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Saheb Ram Om Prakash Marketing Pvt. Ltd. Versus Commissioner of Income Tax & Ors.

Reassessment proceedings validity - Assessment order in terms of Section 153(2) - Penalty u/s 271(1)(c) - period of limitation - Held that:- In the present case, on the date that the stay order stood vacated only 13 days were left for completion of the proceedings. Since this period was less than 60 days, the period of limitation got extended to 60 days from the date of such vacation of stay, i.e. 60 days from 9th November 2016. This, therefore, meant that the order in the re-assessment proceedi .....

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, there appears to be a contradiction in terms because the Madras High Court proceeded to exclude the period during which there was stay of the proceedings in terms of that very Explanation. Further, no reference was made to the proviso below Explanation 1. The Madras High Court proceeded on the assumption that there was a time of period of 4 years from the last date of the assessment year in which the notice was served. Going by that yardstick in the present case, the reassessment order would s .....

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hish Choudhary, and Mr. Dhruv Surana, Advocates. Respondents Through: Mr. Rahul Kaushik, Senior Standing Counsel for Revenue O R D E R Dr. S. Muralidhar, J.: 1. The challenge in this petition under Article 226 of the Constitution of India by Saheb Ram Om Prakash Marketing Pvt. Ltd. (hereafter Assessee ) is to an assessment order dated 30th January 2017 passed by the Income Tax Officer, Ward-22 (2), New Delhi (hereafter Assessing Officer- AO ) for Assessment Year ( AY ) 2006-07. The challenge is .....

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to challenge the said final assessment order. This application was allowed by the Court by an order dated 22nd February 2017. It was further directed that, if the assessment is finalized during the pendency of the proceedings, the respondents are directed not to take any coercive measures to enforce the demand till the next date of hearing. 3. During the pendency of the above interim order, the AO passed the penalty order dated 22nd August 2017, as a result of which, a second application being C .....

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lication money-cum-share premium received from Karishma Industries Limited ( KIL ) and Pelicon Finance & Leasing Limited ( PFLL ). On the basis of the reply filed by the Assessee, the AO issued notice dated 28th January 2008 under Section 133 (6) of the Act to KIL, PFLL, V.R.N. Securities Limited ( VSL ) and Bhawani Portfolio Industries ( BPI ). The notices were again issued by the AO on 28th March 2008 to VSL, BPI, KIL, PFLL and Tejasvi Investment (Pvt.) Limited ( TIPL ). It is stated that, .....

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ed. In the reasons, it was stated as under: DIT (lnv.) during the course of investigation in the case of Tarun Goel Group, found that the Group have operated multiple Accounts in various Branches to plough back unaccounted black money for purposes of the disclosed or for personal need as such the purchase of assets etc. in the form of Gift/s, Share Application Money, Land etc. During the course of investigation by the DIT (lnv.) it was discovered that the assessee have un-accounted money (herein .....

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iary from the same Account (in which the cash is deposited) or another Account in which the funds are transferred· through Clearing in two or more stages. The beneficiary in turn deposits these instruments in his Bank's Account and money comes to his regular books of account in the form of Gift, Share Application money, Loan etc. through banking channels and transactions look genuine. 6. The Assessee filed objections to the reopening of assessment on 10th December 2012. These objectio .....

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h March 2012. 8. W.P. (C) No. 1738 of 2013 was ultimately dismissed as withdrawn on 9th December 2016 with liberty to the Assessee to urge the grounds raised in the petition on merits in the re-assessment proceedings. 9. Consequently, in relation to the re-assessment proceedings that commenced with the issuance of the notice dated 27th March 2012 under Section 148 of the Act, the stay granted by this Court in W.P. (C) No. 1738 of 2013 in favour of the Assessee continued during the period between .....

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and an order passed on or before 9th January 2017. 11. However, the AO passed the assessment order in the re-assessment proceedings only on 30th January 2017, assessing the total income of the Assessee at ₹ 40 lakhs. On the same date, i.e. 30th January 2017, the AO issued to the Assessee a demand notice where a sum of ₹ 31,64,715/- which included interest of ₹ 17,50,320/- under Section 234B and interest of ₹ 67,995 under Section 234C of the Act. A notice under Section 274 .....

