TMI Blog2019 (10) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... ice could not be issued thereafter. Certainly, after 30.09.2019, the Respondents cannot issue a fresh notice. The limitation provided under Section 153 (2) of the Act, pertains to the issuance of the order of assessment, reassessment or recomputation. The Explanation 1 (ii) of Section 153 provides that the period during which the assessment proceedings is stayed by an order or injunction of any court shall be excluded for the purpose of computing the period of limitation. Further, Section 153 (2) read with First proviso to Explanation 1 provides that immediately after the exclusion of the aforesaid period, where the period of limitation available to the assessing officer for making an order of assessment, reassessment or recomputation is less than sixty days, then such remaining period shall be extended to sixty days and the period of limitation shall be deemed to be extended accordingly. In the present case, the reassessment proceedings had to be concluded before 31.12.2018. However, before the expiry of the said period, on 12.12.2018, the Court had restrained the Respondents from passing the final order. Thus in case the Petitioner was not to succeed in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Issue notice. 2. The petitioner/applicant contends that the re-assessment notice dated 30.03.2018 impugned in these proceedings is arbitrary. It contends that the reasons to believe has wholly ignored the circumstances that the reasons cited for re-assessment i.e. alleged unexplained entries in the petitioner's books were in fact replied in detail by during the scrutiny assessment for the A.Y. 2011-2012. 3. Learned counsel for the petitioner has shown that in response to questionnaires and other queries in the course of regular scrutiny assessment the amounts advanced by the M/s Krac Securities Ltd. and M/s South Asian Impex (P) Ltd. were in fact considered and dealt with. It has also been stated that with respect to the amounts advanced by M/s SSJ Foods Limited, in fact the petitioner had entered into an agreement to sell the property, and had received a sum of ₹ 50 lakhs. Learned counsel stated that during the course of assessment the AO had elicited the necessary documents which were furnished and copy of extract of the ledger account - which is produced on the record. The petitioner has also relied upon a receipt executed by SSJ Foods Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 148 of the IT. Act, 1961 states that: (1) Before making the assessment, reassessment or re-computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings would then become infructuous, however, in the event, the writ petition is dismissed; the Respondents would get time to finalise the assessment as per the timeline fixed by the statue. By recommencing reassessment proceedings, the Respondents are enlarging the scope and the time available for reassessment proceedings which is abuse of process of law. 7. Ms. Vibhooti Malhotra, learned senior standing counsel for the Revenue countered the argument advanced by the Petitioner s counsel and submitted that Petitioner has misconstrued the order. She argued that the order granted by this Court is unambiguous and does not call for any clarification. It explicitly directs that the Respondents are restrained only from passing final orders in the proceedings, consequent to the reassessment notice, during the pendency of the petition. The order nowhere interdicts the Respondents from continuing with the reassessment proceedings. She further argued that even otherwise, the issuance of notice dated 27.09.2018 under Section 143 (2) of the Act would not cause any prejudice to the Petitioner. In terms of the proviso to Sub Section (2) of Section 143, the notice could only be issued up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally directed the abatement of the proceedings under Section 148 of the Act. Thus the Respondents have not taken any step that amounts to misinterpretation of the order of the court. 10. Now, coming to the contention of the Petitioner that continuation of the proceedings is contrary to the statute. We find the contention to be untenable and unfounded. On this issue, we have considered the judgment of this Court in Rajan Gupta v. Commissioner of Income Tax (2010) 194 Taxman 287 (Delhi), relied upon by learned senior standing counsel for the Revenue. In the said judgment, this Court considered the statutory scheme and clarified the position with respect to the limitation prescribed for issuance of the notice under Section 143 (2) of the Act. It was observed that the time limit for completion of assessment as prescribed under Section 153 of the Act is separate from the limitation prescribed under Section 143 (2) of the Act. The relevant portion of the said judgment reads as under: 2. To appreciate the pleas taken by the parties, it would be necessary to set down the factual position. A search was conducted on 18.01.2001 and it was said to have been completed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the revenue, contended that an important circumstance has been left out by the learned counsel for the appellant / assessee and that is the filing of an application by the assessee before the Settlement Commission under Section 245C of the said Act. Such an application had been filed by the appellant / assessee on 10.01.2003 and the same had been rejected by the Settlement Commission by passing an order under Section 245 D(1) of the said Act on 25.05.2004 which was received by the Commissioner of Income-tax on 03.06.2004. Consequently, she