TMI Blog1985 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... re income of the minors, without notice to her. The Commissioner of Income-tax, agreeing with this contention, passed orders under section 264, setting aside both the assessments and directing the Income-tax Officer to make fresh assessments in accordance with law. Pursuant to those directions, the Income-tax Officer issued a notice under section 143(2) of the Income-tax Act and completed the assessments on February 8, 1973. The assessments for the years 1964-65 and 1965-66 ought to have been completed by March 31, 1969, and March 31, 1970, respectively. The assessee had, therefore, objected before the Income-tax Officer that he had no jurisdiction to assess in the year 1973, because they were barred by time. The Income-tax Officer did not agree with this contention and completed the reassessments including the share income of the minors under section 143(2) of the Act. The Income-tax Officer did the same in the case of Mohammadi Begum, the second assessee in this case. Having been aggrieved by the orders of assessments passed by the Income-tax Officer, the assessees went up in appeal before the Appellate Assistant Commissioner and, finally, to the Income-tax Appellate Tribunal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in certain circumstances. Clauses (i) and (ii) of section 153(3) lay down that the provisions of sub-sections (1) and (2) shall not apply to assessments, reassessments and recomputations which may be completed at any time(i) where a fresh assessment is made under section 146; (ii) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 264 (or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Act). A bare perusal of the language of sub-section (3) of section 153 would show that where the assessment was made in order to give effect to any finding or direction made under section 264 of the Income-tax Act, such an order cannot be hit by the provisions of limitation contained in sub-sections (1) and (2) of section 153 of the Act. It may be mentioned that in principle, the law of limitation does not bind the Crown, unless it is imposed by a statute. Barring a statutory provision like sub-sections (1) and (2) of section 153, tax payable to the Crown can be quantified and recovered, at any time. It is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no language in section 275 of the Act, similar to the language to be found in sub-section (3) of section 153 of the Act, removing the bar of limitation in the way of the Revenue imposing penalty. It is, therefore, wholly right to hold on the basis of the prohibition language of section 275 that no penalty under the Act can be imposed beyond the period of time prescribed under section 275 of the Act. For that reason, both the judgments in the cases of Ganapathi Rao [1978] 115 ITR 277 (AP) and Bhudhar Singh Sons [1983] 143 ITR 322 (All) should he held to be inapplicable to the construction of section 153 of the Act. But, that much is not seriously disputed even by the learned counsel for the assessees. Bat, what Mr. Rathnakar prominently argued is that there were observations made by a Division Bench of this court in the case of Ganapathi Rao [1978] 115 ITR 277 (AP) to the effect that what construction would apply to section 275 would also apply to section 147 of the Income-tax Act. He relied upon the passage occurring at page 283 which reads as follows : " The language of section 275 is clear and explicit. It is mandatory. Therefore, the question of pushing the language so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra [1973] 90 ITR 110 (Delhi) was a case where the Bench construed that the first assessment made by the Income-tax Officer itself was void and that the directions given by the Commissioner could not empower the Income-tax Officer to save the period of limitation which was barred by his default. Then remains the judgment of the Kerala High Court in Smt. Lucy Kochuvareed [1971] 82 ITR 845 (Ker) [FB]. In that case, the Full Bench has ruled that the Agricultural Income-tax Commissioner's directions and findings, which the Income-tax Officer should give effect to, cannot be made beyond the period of limitation. The judgment does not disclose on what basis this conclusion was reached. Now, the language of section 264 of the Act empowers the Commissioner of Income-tax to dispose of the revisions filed by the assessee and empowers him to pass such orders thereon as he thinks fit not being orders prejudicial to the assessee. There is no limitation of time fixed for the exercise of the revisional powers by the Commissioner [under section 264(3)]. It is not easily conceivable that the law, in normal circumstances, should impose a strict time-limit for the disposal of these matters by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the language of the order of the Commissioner. We are unable to agree with this contention. It is, no doubt, true that the Commissioner's order uses the words " fresh assessment" but not in the same meaning in which section 153 (3)(i) uses these words. The fresh assessment which is spoken of by the statute is fresh assessment under section 146 of the Act. The fresh assessment which is spoken of under section 146 of the Act deals with reopening of assessment at the instance of the assessees. Obviously, that is not the situation which is contemplated now by the order passed by the Commissioner. The assessment which is now made is not a fresh assessment within the meaning of section 153(3)(i). In truth and in reality, it is a case of assessment or reassessment which falls under section 153(3)(ii). There is nothing in the inclusive language of section 2(8) of the Act defining assessment to suggest otherwise. In the circumstances, we reject this argument also. It is then argued by the learned counsel that there is no positive finding or direction within the meaning of section 153(3)(iii) for making the reassessment. His argument is that the language of section 264 of the Act read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Lordships said such a finding was not necessary for the disposal of the particular case. In this case, the direction issued by the Commissioner is clearly warranted by the facts and the contentions therein. We are, therefore, of the opinion that this contention should also fail. The next argument of the learned counsel is that the direction to make a fresh assessment is not a direction which is necessary for the disposal of the revision petition and that, therefore, issuing of such a direction is not within the jurisdiction of the Commissioner. This contention is even more difficult to appreciate. The assessee made an application to the Commissioner under section 264 of the Income-tax Act to revise the orders of assessment passed by the Income-tax Officer, on the ground that the incomes of her minor children were clubbed with her income under section 64 of the Act without giving notice. Having accepted that contention, the Commissioner can only direct the Income-tax Officer to reassess the income of the assessee according to law, which means giving notice to them. To say that the giving of such a notice is not necessary for the purpose of the disposal of the assessee's revisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a void order and that, therefore, there was no order in the eye of law made by the Income-tax Officer within the period of limitation fixed by the statute. For that reason, the learned counsel argued that the directions which had been issued by the Commissioner under section 264 of the Act would not enable the Income-tax Officer to start the assessment proceedings for the first time after the period of limitation. In support of this contention, the learned counsel has relied upon a judgment of the Kerala High Court in Ponkunnam Traders v. Addl. ITO [1972] 83 ITR 508. It is a generally accepted proposition of law that any administrative action taken in violation of the principles of natural justice is a nullity. It is an equally accepted proposition of law that such an order can create no legal obligations nor alter any legal relations. The argument is that the order passed by the Income-tax Officer in this case without giving notice to the assessee being non est, and the period of limitation fixed by the statute having overtaken his powers to reassess meanwhile, the process of reassessment cannot now be restarted by the Income-tax Officer. The question is whether this administra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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