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TMI Blog2024 (12) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Year relevant to the impugned orders is A.Y. 2012-13. 3. The necessary facts as the petition would set out, need to be noted:- The petitioner is a limited liability partnership firm, which was initially incorporated as a Private Limited Company on 27 November 1995 and thereafter converted into a limited liability partnership (LLP) on 30 March 2011. It is regularly filing its income tax returns since its incorporation. 4. For the assessment year 2012-13, the petitioner filed its return of income on 29 September 2012. On 03 October 2013, an intimation was issued to the petitioner under Section 143 (1) of the IT Act. After a long period of time that is on 12 November 2018, a notice under Section 133 (6) was issued by the DDIT (I & CI), Unit-2(2) calling for details like share of the petitioner in the sale proceeds, from the sale of land, computation of capital gains, etc. The petitioner, by its letter dated 27 November 2018, replied to the said notice in which it furnished all the details which were called for. On 07 December 2018, the petitioner filed further details as also requested that a personal hearing be granted to it by the DDIT. Again notices under Section 133 (6) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember 2021 when it passed the following order disposing of the writ petition in terms of paragraph 3 with the concurrence of learned counsel. "1. Mr. Walve states that an affidavit of one Biju Thomas, Assistant Commissioner of Income Tax sworn on September 17, 2021 has been filed in compliance with the order dated September 14, 2021. We have considered the affidavit and we accept the explanation given therein. 2. The assessment order dated May 19, 2021 is hereby quashed and set aside. Naturally, consequential notices, if any, are also quashed and set aside. 3. Keeping open the rights and contentions of the parties, we pass the following order with the concurrence of the counsel. (A) The impugned order dated November 25, 2019 (Exhibit 'P' to the petition) disposing the objection raised against reopening of assessment under Section 147 of the Income Tax Act, 1961 (the 'Act') is quashed and set aside. (B) The matter is remanded to the concerned authority to reconsider the objection dated May 6, 2019 and pass further orders. Should petitioner wish to file any further submissions in response to the letter dated April 23, 2019 giving reasons for reopening assessment for AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 of the IT Act, although it was specifically sought by the petitioner. Thereafter the assessment proceedings were transferred to the National Faceless Assessment Centre, Delhi as per the intimation dated 08 September 2022. The petitioner contends that a show cause notice dated 12 September 2022 was issued to the petitioner by posting such notice on the Income Tax portal. Also a notice under Section 142 (1) of the IT Act dated 12 September 2022 was lodged on the portal. The petitioner contends that it was not aware about the issuance of the show cause notice as also the notice under Section 142 (1) both dated 12 September 2022, hence, the same remained to be responded by the petitioner. 11. On 20 September 2022, a communication was addressed by respondent no.3/Assistant Commissioner of Income-tax, National Faceless Assessment Centre (for short, "NFAC") to the petitioner enclosing therewith a show cause notice dated 20 September 2022 inter alia recording that the variations, which were intended to be made, prejudicial to the interest of the petitioner, were primarily in regard to the information stated to be received in respect of transaction of sale of property by Shri. Daayas Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Shri. Darayas Lovaji Frezar acted as Power of Attorney holders in respect of sellers namely Noshir D Talati, Rashna Talatia nd M/s Zenriba Estate & Investment P. Ltd. Whereas Shri. Sanjay B. Jadhav acted as POA holder for Wavy Construction LLP. On perusal of Index-II, it is found that Mis Wavy Construction LLP was one of the seller. It is further learnt that the entire sale transaction had taken place in three stages as detailed below Description of Property Area in Sq. Mt. Date of conveyance Total sale value in Rs. Amount received Plot A 17615.93 10.08.2011 9,00,00,000 8,75,00,000 Plot B 214879.95 10.08.2011 108,25,00,000 107,00,00,000 N.A. Land 12 Mtrs Internal Road of Plot A 8330 10.08.2011 3,25,00,000 3,25,00,000 While calculating the LTCG the assessee has taken into consideration expenses viz. cost of acquisition of and improvement, professional fees, supervisory charges etc. to curtail the amount of receipts of the assessee. In view of the above facts, the assessee had incurred aforesaid expenses to the tune of Rs.4,13,05,930/- escaped assessment. 1. In view of the above facts, I have reason to believe that income chargeable to tax of Rs. 4,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 2019 for assessment year 2012-13. It was stated that as per provisions contained in Section 153 (2), the last date for passing the assessment order in cases of notice being issued under Section 148 before 01 April 2019, was 31 December 2019 i.e. 9 months from the end of the financial year in which notice under Section 148 was served. It was stated that for such reason, in the assessee's case, the last date for passing the assessment order was 31 December 2019. The petitioner pointed out that Writ Petition No. 3368 of 2019 was filed by the petitioner on which this Court had granted ad-interim stay on 13 December 2019 which was continued till the writ petition was disposed of i.e. on 21 September 2021. It was thus contended that the assessment proceedings had remained stayed by this Court from 13 December 2019 till 21 September 2021. Considering such fact, it was contended by the petitioner that as per Explanation 1 to Section 153 of the IT Act, in computing the period of limitation, the period during which the assessment proceeding was stayed by an order or injunction of any Court was required to be excluded. The petitioner hence contended that even taking into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantive reliefs:- "(a) that this Hon'ble Court may be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of the case leading to the passing order of the Respondent No.1 dated 14 October, 2021 rejecting the objections of the Petitioner (Ex. 