TMI Blog2018 (1) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... to two years while that under Section 153B is far lesser. The legislature cannot be said to have conferred a power redundant, ineffective and unworkable. In the present case, suffice it to notice that the Commissioner had passed the order cancelling the assessment and directing a fresh assessment on 12.03.2010, within the two year period provided under Section 263 of the Act. The fresh assessment was passed on 30.12.2010, a little more than nine months from the order of revision. Considering the fact that there was requirement for a fresh notice and a hearing, in making that fresh assessment and that too of seven years, we are of the opinion that the fresh assessment made under Section 153C is within a reasonable time. - Decided against assessee. - I.T.A. Nos. 56, 57, 58, 59, 60, 61 And 62 of 2017 - - - Dated:- 18-12-2017 - MR. K. VINOD CHANDRAN AND MR. ASHOK MENON, JJ. For The Appellant : Sri.V.V.Asokan (SR.), Sri.K.I.Mayankutty Mather And Sri.R.Jaikrishna For The Respondents : Sri. P.K.Ravindranatha Menon (Sr.) And Sri.Jose Joseph, SC, For Income Tax JUDGMENT K.Vinod Chandran.J, The appellant, common in all the appeals, is concerned with the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessments for the six year period, i.e., 2000-2001 to 2005-2006 by Annexure -B, and for the year 2006-2007 by Annexure D; both under Section 263 of the Act. A fresh assessment was made by the AO for all the years, identical so to say, by Annexure E dated 30.12.2010. The said order goes beyond the period of limitation, is the specific contention raised. 4. The learned Counsel for the appellant makes pointed reference to Section 153B of the Act, wherein limitation is provided with respect to assessments to be completed under Section 153A, which also applies to the assessments under Section 153C. By the first proviso to sub section (1) of Section 153B, from the 1st day of April, 2004, the second proviso substitutes the two year period with a 21 month period. Hence, the limitation for completion of assessment under Section 153C, as available under Section 153B, is a period of 21 months from the end of the financial year in which the last of the authorisation, for search under Section 132 or for requisition under Section 132A, was executed. Insofar as the 'other person', referred to in Section 153C, the first proviso makes a further extension of the period of limitation to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod, even taken from the assessment order, had expired by the time an order was passed under Section 263. The Commissioner not having been conferred with the power to extend the period of limitation, ought not to have remanded the matter for fresh assessment. The Commissioner could have modified or enhanced the assessment, but, could not have remanded the matter, asserts the learned Counsel. On remand, if limitation has already expired, then, the necessary consequence would be that the A.O would be disabled from going ahead with the assessment. It is further contended that, even on remand, the AO has to enter a satisfaction as to the fresh assessment being made. 8. The learned Counsel would also place reliance on the decisions reported in Superintendent of Taxes v. Onkarmal Nathmal Trust - AIR 1975 SC 2065 , Manish Maheswari v. Asstt. Commissioner of Income Tax - 2007(3) SC 794 and two un-reported decisions: one of the Gujarat High Court and another of a Division Bench of this Court, respectively Tax Appeal No.1254/2014 and connected matters dated 09.03.2015 and I.T.A. No.419/2009 dated 20.10.2017. 9. The learned Counsel for the appellant would also specifically refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the financial year in which the search was conducted. The period for completion of assessment, as per Section 153B, going by the facts of the instant case, would have been over on 31.12.2007. When the Commissioner passed an order under Section 263, remanding it to the A.O, for fresh assessment, the period of limitation under Section 153B was also over. If we accept the argument raised by the appellant that limitation has to be under Section 153B itself, even for fresh assessment, the power of the Commissioner to make a remand, would be curtailed and ineffective always rendering the provision otiose. 13. The limitation for assessment, on search and seizure commences from the last date of the financial year, in which the authorisation for search is executed or in the case of 'other person' the materials seized are handed over to the A.O; respectively extending upto 21 months and one year respectively, whichever is later. The limitation under Section 263 is two years from the date of the original assessment. Hence, invariably the order passed under Section 263 would be hit by limitation under Section 153B. 14. The legislature having specifically conferred the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as an additional ground, was found to be permissible though not raised before the lower authorities. The assessments were also set aside on that ground. Manish Maheswari has been relied on, as a decision rendered on identical facts, to urge the necessity of the A.O' s satisfaction in proceeding with an assessment on an 'other person'. The A.O in proceeding with an assessment against a third party (other person) on the basis of documents, accounts or assets seized in connection with a search and seizure in the premises of another person should be satisfied that they have a bearing on the determination of total income of that 'other person'. Therein, the satisfaction that the documents seized from the residence of the Directors, had any bearing on the income of the Company, the 'other person', was not entered and the seized materials were also not transferred to the A.O of the Company. 17. Even we are not agreeable to that line of defence set up by the Revenue, since the question of limitation is a mixed one of law and facts and the assessee could raise it at any stage. There can also be no dispute that in proceeding to assess an 'other person& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remand made under Section 263, nor are we considering its sustainability. 20. On the question of limitation, Section 263 confers power on the Commissioner to revise orders, which are found to be prejudicial to the revenue. When such an order is made within the time provided for making such order, it cannot be said that the limitation under Section 153B has to be resorted to, which would be impossible of compliance. Then, if no further extension is provided, either under Section 153B or under Section 263, for making a fresh assessment on the assessment being remanded to the AO, it has to be taken that there is no limitation provided. In that context, it would have to be understood, as the statute being silent on limitation, in which event, the principles of reasonableness would have to be imported. The fresh assessment then has to be completed within a reasonable time. We would not make any strait-jacket stipulation as to the reasonable time, which has to be decided on the facts and circumstances of each case. In the present case, suffice it to notice that the Commissioner had passed the order cancelling the assessment and directing a fresh assessment on 12.03.2010, within the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh under sub-section (5). The order passed on remand was set aside by the High Court on the ground that it was beyond the limitation provided in sub-section(5). 23. Sub-section (5) of Section 132 provided for a summary enquiry to estimate the undisclosed income and the probable amount of dues that may arise and retain the assets seized to the extent of satisfying such dues. This exercise had to be completed within 90 days of the seizure. An order so passed could also be challenged under sub-section (12), within 30 days. On the question of limitation as also the effect of a remand made under Article 226, the Court held so: Even if the period of time fixed under Section 132(5) is held to be mandatory that was satisfied when the first order was made. Thereafter if any direction is given under Section 132(12) or by a court in writ proceedings, as in this case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under Section 132(5). Once the order has been made within ninety days the aggrieved person has got the right to approach the notified authority under Section 132(11) within thirty days and that authority can d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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