placed reliance on clause (iv) of Explanation 1 to Section 158BE to submit that the period between 10.01.2003 and 03.06.2004 has to be excluded in computing the period of limitation for completion of the assessment proceedings. She submitted that if this exclusion is granted, then the revenue would, in the minimum, have at least 60 days time to complete the same after the order under Section 245D(1) is received by the Commissioner. The assessment proceedings were completed on 30.07.2004 and, therefore, in view of the said provisions with regard to exclusion of time, the block assessment had been completed within time. She also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(3) of the said Act in respect of the assessment years referred to above. The replies were filed to the said notices by the assessees on 21.11.1974 and soon thereafter, the writ petitions were filed before the Punjab Haryana High Court. The plea taken by the assessees / petitioners therein was that under the interim order dated 23.11.1971 passed by the Delhi High Court, there was no stay of the assessment proceedings and, therefore, Explanation 1 to Section 153 of the said Act could not be invoked and that after the expiry of the period prescribed under Section 153, the income-tax officer was not competent to issue the notice in the assessment proceedings against the assessees. The view taken by a learned single Judge of the Punjab Haryana High Court was that the expression assessment proceeding in Explanation 1 to Section 153 would include the passing of the order of assessment and since the passing of the order of assessment had been stayed by the Delhi High Court, there was a stay of the assessment proceedings by the said High Court. The writ petitions were, therefore, dismissed by the learned single Judge of the Punjab Haryana High Court and the Letters Patent Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment is, therefore, an integral part of the process of assessment. Having regard to the fact that the object underlying the explanation is to extend the period prescribed for making the order of assessment, the expression assessment proceeding in the explanation must be construed to comprehend the entire process of assessment starting from the stage of filing of the return under Section 139 or issuance of notice under Section 142(1) till the making of the order of assessment under Section 143(3) or Section 144. Since the making of the order of assessment under Section 143(3) or Section 144 of the Act is an integral part of the assessment proceeding, it is not possible to split the assessment proceeding and confine it up to the stage of inquiry under Sections 142 and 143 and exclude the making of the order of assessment from its ambit. An order staying the passing of the final order of assessment is nothing but an order staying the assessment proceeding. Since the passing of the final order of assessment had been stayed by the Delhi High Court by its order dated 23-11-1971 in the writ petitions, it must be held that there was a stay of assessment proceedings for the purpose of Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee after the expiry of the stipulated time period. Such a requirement has been held to be mandatory by the Supreme Court, as mentioned above, and if such notice is not served within the prescribed time, it would not be a mere irregularity or a curable defect. The fact that such a notice is not served within the stipulated time, is fatal to the assessment proceedings whether they be in the regular course under Chapter XIV or block assessment proceedings under Chapter XIV-B. This much is abundantly clear from the decision of this court in the case of Pawan Gupta (supra) and the decision of the Supreme Court in the case of Hotel Blue Moon (supra). 27. Secondly, because of the fact that no separate periods of limitation were prescribed for service of a notice under Section 143(2) and making of an assessment order under Section 143(2), the Supreme Court in the case of Auto Metal Engineers (supra) was merely concerned with the limitation for the making of an assessment order and the question of limitation for serving a notice under Section 143(2) of the said Act was not, at all, in the contemplation of the Supreme Court. Therefore, the decision of the Supreme Court in Auto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, the reassessment proceedings had to be concluded before 31.12.2018. However, before the expiry of the said period, on 12.12.2018, the Court had restrained the Respondents from passing the final order. Thus in case the Petitioner was not to succeed in the present case, the Respondents would then have to complete the reassessment proceedings in terms of Section 153(2) read with First proviso to Explanation 1 within a period of sixty days from the date of the final decision of the writ petition, assuming the same is against the Petitioner. However, this does not mean that the Respondents are granting themselves endless time for completion of reassessment proceedings. The stay order has been granted by this Court pursuant to request made by the Petitioner. If the Petitioner would not have pressed for the same, the Respondents would have been bound to pass the order within the statutory period prescribed under Section 153. The stay is operating against passing of the final assessment order. That does not mean that the continuation of the reassessment proceedings, in the mean time would be contrary to the statute. Needless to say, if the Petitioner were to succeed, s ..... 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