'J') and the assessment order u/s. 143 (3) r. w. sections 147, 260 and 144B of the Act dated 30" September, 2022 for A.Y. 2012-13. (Ex. 'Q') and after going through the same and examining the question of legality thereof to quash, cancel and set aside the order of the Respondent No.1 dated 14" October, 2021 rejecting the objections of the Petitioner (Ex. 'J') and the assessment order u/s. 143 (3) r. w. sections 147, 260 and 144B of the Act dated 30% September, 2022 for A.Y. 2012-13 (Ex. 'Q'). (b) that this Hon'ble Court may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India ordering and directing the Respondent No.1 to withdraw and cancel the alleged order dated 14th Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are bad in law and without jurisdiction, as the same had been issued after the expiry of the limitation period prescribed in Section 153 (2) of the IT Act along with Explanation 1 below proviso to Section 153 (9) of the IT Act. 18. In supporting such contention, it is submitted that as per Section 153 (2), the Assessing Officer was required to pass such order within nine months from the end of the financial year in which the notice under Section 148 was served. The submission is that the notice under Section 148 was issued on 29 March 2019. The financial year ended on 31 March 2019, and the nine months period from 01 April 2019 ended on 31 December 2019. This would have been the normal position. However, Writ Petition No. 3368 of 2019 was filed by the petitioner in this Court challenging the notice under Section 148 of the IT Act, in which this Court had granted interim stay on 13 December 2019, which continued until the petition was disposed of on 21 September 2021. Such period during which the stay operated would be required to be excluded. It is hence submitted that consequently the reassessment proceedings having remained stayed from 13 December 2019 till 21 September 2021, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to dispose of the objections of the petitioner after giving a personal hearing to the petitioner. 20. It is hence submitted that the High Court has neither given directions nor recorded any findings and on the contrary, the High Court observed - "We clarify that we have not made any observations on merits of the case." Supporting such contentions on the proceedings being barred by limitation under the provisions of Section 153, Mr. Mistri has placed reliance on the decisions of the Supreme Court in Income-tax Officer vs. Murlidhar Bhagwan Das 52 ITR 335 SC, Rajinder Nath v. Commissioner of Income-Tax, Delhi 120 ITR 14, SC and on the decision of the Division Bench of Karnataka High Court in Principal Commissioner of Income-Tax & Anr. vs. Tally India Pvt. Ltd. 435 ITR 137 Kar. 21. It is next submitted that the impugned notice under Section 148 of the IT Act dated 29 March 2019 records that the notice was issued after obtaining the necessary satisfaction of the Principal Commissioner of Income Tax - 21, Mumbai and this fact was reproduced in the copy of the reasons recorded and furnished to the petitioner on 23 April 2019. In such context, Mr. Mistri submits that the petitioner had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harma, were necessarily required to be adhered by the Revenue in passing fresh orders. Hence, the original period of limitation was no more available and it is the extended period of limitation as provided by sub-section (6) of Section 153 which was available for a fresh order to be passed. It is, therefore, Mr. Sharma's submission that the petitioner is not correct in its submission relying on the decision to support its contentions that the extended period of limitation was not available to pass the impugned assessment order dated 30 September 2022. He accordingly submits that the Writ Petition be dismissed. 23. We have heard Mr. Mistri, learned senior counsel for the petitioner and Mr. Sharma, learned counsel for the respondents. With their assistance, we have perused the record. Reasons and conclusion 24. In the facts and circumstances of the case, the short question which arises for consideration is whether the impugned assessment order dated 30 September 2022 would be required to be held to be bad in law and without jurisdiction, on the ground that the same was passed after the expiry of the period of limitation as prescribed under Section 153 of the IT Act and more partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime before the expiry of twelve months from the end of the financial year in which such return was furnished.] (2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 was served: Provided that where the notice under section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted. (3) Notwithstanding anything contained in sub-sections (1), (1A) and (2), an order of fresh assessment [or fresh order under section 92CA, as the case may be,] in pursuance of an order under [section 250 or] section 254 or section 263 or