TMI Blog1981 (4) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... extend beyond a period of 12 months except in cases where the permission of the CBDT had been obtained. It, therefore, proceeded to file two returns on 18th November, 1964. One of these returns was for the period October 15, 1962, to November 30, 1962, a period of 1 1/2 months, which related to the assessment year 1963-64. In the other return it declared the income in respect of the period from December 1, 1962, to November 30, 1963, which pertained to the assessment year 1964-65. The ITO, however, appears to have overlooked the returns filed by the assessee on 18th November, 1964. On December 24, 1964, he completed the assessment for the assessment year 1964-65, and included therein the entire income of the period from October 15, 1962, to November 30, 1963. The assessee preferred an appeal to the AAC. The AAC disposed of the appeal on 10th August, 1965. Before him the assessee had raised three contentions, two of which related to minor disallowances of Rs. 614 and Rs. 1,050. The third ground was that the ITO was wrong in framing the Assessment for the period from October 15, 1962, to November 30, 1963, instead of the separate periods, comprising October 15, 1962, to November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , had cancelled the original assessment without giving any clear direction to make a fresh assessment. It was argued that the time-limit for completing the assessment had expired on March 31, 1969, under s. 153(1) and that the reassessment completed as late as February 16, 1970, was out of time and, therefore, invalid. The AAC did not accept this contention. He held that by the order dated August 10, 1965, the AAC had actually set aside the assessment though he used the word "cancelled " and that there was a clear direction to the ITO to reframe the assessment on the basis of the returns filed. He pointed out that the time-bar provided for in s. 153(1) and (2) would not apply when a reassessment is completed as per the direction of the AAC under s. 250 of the I.T. Act. The assessee preferred a further appeal to the Appellate Tribunal. Before the Tribunal four contentions were raised on behalf of the assessee. The first was that the AAC while cancelling the assessment on August 10, 1965, was not competent to give any direction to the ITO to make a fresh assessment. The second was that even if he was so competent he had not in fact given any such direction in the present case. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out, was incompatible with a mere annulling of the assessment without an intention that it should be redone. The Tribunal observed that the order of the AAC should be construed as a whole and that the use of a single word unguardedly should not be utilised to interpret the order in a different way. For these reasons, the Tribunal held that the reassessment was covered by the language of s. 153(3) and that the reassessment made by the ITO was within time. At the instance of the assessee, the I.T. Appellate Tribunal has referred the following questions for the decision of this court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal had correctly interpreted the order of the Appellate Assistant Commissioner dated August 10, 1965, as giving a direction to the Income-Officer to reframe the assessment. (2) Whether the Tribunal was right in law in holding that the assessment made for the year under appeal on February 16, 1970, was legal and valid ?" As already mentioned, the question for consideration in this case turns on the interpretation of sub-s. (3) of s. 153 of the I.T. Act, 1961. Sub ss. (1) and (2) of s. 153 lay down certain time-limits for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of A, a finding in respect of B may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else a finding that it belongs to B or does not belong to B would be determinative of the issue whether it can be taxed as A's income. A finding respecting B is initially involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. As regards the expression 'direction' in s. 153(3)(ii) of the Act, it is now well settled that it must be an express direction necessary for the disposal of the case before the authority or court. It must also be a direction which the authority or court is empowered to give while deciding the case before it. The expressions 'finding' and 'direction' in s. 153(3)(ii) must be accordingly confined. Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 3 1/2 years after the passing of the AAC's order should be allowed to take advantage of the provisions contained in sub-s. (3) of s. 153 and to have a further period of few months for completing the assessment. We have considered the argument of the learned counsel but, in our opinion, the view taken by the Tribunal is the correct view. The order of the AAC has to be read as a whole and in the light of the point which he had to consider and on the basis of which he considered it necessary to cancel the assessment earlier made. To recapitulate the facts briefly, the original assessment had been made by the ITO in respect of an accounting period of about 13 months and the plea raised before the AAC by the assessee was that this was not justified under the provisions of the 1961 Act. It was pointed out before him that the assessee had filed separate returns for the assessment years 1963-64 and 1964-65 which had been ignored by the ITO. While accepting the plea raised by the assessee, the AAC could perhaps have confirmed the assessment partially by excluding from the previous year a portion of it, i.e., 1 1/2 months, which was in excess over the statutorily permitted interval of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order. There is, in our opinion, a clear direction by the AAC to that effect' But even if it is possible to say that there was no specific direction, there can, in our opinion, be no doubt that there is a finding by the AAC which involved a reassessment being done by the ITO. In the circumstances of the case, the AAC had set aside the assessment on the ground that it could not cover a previous year of more than 12 months. The result of this finding was that an assessment had to be made for period of the permitted extent of 12 months. There can, therefore, be, in our, opinion, no doubt that the fresh assessment made by the ITO was in consequence of the finding given by the AAC. We, therefore, think that the assessment made on 16th February, 1970, was within time an was not time barred as contended for by the assessee. Mr. Suri, learned counsel for the assessee, sought to raise two further contentions. He raised the point as to how far in making the reassessment as a consequence of the cancellation of the original assessment order, it was open to the ITO to travel outside the scope of the original assessment order and make an addition of a sum of Rs. 25,000. He also sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
