TMI Blog1975 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Rs. 3,36,000. This amount came to be added as cash credits to the income of the assessee in the assessment year 1959-60. However, on appeal, the Appellate Assistant Commissioner found that cash credits amounting to Rs. 2,50,000 fell within the financial year relevant to the assessment year 1958-59 and the amount of Rs. 2,50,000 came to be deleted from the income of the assessee for the assessment year 1959-60. On this finding of the Appellate Assistant Commissioner the Income-tax Officer issued a notice under section 147(a) of the Act for the assessment year 1958-59, and as a result of reassessment an amount of Rs. 2,25,000 for which there was no satisfactory explanation with regard to the source according to the Income-tax Officer, came to be included in the income of the assessee for the assessment year 1958-59. An appeal was filed against this assessment order by the petitioner. This Appeal No. 27-Spl-B/1965-66 came to be decided on August 22, 1966, by the Appellate Assistant Commissioner. The Appellate Assistant Commissioner took the view that since section 68 of the Act provided that where any sum is found credited in the books of an assessee maintained for any previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petitioner was not given adequate opportunity to represent his case to rebut the proposal of the Income-tax Officer to make an addition as income from undisclosed sources referable to hundi loans. The position as it stands today, therefore, is that the assessment order against the petitioner has been set aside and the Income-tax Officer has been directed to make a fresh assessment after giving the assessee a specific opportunity to rebut the case which was sought to be made out against it. Since the Tribunal did not go into the validity of the notice and it is not now possible for the Income-tax Officer to go into that question in view of the terms of the remand order, we have heard the learned counsel for the petitioner in this petition. After the assessment order was passed by the Income-tax Officer, he took steps under section 226(3) of the Act to recover an amount of Rs. 1,76,000 due from the Hindustan Steel Limited to the petitioner. The petitioner in this petition has also prayed that the said recovery is illegal and it was entitled to the refund of that amount. The main argument advanced for the petitioner is that the notice issued by the Income-tax Officer under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken." At this stage we may also refer to the provisions of section 153. Sub-section (1) of section 153 prescribes the period for making an order of assessment under section 143 or under section 144 of the Act. Sub-section (2) of section 153, in so far as it deals with the assessment, reassessment or recomputation under section 147(b), reads as follows: "No order of assessment, reassessment or recomputation shall be made under section 147- . ...... (b) where the assessment, reassessment or recomputation is to be made under clause (b) of that section, after- (i) the expiry of four years from the end of the assessment year in which the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound in clause (b) of section 153(2), and according to the learned counsel it is that limitation which will govern the proceedings for assessment, and since the notice was issued beyond four years from the end of the assessment year 1959-60 and the notice was also not issued within the similar period as prescribed by section 149(1)(b), the notice was liable to be quashed. Now, it is no doubt true that sub-section (2) of section 153 prescribes the limitation for making an order of assessment, reassessment or recomputation, and where such an order is to be made under clause (b) of section 147, it cannot be made after the expiry of four years from the end of the assessment year in which the income was first assessable, which is the assessment year 1959-60 in the instant case. The legislature has, however, made positive provisions excluding certain proceedings from the bar of limitation contained in section 153(1) and (2). One such provision is contained in clause (ii) of sub-section. (3) of section 153, which says that the provisions of sub-sections (1) and (2) shall not apply where the assessment, reassessment or recomputation is made in consequence of or to give effect to any findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fictionally treated as one under section 150, then the bar of limitation will not apply in view of the express provisions in section 153(3). In a case like the instant one the provisions of section 153(2) will not be attracted. Sub-section (2) no doubt provides that sub-section (1) of section 150 shall not apply in a case where the assessment, reassessment or recomputation relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. Now, if as argued by the learned counsel, the limitation referred to in sub-section (2) of section 150 is the one referred to in sub-section (2) of section 153, then by the express provisions of sub-section (3) of section 153 the bar of limitation has been removed. The provisions of sub-section (2) of section 150 cannot, therefore, be availed of by the petitioner. The view which we have taken is supported by a Division Beach decision of the And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Appellate Tribunal confirming the order of the Appellate Assistant Commissioner that the amount in question was not liable to be included in the income for the assessment year 1958-59 having regard to the provisions of section 68, the Income-tax Officer was prevented from exercising his jurisdiction under section 147(b) of the Act. As the matter stands today, there is an operative order of competent authorities holding that the amount in question was not liable to be included in the assessment year 1958-59. Indeed, the order of the Appellate Assistant Commissioner who deleted this amount for the assessment year 1958-59 has clearly stated that the period during which this amount was credited in the account books fell for assessment in the assessment year 1959-60. This finding was sufficient for the Income-tax Officer to take steps to bring to tax the disputed amount. The decision in Smt. Hemlata Agarwal's case is clearly distinguishable on facts. In that case, a sum of Rs. 24,500, which was stated to be the sale proceeds of the assessee's jewellery and invested in the purchase of a house, was assessed in the hands of the family, but the assessment was set aside in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits or gains had escaped assessment. The proceedings which the Income-tax Officer had initiated in this case followed the order of the Appellate Assistant Commissioner in the assessment proceedings for the assessment year 1958-59, and the action was clearly supported by the observations made therein as contemplated by section 147(b) of the Act. There was already a final order which continues to be operative which holds that the disputed amount could not be subjected to tax in the assessment year 1958-59. The Income-tax Officer was, therefore, entitled to take recourse to the provisions of section 147(b) and issue the requisite notice for which unfortunately for the petitioner there does not seem to be any bar of limitation in view of the provisions of section 153(3)(ii) read with Explanation 2. It is not, therefore, possible to hold that the notice issued by the Income-tax Officer was invalid on the ground of limitation. As the matter stands today, the petitioner's argument that the department is not entitled to retain the amount recovered in pursuance of the notice under section 226(3) of the Act must be accepted. The original assessment order consequent on the notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