section 264, setting aside or cancelling an assessment, [or an order under section 92CA, as the case may be], may be made at any time before the expiry of nine months from the end of the financial year in which the order under [section 250 or] section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the 45[Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be] : Provided that where it is not possible for the Assessing Officer 44[or the Transfer Pricing Officer, as the case may be,] to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer 46[or the Transfer Pricing Officer, as the case may be], if satisfied, may allow an additional period of six months to give effect to the order: Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153B [or section 158BE], the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A [or sub-section (5) of section 158BA], shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B [or section 158BE], whichever is later. (9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st day of June, 2016: Provided that where a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016). Explanation 1.-For the purposes of this section, in computing the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of section 245R; or (ix) the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided also that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 149, 154, 155 and 158BE and for the purposes of payment of interest under section 244A, this proviso shall also apply accordingly: Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 148 was served. The proviso below sub-section is not applicable, as it applies only in a case where the notice under section 148 is served on or after the 1st day of April, 2019, which is not the case. Sub-section (6) is the debated provision which the Revenue intends to apply when it contends that the extended period of limitation of 12 months from the end of the month in which the Court had passed the order (dated 21 September 2021) would become applicable. Sub-section (6) provides that nothing contained in sub-sections (1), (1A) and (2) shall apply to the classes of assessments, reassessments and recomputation which may, subject to the provisions of sub-sections (3), (5) and (5A), be completed so as to ordain that 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 250, section 254, section 260, section 262, section 263, or section 264 or "in an order of any court in a proceeding otherwise than by way of appeal or reference under the Act, on or before the expiry of twelve months from the end of the month in which such order is received o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer to pass a reassessment order under Section 147. Such order came to be effected on 21 September 2021. 28. The controversy which arises is as to what is the nature of the order passed by this Court and whether the order passed by this Court would be required to be construed to fall within the provisions of sub-section (6) of Section 153, so as to provide the extended period of limitation of twelve months as clause (i) of sub-section (6) provides or whether the order would be required to be construed so as to accept a situation falling within the purview of the first proviso below Explanation 1, namely that only the extended period of sixty days was available with the Revenue in the present facts to pass the reassessment order. The aforesaid analysis of the provisions would lead us to construe as to what is provided by clause (i) of sub-section (6) as applicable to the facts in hand, namely whether the assessment/reassessment in question "is being made in consequence of" or to give effect to any finding or direction as contained in the orders passed by this Court, being a proceeding otherwise than by way of appeal or reference under the Act, for which the limitation woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income-tax Officer. It is assailing such orders passed by the High Court, the proceedings reached the Supreme Court. In such context, the Constitution Bench of the Supreme Court examined as to what is the true meaning of the terms of the second proviso to Section 34 (3) of the Act, which is quite similar to the provisions of Clause (i) of sub-section (6) of Section 153 of the IT Act. The second proviso to Section 34 (3) of the IT Act which fell for consideration of the Supreme Court and as extracted in the report, needs to be noted which reads thus: "Provided further that nothing in this section limiting the time within which any action may be taken, or any order, assessment or re-assessment may be made, shall apply to a re-assessment made under Section 27 or to an assessment or re-assessment 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 31, Section 33, Section 33A, Section 33B, Section 66 or Section 66A." 30. In the context of the facts in hand, the expression "direction" and "in consequence of" or "to give effect to" are the key words which are common expressions used in the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. It was observed that if the scope is limited in such manner, the said words also must be related to the scope of the findings and directions. The relevant observations of the Supreme Court are required to be noted which read thus:- "Now, let us scrutinize the expressions on which strong reliance is placed for the contrary conclusion. The words relied upon are "section limiting the time", "any person", "in consequence of or to give effect to any finding or direction." Pointing out that before the amendment the word "sub-section" was in the proviso but it was replaced by the expression "section", it is contended that this particular amendment will be otiose if it is confined to the