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6. Thereafter notice was issued to the Assessee on 6th December 2016 under Section 142 (1) of the Act. Within 60 days of the date of the receipt of the order of the High Court, the impugned assessment order under Section 147 read with Section 143 (3) of the Act was passed on 30th January 2017. It is accordingly submitted that the assessment order was not issued beyond the period stipulated under Section 153 (2) of the Act read with the proviso to Explanation 1 thereof. 13. Mr. Nipun Goel, learne .....

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ction 153, in computing the period of limitation the period during which the assessment proceedings stayed by an order or injunction by the Court shall be excluded. In terms of first proviso to Explanation 1, where, after the vacation of stay, the period available to the AO to complete the re-assessment proceedings is less than 60 days, then such remaining period shall be extended to 60 days and the aforesaid period of limitation shall be deemed to be extended accordingly. It is submitted that i .....

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on. That apart, the said assertion stood belied with the fact that, on 30th November 2016, the AO issued a notice to the Assessee under Section 142 (1) of the Act. A copy of the said notice has been enclosed in the Assessee s rejoinder affidavit as Annexure R-1. It is thus obvious that the AO was aware of the order dated 9th November 2016 of this Court which is why the notice was issued on that date. Mr. Goel submitted that even if 30th November 2016 was to be taken as day that the Revenue knew .....

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[2008] 172 Taxmann 170 (Del) and Deputy Commissioner of Income-tax, Circle-Tinsukia v. Steels Worth (P.) Ltd. [2015] 58 taxmann.com 262 (Guwahati - Trib). 16. On the other hand, Mr. Rahul Kaushik, learned Senior Standing Counsel appearing for the Revenue, relied on the decision of the Calcutta High Court in India Ferro Alloy Industry Pvt. Ltd. v. Commissioner of Income-Tax [1993] 202 ITR 671 (Cal) and of the Madras High Court in Thanthi Trust v. Income Tax Officer [1989] 177 ITR 307 (Mad) and u .....

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At the outset, it requires to be noticed that although it is asserted in the counter-affidavit by the Revenue that a copy of the order of the High Court dated 9th November 2016 was received in the office of the Principal CIT-8 only on 2nd December 2016, there is no document placed on record to substantiate the assertion. This could have been substantiated by producing the relevant extract from the dispatch and receipt register maintained in the said office or even a copy of the order of the High .....

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advantage of the fact that it received a copy of the order dated 9th November 2016 of this Court only on 2nd December 2016. 19. Even otherwise, the assertion that the Revenue was aware of the order only on 2nd December 2016 does not appear to be correct. The Revenue has been unable to dispute the fact that, on 30th November 2016, a notice was issued by the AO to the Assessee under Section 142 (1) of the Act and this was pursuant to the order passed by this Court on 9th November 2016. Clearly, th .....

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terms of the first proviso to Explanation 1 to Section 153 of the Act should begin to run from that date. 21. The Court is also unable to accept the submission that the 60 day period in terms of the first proviso to Explanation 1 to Section 153 of the Act should begin to run from the date on which the Revenue received a copy of the order of vacation of stay. Such an interpretation is not supported by the plain language of the proviso to Explanation 1. In fact, Circular No. 621 dated 19th Decemb .....

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limitation after the excluded period has elapsed is less than 60 days. 22. In the present case, on the date that the stay order stood vacated only 13 days were left for completion of the proceedings. Since this period was less than 60 days, the period of limitation got extended to 60 days from the date of such vacation of stay, i.e. 60 days from 9th November 2016. This, therefore, meant that the order in the re-assessment proceedings had to be necessarily passed on or before 8th January 2017. T .....

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period during which there was stay of the proceedings in terms of that very Explanation. Further, no reference was made to the proviso below Explanation 1. The Madras High Court proceeded on the assumption that there was a time of period of 4 years from the last date of the assessment year in which the notice was served. Going by that yardstick in the present case, the reassessment order would still be time-barred. 24. The decision of the Calcutta High Court in India Ferro Alloy (supra) is dist .....

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indicates that for computing the period of limitation the period during which the assessment proceedings is stayed shall be excluded. In excluding the above period, the concept of communication of the order of the Court cannot be imported. The exclusion of the period has been provided because of stay or injunction by any Court during which the assessment proceedings are stayed. The intention is clear that when the limitation for assessment has started it can be stayed only by an order or injunc .....

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