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TMI Blog2023 (10) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... er is a public limited company, and the petitioner has filed its return on income with the claims for refund for the corresponding assessment years as follows: Assessment Years 2007-08 In Rs. 2008-09 In Rs 2009-10 In Rs Declared Income 346,41,78,725/- 525,86,44,940/- 496,63,97,797/- Refund Claimed 2,74,12,043/- 21,14,04,480/- 21,82,43,000/- The Assessing Officer [AO], after a scrutiny assessment under Section 143[3] of the Income Tax Act, 1961 [for short, the 'IT Act'], has passed respective Assessment orders [A copy of the respective order is produced as Annexure - A in each of the petitions.] dated 31.12.2009 [for the Assessment Year 2007- 08], 29.12.2010 [for the Assessment Year 2008-09] and 30.12.2011 [for the Assessment Year 2009-10] making various disallowances. 3. The AO in the aforesaid Assessment orders has disallowed the following for the respective Assessment Years. (i) For the Assessment Year 2007-08 Depreciation on building [Section 32 of the IT Act] Rs. 2,45,116/- Section 14A of the IT Act Rs. 27,64,15,000/- Bad Debts and Bad Advances written off Rs. 1,48,85,308/- Non consideration of brought forward loss Rs. 16,13,58,199/- Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT has disposed of these appeals by common order dated 31.03.2015 as contemplated under Section 254 of the IT Act stating that the appeals are allowed for statistical purposes with certain conclusions. The ITAT has directed the AO to reconsider, after due opportunity to the petitioner and in the light of all the facts placed on record, the petitioner's grievance against disallowing claims for bad debts/ advances written off and under Section 14A of the IT Act. 7. The petitioner, after the ITAT's order dated 31.03.2015, has filed its applications dated 21.11.2019 and 29.10.2020. In the first application, the petitioner has just stated that orders to give effect to the ITAT's order are pending, and because it has proved its case, the amount computed [as per the appendix to this application] must be refunded. In its next application, the petitioner has filed a detailed explanation contending that, because the proceedings pursuant to the ITAT's orders dated 31.03.2015 are not concluded, they are rendered time-barred under the provisions of Section 153 of the IT Act and, in view of the decision of the Hon'ble Supreme Court in CIT v. Shelly Products [2003] 5 SCC 461, the amount p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per ROI and Self Assessment Tax paid Rs. 1,65,00,00,000/- Rs. 25,22,44,349/- Total Deductions towards Taxes Rs. 1,90,22,44,349/- Excess Tax paid Rs. 21,82,43,001/- The petitioner with the aforesaid amount as the base figure has given credit to certain refunds allowed and demands paid with additions towards interest under Section 244A of the IT Act in claiming refund of Rs. 36,37,90,129/-. [As against a sum of Rs. 21,82,43,000/- claimed in its Return of Income]. 9. The first respondent has issued the impugned notices dated 05.11.2020 and 06.11.2020 after the petitioner's applications dated 21.11.2019 and 29.10.2020. The petitioner is called upon to appear on specific dates, but this Court, on 14.12.2020, has granted stay of the proceedings pursuant to the impugned notices. On 05.01.2023, these three petitions are clubbed because of the similarities in the questions and the interim order granted earlier is continued. 10. Sri Percy Pardiwala, the learned Senior Counsel for the petitioner, submits that after the ITAT's order dated 31.03.2015 admittedly there had to be reassessments for the AYs. 2007-08, 2008-09 and 2009- 10 and in that event, if the provisions of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act, the final time line is until 31.03.2017, and if the concerned order or direction or order is not given effect to before this date, the proceedings stand lapsed [Sri Percy Pardiwala in canvassing this proposition does not insist that the ITAT's order is for a fresh assessment cancelling entirely the subject Assessment Orders.]. The learned Senior counsel argues that in the present case the ITAT's orders dated 31.03.2015 irrefutably are before 01.06.2016 and therefore, the AO, had to give effect to ITAT's orders on or before 31.03.2017 and because this exercise is not completed within this time, the proceedings must lapse. 14. Sri E I Sanmathi, the learned counsel for the respondents, without contesting Sri Percy Pardiwala's reading of the provisions of the substituted Sections 153[3], 153[5], 153[6] and 153[7] of the IT Act, submits that the timeline for conclusion of the proceedings in the present case, pursuant to the ITAT's order dated 31.03.2015 would be under the provisions of Section 153[3] of the IT Act as it stood before the substitution by the Finance Act, 2016. He argues that the provisions of Section 153[3] of the IT Act, as it stood prior to substitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the provisions of Section 153 of the IT Act as it stood prior to the Finance Act, 2016 or the substituted provisions. There will have to be elaborate discussion on this aspect when the second question is considered, but to bring out the significance of the first question to the extent that is relevant, this Court must refer to a decision of the Division Bench of the High Court of Delhi in 'Basu Distributors Private Limited v. Income Tax Officer Ward' [2007 [94] DRJ 495[DB]. This decision is also referred to by another Division Bench of the Delhi High Court in in Nokia India Pvt. Ltd. v. Deputy Commissioner of Income Tax [2017] 298 CTR 0334.]