assessment year under appeal, for it is said that under no circumstances the Income-tax Officer would have to initiate proceedings for the said year pursuant to an order made by an Appellate Assistant Commissioner. This contention is obviously untenable. The Appellate Assistant Commissioner or the Appellate Tribunal may set aside the notice itself for one reason or other and in that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g" as well as the expression "direction" can be given full meaning namely, that the finding is finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is empowered to give under the sections mentioned therein. The words "in consequence of or to give effect to" do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to the scope of the findings and directions." (emphasis supplied) 31. In Rajinder Nath vs. Commissioner of Income Tax, Delhi (supra) the expressions "finding" and "direction" fell for consideration of the Supreme Court as used in the provisions of Section 153 (3) (ii) of the IT Act. The contention urged before the Court was whether there was any finding or direction within the meaning of Section 153 (3) (ii) of the Act in the order passed by the Appellate Assistant Commissioner, in consequence of which or to give effect to which the assessments in question were made. In such context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imate 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. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regards the expression "direction" in section 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 section 153(3) (ii) of the Act must be accordingly confined. Section 153 (3) (ii) is not a provision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation of making an assessment order under section 143 or section 144 or section 147: ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC) and and N. K. T. Sivalin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a finding is given in an appeal, revision or reference are concerned, arising out of an assessment and it must be a finding necessary for disposal of a particular case and similarly, a direction must be an expressed direction necessary for disposal of the case before authority or Court and must also be a direction which the authority or Court is empowered to give while deciding a case before it. It was held that it was evident that the order dated 7 March 2012 passed by the High Court neither contained any finding nor any direction and accordingly, accepted the contention as urged on behalf of the assessee and held against the Revenue. The relevant observations as made by the Court which are similar to the facts in hand, are required to be noted which read thus:- "7. A bench of this court by an order dated 07.03.2012 disposed of the writ petition viz., W.P.No.45313/2011 in the following terms: 3. Having regard to the submission made by both the counsel, there is no option but to accept the writ petition, set aside the impugned order and remit the matter to the 1st respondent-Assessing Officer. 4. The petitioner shall take these proceedings as notice to them and shall appear b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pening, the concerned authority shall provide the same within two weeks of receiving the communication from the petitioner. (iv) Finally in paragraph 3(D) of the order, it is observed that the concerned authority "may" further dispose of the objection to the reopening of assessment after giving a personal hearing to the petitioner as per Rules prescribed. (v) What is significant is paragraph (4) of the order where the Court clarifies that the Court has not made any observations on the merits of the case. 34. Thus, applying the principles of law as laid down in the decisions in Income Tax Officer vs. Murlidhar Bhagwan Das (supra), Rajinder Nath vs. Commissioner of Income Tax, Delhi (supra) and Principal Commissioner of Income Tax & Anr. Vs. Tally India Pvt. Ltd. (supra), it is clear that the order dated 21 September 2021 passed by the Division Bench (supra) does not contain any findings necessary for disposal of the writ petition in a particular manner, so as to govern the issues which would be decided by the Assessing Officer. We may observe that in the context in hand when the Revenue seeks to take recourse to sub-section (6) (i) of Section 153 of the IT Act so as to avail al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the first proviso below Explanation 1 of Section 153. In fact as the order dated 21 September 2021 passed by this Court on the petitioner's writ petition (supra) do not, in any manner, record a finding or issues directions as understood in terms of clause (i) of sub-section(6) of Section 153. We do not see how the Revenue can avoid the consequence of the limitation in the present case, being triggered by the first proviso below Explanation 1. In our opinion, as rightly contended on behalf of the petitioner, applying the provisions of clause (ii) below Explanation 1 read with the first proviso below Explanation 1, certainly the limitation for the Assessing Officer to pass the Assessment Order had come to an end on 20 November 2021 i.e. sixty days from 21 September 2021 (orders passed by the High Court) by applying the extended period as per the first proviso below Explanation 1, whereas the impugned assessment order has been passed almost ten months after the limitation expired. Thus, the case of the Revenue in regard to applicability of the extended period under sub-section (6) (i) of Section 153 cannot be accepted. 36. Considering the nature of the orders passed by this Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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