TMI Blog2006 (12) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the assessment order and direct a de novo enquiry, in which case every aspect, computation and dimension is open for consideration. This partakes of the nature of an assessment which is akin to the original assessment and, therefore, the period of limitation applicable to the original assessment must apply to the fresh assessment. It is manifestly clear that in substance the entire assessment had not been set aside. The assessee's contention was that section 40A(3) had not been violated in its spirit since no expenditure exceeding rupees twenty thousand had been incurred in cash; these were incurred by effecting entries in the books of account and, hence, were as undisputable as payments made by account payee cheques or account payee bank draft. It was only on this restricted aspect of the assessment that the Tribunal had remanded the case to the Assessing Officer. The entire assessment exercise, therefore, had not been undertaken de novo, thereby rendering section 153(2A) of the Income-tax Act inapplicable to the case. We conclude by holding that a writ petition under articles 226 and 227 of the Constitution is always maintainable if the High Courts find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner, who immediately responded vide its communications dated January 11, 2005, and February 24, 2005, that the proceedings were no longer competent, as they had travelled beyond the time prescribed in section 153(2A) of the statute. The present writ petition is predicated on this factual matrix. The Assessing Officer, however, framed the assessment on February 28, 2005, i.e., before the filing of the present writ petition. Indeed, it is remarkable that the averment in the writ petition is that as on March 11, 2005, the Assessing Officer despite objection is adamant in framing the assessment despite the fact that he has no jurisdiction, the petitioner is left with no alternative but to file the present petition , whereas the assessment had by then already been completed. 2. On behalf of the Revenue it has been asseverated that the Assessing Officer issued a notice under section 143(2) of the Income-tax Act and served the same on the petitioner on September 2, 2004, requiring the petitioner to appear on September 10, 2004. As there was no representation for the petitioner on that date, a notice under section 142 of the Act was issued on December 22, 2004, requiring the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi Municipal Council [1996] III AD (Delhi) 299 noting that an earlier judgment of the Constitution Bench of the Supreme Court had not been laid before their Lordships when called upon to decide the appeal in Shyam Kishore v. Municipal Corporation of Delhi, AIR 1992 SC 2279. The Division Bench observed, inter alia, as follows : 34. Yet another aspect which needs to be taken note of is the pro vision by the Legislature for 100 per cent. deposit of tax before filing an appeal. This provision has been introduced obviously in the interest of revenue, so as to see that unwilling taxpayers do not delay payment of tax by filing undeserving appeals. Challenge was laid to the vires of section 170(b) of the DMC Act providing for 100 per cent. deposit of tax as a condition precedent to the hearing of the appeal. Challenge has been turned down and the provision upheld as intra vires by the Supreme Court in Shyam Kishore v. Municipal Corporation of Delhi, AIR 1992 SC 2279. Their Lordships have also held that resort to articles 226-27 challenging the orders of assessment of property tax should be discouraged when there is an alternative remedy of an appeal a more satisfactory solution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court in D. R. Aggarwal v. New Delhi Municipal Committee, AIR 1999 Delhi 67, has rejected a similar objection, and has articulated the following enunciation of the law (page 68) : The Full Bench decision of this court in Shyam Kishore v. Municipal Corporation of Delhi, AIR 1991 Delhi 104, which was affirmed by the Supreme Court in 1993 (1) SCC 22 (AIR 1992 SC 2279), was mainly concerned with the question of validity of the provisions of section 170(b) of the Delhi Municipal Corporation Act, 1957. The Supreme Court while affirming the said Full Bench decision only stated that the resort to articles 226 and 227 should be discouraged when there is an alternative remedy. It is one thing to hold that on facts if it is so justified, a petition under article 226 may be discouraged but it is another thing to hold that the writ petition is not maintainable. In Shyam Kishore' s case (supra), the Supreme Court did not hold that the writ petition is not maintainable. It deserves to be emphasised that a statutory law cannot take away the constitutional powers of the court. Reference may be made to the Constitution Bench decision of the Supreme Court in the case of Himmatlal Harilal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction conferred upon the High Courts under article 226/227 and upon the Supreme Court under article 32 of the Constitution is part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by articles 226/227 and 32 of the Constitution. 