IT: Limitation period for completing assessment would start from date when High Court vacated interim order and not from date when Assessing Officer received such vacation order
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[2013] 40 taxmann.com 115 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax
v.
Drs. X-Ray & Pathology Institute (P.) Ltd.*
SUNIL AMBWANI AND Surya Prakash Kesarwani, JJ.
IT Appeal No. 219 of 2013†
SEPTEMBER 5, 2013
Section 158BE, read with section 158BC, of the Income-tax Act, 1961 - Block assessment in search cases - Time-limit for completion of [Computation of limitation period] - A search was conducted at assessee's premises and, accordingly, notice under section 158BC was issued on 29-4-2003 - Consequent thereto return was filed by assessee on 16-6-2003 - High Court in writ petition filed by assessee, stayed assessment proceedings vide interim order dated 12-2-2004 - Subsequently, stay order was vacated on 26-8-2009 - Assessing Officer took date of vacation of interim order to be date, when it was received by him on 9-11-2009, and passed assessment order on 22-6-2010 - Tribunal held that once stay was vacated assessee had to revert back to its position as on 12-2-2004 and balance time available for framing assessment was only upto 15-4-2010 and, hence, assessment order passed on 22-6-2010 was barred by limitation - Whether as soon as order was vacated, limitation will restart and will exhaust itself on period of limitation provided under Act and, therefore, there was no error of law in judgment of Tribunal holding that assessment was clearly barred by limitation - Held, yes [Paras 8 & 9][In favour of assessee]
CASE REVIEW
Dy. CIT v. Drs. X-Ray & Pathology Institute (P.) Ltd. [2013] 40 taxmann.com 114 (para 13) affirmed.
CASES REFERRED TO
Dy. CIT v. Drs. X-Ray & Pathology Institute (P.) Ltd. [IT Appeal No. 410 of 2012, dated 25-4-2013] (para 3), Auto & Metal Engineers v. Union of India [1998] 229 ITR 399/97 Taxman 363 (SC) (para 9) and CIT v. Durga Shankar Kansara [2008] 305 ITR 249 (Raj) (para 9).
Shambhu Chopra for the Appellant.
JUDGMENT
1. We have heard Shri Sambhu Chopra, learned counsel for the appellant.
2. This income-tax appeal under section 260A of the Income-tax Act, 1961, arises out of order dated April 25, 2013, passed by the Income-tax Appellate Tribunal in I. T. A. No. 410/LKW/2012-since as Dy. CIT v. Drs. X-Ray & Pathology Institute (P.) Ltd. [IT Appeal No. 410 of 2012, dated 25-4-2013].
3. The Department has preferred the appeal on the following questions of law :
| "1. | Whether the hon'ble Income-tax Appellate Tribunal has erred in law and on facts in annulling the assessment without appreciating the fact that the communication of dismissal of the assessee's writ petition against the proceedings initiated under section 158BC of the Income-tax Act, 1961, was made to the Assessing Officer on November 9, 2009, and then the Assessing Officer could not have proceeded to take up the assessment proceedings before November 9, 2009, consequently the period of limitation was counted from such date ? | |
| 2. | Whether the hon'ble Income-tax Appellate Tribunal has erred in law and on facts in applying the ratio of the decision of the hon'ble court in the case of Collector of Central Excise v. M. M. Rubber & Co. [1992] Suppl. 1 SCC 471 WP (C) No. 4821/2010 page 16 of 68 and Municipal Corpn. of Delhi v. Qimat Rai Gupta [2007] 7 SCC 309 ? | |
| 3. | Whether the hon'ble Income-tax Appellate Tribunal was justified in ignoring the provisions of the Income-tax Act in the case of a proceeding under the Income-tax Act and applying the provisions of the High Court Rules which would be applicable in the case of proceedings in the High Court only ?" |
4. In this case, search was conducted at the assessee's address on September 14, 2002, and notice under section 158BC of the Act was issued on April 29, 2003. Consequent thereto the return was filed by the assessee on June 16, 2003. The search proceeding was challenged by the assessee before the High Court by filing writ petition. The assessment proceedings were stayed, vide interim order dated February 12, 2004. The interim order was vacated on August 26, 2009.
5. Section 158BC provides to complete assessment proceedings within two years. It further provides that period during which the proceedings have been stayed shall be excluded.
6. In the present case, the stay was vacated by the High Court on August 26, 2009. The Assessing Officer took the date of vacation of the interim order to be the date, when it was received by him on November 9, 2009, and passed the assessment order on June 22, 2010, which was clearly beyond two years as limitation would restart from August 26, 2009, and ended on April 15, 2010.
7. Apart from the fact that the Assessing Officer had sufficient time the Tribunal has held that there is no procedure in the High Court to communicate the order to the party to make it effective. The provisions of the Income-tax Act for filing of the appeal from the date of service of the order will not be attracted to calculate the period of limitation to complete the assessment.
8. In the present case, we are not concerned with limitation for any particular act to be performed, but the arrest of the limitation by an interim order passed by the High Court. As soon as the order was vacated, the limitation will restart and will exhaust itself on the period of limitation provided under the Act.
9. In order to appreciate the submissions of Shri Sambhu Chopra that the Assessing Officer should get knowledge of the order, the facts as to when the counsel appearing for the Department applied for copy and communicated to the Assessing Officer have not been brought on record. Shri Sambhu Chopra has relied upon Auto & Metal Engineers v. Union of India [1998] 229 ITR 399/97 Taxman 363 (SC) with regard to limitation of assessment proceedings in the Explanation to section 153 and the effect of the stay order and CIT v. Durga Shankar Kansara [2008] 305 ITR 249 (Raj).
10. In both the cases cited for the Revenue the limitation as provided under section 158BE was under consideration. The question as to whether the order should be communicated by the court, which had stayed the proceedings to restart the period of limitation was neither raised nor considered.
11. We do not find any error of law in the judgment of the Tribunal holding that the assessment was clearly barred by limitation. The questions of law as framed are not substantial questions of law, which may arise for consideration from the facts of the case.
12. The income-tax appeal is dismissed.
USP Regards
Prarthana Jalan
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