TMI Blog2017 (12) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment is barred by limitation as provided u/s 149 r.w.s. 150(2) of the Act. - Decided in favour of assessee. - ITA No. 1024/JP/2013 And ITA No. 1025/JP/2013 - - - Dated:- 8-12-2017 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Mahendra Gargieya (Adv.) For The Revenue : Shri P.P. Meena (J.CIT) ORDER PER: VIJAY PAL RAO, J.M. These two appeals by the assessee are directed against two separate orders of ld. CIT(A), Alwar dated 15.11.2013 20.11.2013 for the A.Ys. 2001-02 2002-03 respectively. The assessee has raised common grounds in these appeals except the variation in quantum of addition U/s 69 of the Act. The grounds raised for the A.Y. 2001-02 are as under:- 1. The Learned A.O. has erred in initiating the reassessment proceedings under section 147/148 of the IT Act 1961 and CIT (appeal) has erred in confirming the same. 2. The Learned A.O. has erred in making addition u/s 69 of IT Act of ₹ 290213/- on account unexplained difference in cash book and CIT (appeal) has erred in confirming the same. 2. Ground No. 1 is regarding the validity of reopening. The assessee is an HUF and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee filed objections against the initiation of the proceedings U/s 148 vide letter dated 04.05.2011 which was rejected by the AO vide order dated 11.05.2011. Thereafter, the AO completed the assessment u/s 143(3) r.w.s. 147 on 01.12.2011. The assessee challenged the action of the AO including the validity of reopening before the ld. CIT(A) but could not succeed. 3. Before us, the ld. AR of the assessee has submitted that the notice issued u/s 148 on 30.07.2010 is barred by limitation as provided U/s 149 r.w.s. 150. He has further contented that the AO while rejecting the objections of the assessee has applied Section 150(1) without considering the provisions of Sub-section (2) of Section 150 of the Act. The ld. AR has contended that in the present case the notice U/s 148 was issued on 30.07.2010 and as per restrictions provided U/s 150(2) of the Act the time limit prescribed u/s 149 had already expired on 31.03.2009. Thus, reassessment proceedings are illegal void and the Assessing Officer has completely ignored or over looked the provisions of Section 150(2) of the Income Tax Act. The compliance of conditions as provided U/s 150(2) is mandatory on the part of the AO before i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice issued u/s 148 on 30.07.2010 for both assessment years are barred by limitation and consequently reassessment order passed by the AO are invalid and liable to be quashed. 4. On the other hand, ld. DR has submitted that the limitation for initiation of proceedings u/s 148/147 of the Act as per the directions of the Tribunal has to be seen on the date when the assessment order was passed by the AO in case of M/s Tirupati Automobiles Pvt. Ltd. and wrongly assessed the income in the hands of the said company instead of in the hands of the assessee HUF. As per the order dated 26.03.2010 of this Tribunal in case of M/s Tirupati Automobiles Pvt. Ltd. it was held that the documents found during the survey belongs to the assessee HUF and further, the addition could not have been made in the hands of M/s Tirupati Automobiles Pvt. Ltd. and the income if any arising from such transaction was to be assessed in the hands of the assessee. Thus, the reopening in this case is based on the directions of the Tribunal would fall under the provisions of Section 150 of the Act and the limitation for issuing the notice U/s 148 is not covered under the provisions of Section 149 of the Act. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial or information forms an opinion that the income assessable to tax as escaped assessment. Section 150 of the I.T Act provides the assessment or reassessment in pursuant to an order of appeal, revision or reference and therefore, the limitation provided U/s 149 for reopening of the assessment is not per se applicable when the reopening is based on the directions of the appellate or revisional authority or as per the directions of the Court. Section 150 of the IT Act is reproduced as under:- 150. Provision for cases where assessment is in pursuance of an order on appeal, etc. ( 1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any 1. The words more than omitted by the Direct Tax Laws (Second Amendment) Act, 1989, w. e. f. 1- 4- 1989. authority in any proceeding under this Act by way of appeal, reference or revision 1or by a court in any proceeding under any other law]. ( 2) The provisions of sub- section (1) shall not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of directions of second appellate authority the order which was subject matter of appeal would be assessment order or the order of the ld. CIT(A) for the purpose