6. Very recently, in State of H. P. v. Gujarat Ambuja Cement Ltd., AIR 2005 SC 3936 this very aspect of the law has been discussed in detail. The decision constitutes a restatement of the law on the interplay between article 226 of the Constitution and statutory provisions prescribing ouster of jurisdiction of civil courts and availability of redress by way of appeals. Almost all the precedents on this question have been considered and thereafter the court has enunciated the law in these concise words, viz., (page 3946) : when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is somethin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Officer not to take any action on the basis of the three impugned notices. We are informed that assessment orders were in fact made on March 25, 1952, by the Income-tax Officer in the proceedings started on the basis of these impugned notices. This was done with the per mission of the learned judge before whom the petition under article 226 was pending, on the distinct understanding that these orders would be without prejudice to the contentions of the parties on the several questions raised in the petition and without prejudice to the orders that may ultimately be passed by the court. The fact that the assessment orders have already been made does not, therefore, affect the company' s right to obtain relief under article 226. In view, how ever, of the fact that the assessment orders have already been made we think it proper that in addition to an order directing the Income-tax Officer not to take any action on the basis of the impugned notices a further order quashing the assessment made be also issued. 8. Articles 226 and 227 of the Constitution were invoked in Daffadar Bhagat Singh and Sons v. ITO [1969] 71 ITR 417 (SC). The same view has been taken in Mercury ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the rival submissions and the materials on the file. We are of the view that the case had not been properly examined by the Assessing Officer and the learned Commissioner of Income-tax (Appeals). It appears that sufficient reasonable opportunity was not given to the assessee to place the complete facts and to furnish necessary explanation and evidences regarding the cash payment in question. Both the Assessing Officer and the learned Commissioner of Income-tax (Appeals) considered the issue in question in a routine manner. It was a case where huge amounts were involved in all the three years in question and the case required proper con sideration of the details, explanations. We find that neither the Assessing Officer nor the learned Commissioner of Income-tax (Appeals) had looked into the relevant accounts to have proper appreciation of the peculiar facts and circumstances of the present case. A perusal of the impugned order shows that specific opportunity was not given to the assessee to explain the exceptional and unavoidable circumstance under which the cash payments were made and to furnish certificate from the concerned parties to the effect that they insisted on cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions for fresh order and has allowed the appeals for statistical purposes . There is a stamp of the assessee of even date. The contention of Shri J. R. Goel, learned counsel for the Revenue, is that the above extract clearly shows that the remanded assessment was to be made in order to give effect to the findings and directions made by the Income-tax Appellate Tribunal in the order passed under section 254 of the Act. Although the remand order is dated June 23, 2000, a notice under section 143(2) is stated by the Department to have been served on the assessee as late as on September 2, 2004, requiring the assessee to appear before the Assessing Officer on September 10, 2004. No explanation has been offered for the absence of any action on the part of the Assessing Officer for over four years, viz., between June 23, 2000, and September 2, 2004. The reason for the assessee' s repeated objection that the proceedings have become time-barred is, therefore, obvious. This objection has been overruled in the assessment order dated February 28, 2005, ascribing the following reasons : (a) The Income-tax Appellate Tribunal has set aside the assessment partly limited to the question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 13. The time-limit for completion of assessments and reassessments is to be found in section 153 of the Income-tax Act. It has already been noted that different periods have been prescribed for actions envisaged in the statute. Thus, the limitation is presently two years for first assessment as it used to be for section 147/148 (which stands reduced to one year by the Finance Act, 2001) etc. etc. We are presently concerned with sub-section (2A) relied upon by Mr. Kapur, learned counsel for the assessee whereas sub-section (3)(ii) is referred to by Shri Goel, learned counsel for the Revenue : 