated therein for the opinion of the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surjit Pal Singh [1991] 188 ITR 297 against the Revenue, Learned Senior Counsel would submit that questions 3 and 4 alone need be answered. 12. On question No.4, learned Senior Counsel would contend that, under Explanation I (ii) of Section 153(3), the period during which assessment proceedings were stayed by an order or injunction of any Court must be excluded in computing the period of limitation. Learned Senior Counsel would submit that, since operation of the order of the Chief Commissioner of Income Tax dated 28.07.1988 was suspended by this Court, in its order in W.P.M.P. No. 19396 of 1988 in W.P. No. 15267 of 1988 dated 10.10.1988, and as the order of suspension continued to remain in force till W.P. No. 15267 of 1988 was allowed by order dated 13.12.1989, the period from 10.10.1989 to 13.12.1989 is required to be excluded in computing the period of limitation. Learned Senior Counsel would place reliance on Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association [1992] 75 Comp Cas 440 (SC); in this regard. 13. On the other hand Sri K.K. Viswanatham, learned Counsel appearing on behalf of the assessee, would contend that this Court, by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) where the assessment, reassessment or re-computation is to be made under clause (a) of that section, after the expiry of four years from the end of theassessment year in which the notice under section 148 was served; (b) where the assessment, reassessment or re-computation is to be made under clause (b) of that section, after - (i) the expiry of one year from the date of service of the notice under section148, (ii) the expiry of one year from the date of service of the notice under section 148, whichever is later. (2A) Notwithstanding anything contained in sub-section (1) and (2), in relation to the assessment year commencing on the 1 st day of April, 1971, and any subsequent assessment year, an order of fresh assessment under section 146 or in pursuance of an order under section 250, section 254, section 263 or section 264, 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 146 cancelling the assessment is passed by the Income-tax Officer or the order under; section 250 or section 254 is received by the Commissioner or, as the case may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be excluded from the period of limitation. What was stayed/suspended by this Court, in its order in W.P.M.P. No. 19396 of 1988 dated 10.10.1988, was the order of the Chief-Commissioner of Income Tax dated 28.07.1988 transferring the assessee's case from the file of the Assistant Commissioner, Company Circle, Hyderabad to the file of the Assistant Commissioner (Investigation), Visakhapatnam. The order transferring the case was suspended and not the assessment proceedings themselves. While the consequence of suspension of the order, of the Chief-Commissioner of Income Tax, Hyderabad dated 28.07.1988, was that the Assistant Commissioner (Investigation), Visakhapatnam was precluded from making the assessment, it did not prevent the Assistant Commissioner, Company Circle, Hyderabad from passing the assessment order within the period of limitation on or before 31.03.1989. As rightly held by the Tribunal, Explanation 1 (ii ) of Section 153 (3) has no application to the case on hand as the interim order of this Court dated 10.10.1988 did not amount to stay of assessment proceedings. 16. In Shree Chamundi Mopeds Ltd .[1992] 75 Comp Cas 440 (SC), proceedings before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts order dated January 7, 1991 and it cannot be said that after February 21, 1991, the said appeal stood revived and was pending before the Appellate Authority. ........ Section 22(1) of the Act could not, therefore, be invoked and there was no impediment in the High Court dealing with the winding up petition filed by the respondents. ........" (emphasis supplied) 17. It is well settled that observations in a judgment cannot be read out of context as laying down the law and must be examined in the light of the facts which fell for consideration therein. The interim order passed by this Court on 10.10.1988 would only mean that the impugned order would not be operative from the date of passing of the stay order and does not mean that the order had been wiped out from its existence. The interim order, suspending the order of transfer dated 28.07.1988, did not bar the Assistant Commissioner (Company Circle), Hyderabad from passing the order of assessment. Reliance placed by the Learned Senior Counsel on Shree Chamundi Mopeds Ltd ,[1992] 75 Comp Cas 440 (SC), is misplaced and is of no avail. Question No.4 is, therefore, answered in favour of the assessee and against the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction. Learned Counsel would contend that the assessment order of the Assistant Commissioner (Investigation), Visakhapatnam dated 31.03.1989 was without jurisdiction and a nullity, that the order did not have any existence in the eye of law and the mere fact that the assessee had preferred an appeal, which had resulted in the Commissioner of Appeals having annulled the assessment order, was of no consequence. 