of considering the point of time when the limitation period for reassessment has to be counted. Sub-section (2) relaxes the limitation period as provided u/s 149 to be counted from the end of the assessment year till the date of the order which was the subject matter of appeal instead of the date of the notice issued under section 148 of the Act. Hence, for the purpose of limitation for reassessment as prescribed Sub-section (2) of Section 150 the limitation provided u/s 149 has to be counted from the end of the assessment year till the date of the order which is subject matter of appeal wherein the directions were passed instead of the date of the notice issued U/s 148. The ld. AR of the assessee has submitted that the date of the order of the Tribunal passing the directions is the relevant date for computing the limitation whereas the ld. Dr has submitted that Sub-section (1) of Section 150 is applicable and there is no restrictions as far as limitation for reassessment of the income of the assessee in pursuant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time consumed in the appeal proceedings and date of the directions passed by the appellate or revisional authority. In nut shell Sub-section (2) of Section 150 excludes the time consumed in the proceeding before appellate or revisional authority wherein such directions are passed from the limitation prescribed U/s 149 of the Act. 6. As regards the date of order on which the limitation has to be considered whether it is assessment order or the order of first appellate authority in case the directions are passed by the Tribunal we are of the considered opinion that it makes no difference whether the directions are passed by the first appellate authority or in the second appellate proceedings by this Tribunal as the time consumed in the proceedings in the appeal cannot be attributed to any party either the AO or the assessee for the purpose of limitation as per Sub-section (2) of Section 150 of the Income Tax Act. However, we find that the Hon ble Kerala High Court in case of CIT vs. Vaikundam rubber Co. Ltd. (supra) while dealing with this issue has held in para 4 to 6 as under:- 4. The two questions to be decided in this case are whether the reassessment was under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on limiting the time within which any action for assessment, reassessment or recomputation may be taken. The question is what is the meaning of subjectmatter of appeal. While the Department contends that subjectmatter of appeal refers to order or assessment passed for the year 1980-81, i.e., 27th Jan., 1983; the assessee would contend that assessment order passed on 27th Jan., 1983, was subjected to appeal before the CIT(A) and that appeal was dismissed and against that order, an appeal before the Tribunal was filed. It is the Tribunal which passed the order on 19th Feb., 1988. So, according to the assessee, it is the order of the CIT(A) which was subject-matter of appeal, before the Tribunal which is relevant. That date is 1st March, 1984. 5. Here, so far as the asst. yrs. 1975-76, 1976-77 and 1977-78 is concerned, it has been found by the Tribunal that even if the date is reckoned from 27th Jan., 1983, as pointed out by the Revenue, reassessment cannot be had for these three years viz., 1975-76 to 1977-78. As a matter of fact, the Department can rescue only if the contention under s. 147(a) is accepted. Since that is rejected, we agree with the Tribunal and hold that reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is because of the word appeal that, it is contended that the subject-matter should be construed as the original order. There are two tiers of appeals from the assessment order; one to the CIT(A) and another to the Tribunal. But, the next word is reference. Reference is made under s. 256(1) of the Act. What is referred is the subject-matter of the order of the Tribunal. Can we say that when the Tribunal refers the matter to the High Court, the order that was considered by the Tribunal is the order of the AO?. No. It is the order of the Tribunal that is being referred. For example, in this case, where there is a reference to the High Court against the order of the Tribunal, it will be order of the Tribunal that will be material. Further according to us, when an order is passed by the original authority and an appeal is filed, the order passed by the original authority merges with that of the order of the appellate authority. When a second appeal is filed, the subject-matter is the order of the appellate authority. So also, when the order of the Tribunal is challenged, what is the subject-matter, is the order of the Tribunal. If that be so, there is no difficulty in construing s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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