153(2A) Notwithstanding anything contained in sub-sections (1), (1A), (1B) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or as the case may be, the order und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing' and ' direction' in section 153(3)(ii) of the Act must be accordingly confined. Section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation for making an assessment order under section 143 or section 144 or section 147 : ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC) and N. K. T. Sivalingam Chettair v. CIT [1967] 66 ITR 586 (SC). The question for mulated by the Tribunal raises the point whether the Appellate Assistant Commissioner could convert the provisions of section 147(1) into those of section 153(3)(ii) of the Act. In view of section 153(3)(ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point. 15. Mr. Y. K. Kapur, learned counsel for the assessee has also drawn our attention to Shri Prem Nath Mayor v. CIT [1984] 148 ITR 588 (P H) in which the Bench held that it is open to the appellate authority to remand a case and in this event the Assessing Officer is bound to frame a fresh assessment in accordance with the directions contained in the order of remand. It was further observed that by virtue of section 153(2A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment was made on February 14, 1972, in the status of a registered firm. The Appellate Assistant Commissioner (AAC) negatived the plea of limitation since, in his opinion, section 153(3) of the Income-tax Act was operative as the Income-tax Officer had acted on the directions of the Appellate Assistant Commissioner. The Income-tax Appellate Tribunal reversed the position. Applying Daffadar Bhagat Singh and Sons v. ITO [1969] 71 ITR 417 (SC) the Patna High Court took the view that in order to decide the appeal it was necessary to determine whether the firm or the Hindu undivided family was liable to be taxed and, hence, section 153(3)(ii) had the effect of enlarging limitation. These decisions do not advance the case of the petitioners although they delineate the distinction between a remand for purposes of a fresh assessment and an enquiry into a specific aspect in the absence of which the appeal cannot be decided. 18. We shall now briefly analyse the other precedents relied upon by Mr. Y.K. Kapur. In CIT v. Mohini Thapar Charitable Trust [1986] 160 ITR 408 the Calcutta High Court was confronted with the decision of the Appellate Assistant Commissioner who had considered it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant since what was held was that two years period was to be reckoned from the date of the Tribunal' s order and not of the Commissioner of Income-tax. A perusal of the facts of the case in Rikhabdas Jhaverchand v. CIT [2001] 249 ITR 774; [2001] 169 CTR 196 (Bom) is directly relevant. The Bench was presided over by His Lordship S.H. Kapadia and it was held that section 153(2A) refers to an order of fresh assessment being passed pursuant to the assessment order being set aside. Since the Tribunal in its order dated January 10, 1989, had only directed the Assessing Officer to clarify the correctness of the claim for bad debts made by the assessee by calling for information from the debtors or by getting the details verified through the Income-tax Officer, it did not tantamount to a fresh assessment. Hence, section 153(2A) was not relevant, whereas section 153(3) clearly stood attracted. 19. Mr. J. R. Goel, learned counsel for the Revenue, has drawn our attention to the decision of this court in R. K. Sawhney, Executor of the Estate of Late R. B. Nathu Ram v. CIT [1987] 166 ITR 128. However, section 153(3) of the Act came to be considered in circumstances not relatable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t after giving notice to the heirs/executrix. The assessment was made more than four years after the end of the assessment years. The Supreme Court held that the failure to give notice to the widow/second wife only rendered the assessments defective. The order for issuance of a notice to the said heirs/executrix was a finding and direction as contemplated in the second proviso to section 34(3) (corresponding to section 153(3)(ii)). 21. Having had the advantage of perusing the plethora of precedents on the aspect of law which has engaged our attention, we are of the view that section 153(2A) is not attracted in the facts of the present case ; no period of limitation is prescribed as per the provisions of section 153(3)(ii). It is trite that Parliament is continuously concerned with the evils or undesirability of the proverbial sword hanging over the head of an assessee. Parliament has, therefore, set down the parameters within which an assessment must be completed, and over the years has shortened the span of time in this regard. It has, however, carved out an exception to the rule where a specific, limited or restricted direction is passed by an appellate authority which is o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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