21. Before examining the aforesaid contentions, it is necessary to take note of the relevant provisions under the Income-tax Act and the extent of power conferred on the High Court to reframe the question referred by the Tribunal for its opinion. 22. Under Section 254(1) of the Income Tax Act, as it then stood, the Appellate Tribunal was empowered, after giving both parties to the appeal an opportunity of being heard, to pass such orders as it thought fit. Under Section 256(1) the assessee, or the Commissioner, was entitled to require the Appellate Tribunal to refer to the High Court any question of law arising out of the order passed under Section 254(1) and the Appellate tribunal was required to draw up a Statement of Case and refer the question of law to the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not specifically invest the High Court with such a power. The High Court is not confined to the questions which the Tribunal was directed to submit. The only condition is that the questions of law should arise from the reference. The High Court has not only the power but it is its duty to reframe the questions in such a way as to bring out the real dispute between the parties. ( Raja Rameshwara Rao Vs . Commissioner of Income Tax ;[1957] 32 ITR 552 (AP); Narain Swadeshi Weaving Mills Vs. Commissioner of Excess Profits Tax ;[1954] 26 ITR 765 (SC); Commissioner of Income Tax Vs. G.M. Chennabasappa ;[1959] 35 ITR 261 (AP); Scindia Steam Navigation Co. Ltd. [1961] 42ITR 589 (SC), Commissioner of Income Tax Vs. H.E.H. Mir Osman Ali Khan Bahadur .[1970] 76 ITR 383(AP)) It is possible that the same question of law may involve different approaches for its solution, and the High Court may amplify the question to take in all the approaches. But the question must still be one which was before the Tribunal and was decided by it. It must not be an entirely different question which the Tribunal never considered. ( Kusumben D. Mahadevia Vs. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 1(b) thereof, any assessee aggrieved by an order of assessment, reassessment and re-computation under Section 147 or 150 was entitled to prefer an appeal against such an order. Section 249 prescribed the form of the appeal and limitation and Section 250 the procedure in appeal. Sub-section (6) of Section 250 required the order of the Commissioner (Appeals), disposing of the appeal, to be in writing, to state the points for determination, the decision thereon and the reason for the decision. Section 250(7) required that, on the disposal of the appeal, the Commissioner (Appeals) should communicate the order passed by him to the assessee. Under Section 251(1)(a), the Commissioner was conferred the power, in an appeal against an order of assessment, to confirm, reduce, enhance or annul the assessment or to set aside the assessment and refer the case back to the assessing officer for making a fresh assessment in accordance with the directions which the Commissioner may give and after making such further enquiry as may be necessary. Exercise of power by the Commissioner (Appeals) to annul the assessment, and to give directions to the assessing officer, under Section 251(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal preferred against the assessment order, can, at best, be a passing remark and not a direction in an Order passed under Section 250 of the Act. 32. It is necessary to note that the Chief Commissioner of Income Tax had the power, under Section 127(2) of the Income Tax Act, to transfer the case of the assessee from the file of the Assistant Commissioner (Company circle), Hyderabad to the file of the Assistant Commissioner (Investigation), Visakhapatnam. It is no doubt true that the assessment order dated 31.03.1989, was passed by the Assistant Commissioner (Investigation), Visakhapatnam when the interim order of suspension, passed in W.P.M.P. No. 19396 of 1988 dated 10.10.1988, was in force. This Court, by order in W.P. No. 15267 of 1988 dated 13.12.1989, quashed the order of transfer not on the ground that the Chief Commissioner of Income Tax lacked jurisdiction to pass such an order but for the reason that the order did not contain the grounds for transferring the case and that such grounds were not communicated to the assessee. In fact, this Court left it open to the Chief Commissioner to start fresh proceedings for transfer in accordance with law. 33. Even if we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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