. 18. The Division Bench, while referring to a decision of the Bombay High Court in 'Rikhabdas Jhaverchand v. Commissioner of Income Tax [2001] 169 CTR [Bom] 196 ' where it is held that the time line in Section 153[2A] of the IT Act is applicable when an assessment order is entirely set aside or cancelled and a host of other decisions, has ultimately held as follows: "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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written off and under Section 14A of the IT Act permitting the petitioner to produce further documents, and directing the AO to extend an opportunity of hearing to the petitioner and decide on the afore in the light of the judicial pronouncements. 20. This order is common to all the three subject assessment years, and in fact, it is in view of the ITAT's similar order for the previous assessment years. This Court, in view of the above, can only conclude that it is indubitable that the ITAT's common order dated 31.03.2015 do not set aside or cancel the subject assessment orders requiring a fresh assessment. The first question is answered accordingly, and this Court is of the considered view that the second question must necessarily be examined in the light of this definite opinion. 21. The merits of the respondent's case that the proceedings to give effect to orders, and to give effect to findings or directions pending as of 31.03.2017 pursuant to order under Section 254 of the IT Act, could be concluded at any time [as contemplated under the provisions of Section 153 prior to substitution] because of the provisions of Section 153[9] of the IT Act must be firstly examined upon a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the 1st day of June, 2016, the Assessing Officer shall give effect to such order, finding or direction, or assess, reassess or recompute the income of the assessee, on or before the 31st day of March, 2017." The Parliament, in incorporating Section 153[7] of the IT Act, is unequivocal that the proceedings to give effect to orders or findings or directions under Sections 250, Section 254, Section 260, Section 263 and Section 264 of the IT Act must be completed before 31.03.2017. 24. The CBDT's Explanatory Note issued vide Circular No. 3/2017 dated 20.01.2017 on the changes brought about by the Finance Act, 2016 removes any doubt about the Parliament's intention in incorporating Section 153[7] of the IT Act. The Explanatory Note, as regards the substitution of the provisions of Section 153 of the IT Act, reads as under as regards the changes in the timelines: * The period, for completion of assessment under section 143 or section 144 has been changed from existing two years to twenty-one months from the end of the assessment year in which the income was first assessable. * The period for completion of assessment under section 147 has been changed from existing one year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that proceedings under the Act are finalised more expeditiously as digitisation of processes within the Department has enhanced its efficiency in handling workload. In order to simplify the provisions of existing section 153 of the Income-tax Act by retaining only those provisions that are relevant to the current provisions of the Income-tax Act, section 153 of the Income-tax Act has been amended by substituting the existing section changes in time limit from the existing time limits." It is obvious from the reading of the reasons assigned that the substitution of Section 153 of the IT Act is to ensure that the assessment proceedings are finalized expeditiously and therefore, the timelines are reduced. Crucially, insofar as the proceedings pending as of 01.06.2016 for giving effect to orders under Section 153[5] of the IT Act or to give effect to a finding or direction under Section 153[6] of the IT Act, Explanatory Note also reiterates that the final timeline will be 31.03.2017 or twelve months from the end of the month in which such order is received, whichever is later. This clarification completely undermines the respondent's case, as canvassed by Sri E.I Sanmathi, that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitution." 28. It is apparent that the respondents have issued the impugned notices after the petitioner's applications dated 29.10.2020 as they were of the opinion that they could give effect to the ITAT's orders dated 31.03.2015, but the respondents, consequent to this Court's conclusion that the time for the AO to consider the question of disallowance of the claims of bad debts/ advances written off and under Section 14A of the IT Act stand lapsed as of 31.03.2017, must consider the petitioner's representation dated 29.11.2020 for refund. The details of the petitioner's claim for refund in these petitions are as follows: Writ Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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