TMI Blog1982 (3) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... er was, therefore, finalised on 28-3-1980 and was despatched by registered post to the assessee on the same day. It was received by the assessee on 2-4-1980, for which an acknowledgment was on record. No objections were forwarded by the assessee to the ITO within the period of seven days prescribed by sub-section (2) of section 144B. It filed its objections only by a letter dated 11-4-1980 which was received by the ITO on 14-4-1980. There was no application by the assessee for extension of the period for the filing of the objections. The ITO ignored the objections on the ground that they were filed out of time and passed the assessment order on 19-4-1980 under sub-section (3) without forwarding the draft order and the objections to the IAC under sub-section (4). 4. It is necessary at this stage to refer to the provisions of section 144B and section 153, so far as they are relevant for the questions involved in this appeal. 5. When the proposed variation in the income is more than Rs. 1 lakh sub-section (1) of section 144B requires the ITO to "forward" a draft of the proposed order to the assessee. Sub-section (2) provides that "on receipt of the draft order" the assessee may fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expiry of the period of two years available for completing the assessment and that it is also necessary that the draft order should be served on the assessee within the period of two years. As in the present case the draft order was served only two days after the expiry of the period of two years, it is claimed that there were no valid proceedings under section 144B, that the assessment can, therefore, be treated as only one under section 143(3) of the Act and not one under section 143(3) read with section 144B, and that the assessment is, therefore, time-barred. The contention was accepted by the Commissioner (Appeals) and the assessment was annulled as illegal and inoperative. Hence the present appeal by the department. 9. The contention of the department, on the other hand, is that it is enough if the draft order is despatched to the assessee before the expiry of two years available for completing the assessment and that it is not necessary that the order should be served on the assessee within two years. As already stated, in the present case the order has been despatched within two years. It is the further case of the department that as the objections were not filed within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed for completing the assessment or whether it is necessary that the draft order should reach the assessee within two years. 13. The relevant provision in sub-section (1) of section 144B is that "the ITO shall, in the first instance, forward a draft of the proposed order of assessment... to the assessee." The contention of the learned counsel for the assessee is that the word "forward" occurring in the sub-section has been used in the sense that the draft order should be served on the assessee. In support of the contention, the learned counsel relied upon certain rulings to the effect that the word "issued" occurring in similar provisions means "served". The first ruling to which the reference was made by the learned counsel was that of the Supreme Court in Banarsi Debi v. ITO [1964] 53 ITR 100. In this case, the Supreme Court was interpreting the word "issued" occurring in section 4 of the Indian Income-tax (Amendment) Act, 1959, which was enacted to save the validity of notices issued under section 34(1)(a) of the 1922 Act. This section related to income escaping assessment. Section 34(1) as it stood at the relevant time provided that the notice to be issued in the matter had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1959] 37 ITR 264 wherein it was held that the period for the filing of the application for revision under section 33A of the 1922 Act begins to run from the date of receipt of the order of the AAC and not from the date of making the order. On the basis of the above rulings it was argued that as the word "issued" has been interpreted to mean "served" and as the expression "making of the order" or "passing of the order" has been interpreted to mean service of the order, the word "forward" occurring in sub-section (1) of section 144B cannot mean mere despatch of the order but can only mean the service of the order on the assessee. It was also argued that if the "making of an order" or the "issue of an order" means the "service of the order", the "forwarding" of an order which can normally occur only after making or passing the order should also mean service of the order. It was also argued that if the word "forward" is interpreted to mean only despatch, it will lead to anomaly and uncertainty because the process server employed by the department or the transit through post may take its own time and will unduly extend the period of limitation prescribed for completing the assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d departmental representative fully supports the contention of the department. This was a case under sections 147, 148 and 149. It was held by the Punjab and Haryana High Court that the word "issued" occurring in section 149 should be given its natural meaning and not the strained wider meaning of "served". In doing so, the Punjab and Haryana High Court overruled its earlier ruling in Tikka Kushwant Singh v. CIT [1975] 101 ITR 106 and dissented from the rulings to the contrary in Indu Prasad Devshankar Bhatt v. J.P. Jain, ITO [1965] 58 ITR 559 (Guj.), Shanabhai P. Patel v. R.K. Upadhyaya and CIT v. Kailasa Devi Smt. Rukmini Bai. The Punjab and Haryana High Court also distinguished the ruling of the Supreme Court in Banarsi Debi v. ITO which had been relied on in the rulings referred to above. The ruling of the Supreme Court was distinguished thus : "The decision of the Supreme Court in Banarsi Debi's case [1964] 53 ITR 100 (SC), therefore, was that the expression 'issued' had a wide as well as narrow meaning and that in the context of section 34(1) which provided for service of notice within a period of eight years and in the context of the object of the Amending Act, the expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y purport to follow the decision of the Supreme Court in Banarsi Debi v. ITO [1964] 53 ITR 100. We have given our reasons for holding that the Supreme Court did not decide in Banarsi Debi's case that the expression 'issued' wherever and whenever it occurred should always be given the wider meaning 'served' to the expression 'issued' occurring in section 4 of the Amending Act having regard to the context of the provision and the object of the Amending Act. We are already of the opinion that in the context of the provisions of the Income-tax Act, 1961, the expression 'issued' occurring in section 149 cannot be given the meaning 'served'. We dissent from the views expressed by the Gujarat and Andhra Pradesh High Courts and we overruled the decision of the Punjab and Haryana High Court in Tikka Khushwant Singh's case." With great respect, we prefer to follow the above ruling of the Punjab and Haryana High Court in preference to the rulings relied upon by the learned counsel for the assessee and which have been referred to earlier. Applying the ratio of this ruling, the word "forward" occurring in sub-section (1) of section 144B cannot mean "serve" as contended for by the learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the very word "forward" occurs in clause (iv) of Explanation 1 to section 153. The word "issued" has been used in section 149 in passive voice and it was, therefore, possible to construe the word as "received". But the word "forward" has been used in sub-sections (1) and (2) of section 144B in the active form and they say that the ITO shall forward the draft and that the assessee may forward his objections. On a plain grammatical construction, the word "forward" cannot be given any meaning other than "despatch". It is also significant that in clause (iv) of Explanation 1 to section 153, the word "forward" is used with regard to the draft and the word "received" is used with regard to directions from the IAC and the objections. This also indicates that the word "forward" has not been used to mean the receipt of the draft order or the receipt of the objections. The same pattern is found in sub-sections (2) and (3) of section 144B. With regard to the assessee, the word "receipt" is used when referring to the draft order and word "forward" is used when referring to objections. Similarly, in sub-section (3) the word "received" is used with reference to objections when it comes to the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty because objections which are submitted late will have to be considered in cases where assessments have not been completed but they can be ignored in cases where assessments have been completed. This will leave the matter to chance and will work out a discrimination between the assessees who have filed their objections out of time. Clause (iv) of Explanation 1 to section 153 has to be read along with section 144B and if so done, it will be clear that the last portion of the clause obviously refers to cases where no objections have been received within time or within extended time. We, therefore, reject the alternative contention of the assessee that in the present case, the ITO should have forwarded the draft and the objections to the IAC and that he should have treated the case as one in which no objections have been filed. In view of the findings above, the order of the Commissioner (Appeals) cannot be sustained and has to be set aside. 17. The order of the Commissioner (Appeals) shows that he has dealt with only the grounds relating to the validity of the assessment order. It is not indicated that there were no other grounds in the appeal before him. The matter will, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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