Appellant:(Assessee v. Respondent:(Revenue

HIGH COURT OF CHHATTISGARH AT BILASPUR Tax Case No.28 of 2006 K.M. Tiwari & Sons (HUF), Prop.M/s Maruti Enterprises, 2FloorDeshlaharaSadan,KankaliHospital Chowk, Raipur (CG) APPELLANT:(Assessee) Versus RESPONDENT:(Revenue) Assistant Commissioner of IncomeTax, Circte 2 (1) Raipur (CG) APPELLANT: RESPONDENT: AND Tax Case No^4 of 2008 Assistant Commissioner of IncomeTax,2(1), Raipur Versus K.M.Tiwari&Brothers(HUF),Prop. M/s Maruti Enterprises, 2Floor, Deshlahara Sadan, Raipur Present: Shri Neelabh Dubey, counsel for the appellant in Tax Case No.28/06and for respondent in Tax Case No.4/2008.Shri Rajeev Shrivastava, counsel for the respondent in Tax CaseNo.28/06 and for the appellant in Tax Case No.4/2008. DivisionBench: Hon'ble Shri Dhirendra Mishra &Hon'^leShriPrashant Kumar Mishra, JJ. JUDGMENTBEN1 (Delivered on»33MApril,2010) The following judgment of the Court was delivered by Dhirendra Mishra, J. 1. Theaforesaidappealsarebeingdisposedofby thiscommonjudgment, as both these appeals pertain to dispute between the partiesrelating to block assessment for the same period.judgment, as both these appeals pertain to dispute between the partiesrelating to block assessment for the same period. 2.For the purposes of this judgment, facts of Tax Case No.28 of 2006 arerelevant.relevant. 3.This appeal underSection 260-A of the Income Tax Act, 1961 (forshort 'the Act') against the order of the Income Tax Appeltate Tribunal,Nagar, (for short 'the Tribunal') has been admitted on 27-11-2006 onsubstantial questions of law as detailed under the caption 'SubstantialQuestions of Law' in the memo of appeal.short 'the Act') against the order of the Income Tax Appeltate Tribunal,Nagar, (for short 'the Tribunal') has been admitted on 27-11-2006 onsubstantial questions of law as detailed under the caption 'SubstantialQuestions of Law' in the memo of appeal. 4.Briefly stated facts of the case, as projected in the impugned order ofthe Tribunal, are that search and seizure operations in the premises ofDhuppad Group were conducted between 20and 23December,2001 and proceeding underSection 158BD was initiated against theassessee and the assessment was completed on 2-2-2006.In theassessment order, it was mentioned that the assessee filed returnshowing nil income on 19-1-2004 for the block period.The presentincumbent had taken over the charge of ACIT -2(1), Raipur and issuednotice to the assessee under Section 158BE read with Section 129 ofthe Act, therefore, limitation for finalizing the assessment under section158BD stood extended by a period of 60 days. Since the present A.O.started proceeding on 5-12-2005, limitation stood extended up to 3February, 2006 and the case did not get time barred in view of theprovisions of Section 129 of the Act.However, on appeal by theassessee, CIT(A) after considering the provisions of Section 158-BEand Section 129 of the Act annulled the order of the A.O. by declaringthe order as time barred.the Tribunal, are that search and seizure operations in the premises ofDhuppad Group were conducted between 20and 23December,2001 and proceeding underSection 158BD was initiated against theassessee and the assessment was completed on 2-2-2006.In theassessment order, it was mentioned that the assessee filed returnshowing nil income on 19-1-2004 for the block period.The presentincumbent had taken over the charge of ACIT -2(1), Raipur and issuednotice to the assessee under Section 158BE read with Section 129 ofthe Act, therefore, limitation for finalizing the assessment under section158BD stood extended by a period of 60 days. Since the present A.O.started proceeding on 5-12-2005, limitation stood extended up to 3February, 2006 and the case did not get time barred in view of theprovisions of Section 129 of the Act.However, on appeal by theassessee, CIT(A) after considering the provisions of Section 158-BEand Section 129 of the Act annulled the order of the A.O. by declaringthe order as time barred. 5.The Revenue, being aggrieved by the order of tearned CIT (A),preferred an appeal before the Tribunal and the Tribunal even afterarriving at a conclusion that assessment in dispute is time barred by 2daysand the A.O. should have completed assessment as per thepreferred an appeal before the Tribunal and the Tribunal even afterarriving at a conclusion that assessment in dispute is time barred by 2daysand the A.O. should have completed assessment as per the provisions[of][ Section][ 158BE][ by][ 31-1-2006][ but][ the][ assessee][ has]completed assessment on 2-2-2006 which is detayed by only 2 days.Having held this, learned Tribunal further observed that "Had the AOnoticed that the assessment is getting time barred by two days on02.02.2006, it was not difficult for him to the ante dated order on pass02.02.2006 mentioning the date of assessment order as 31.01.2006.Therefore, mistake committed by the AO is bona fide and for thebonafide mistake comnrijtted by the AO in passing the order on02.02.2006, the revenue should not suffer. It would be a rigid viewagainst the revenue if wp quash the impugned assessment which isbeing time barred by only two days." And accqrdingly cancelled theorder of CIT(A) and restored the matter back to the file of CIT(A) with adirection to decide the issue of addition of Rs.17,90,000/- made in theassessment order by the AO on merits as per law after affordingreasonable opportunity of being heard to the assessee. The instantappeal is djrected against the aforesaid order of the Tribunal. e.Shri Neelabh Dubey, learnedcounsel for the appellant would arguethat admittedly notice under Section 158BD of the Act was served onthe appellant on 8-1-2004.The period of limitation for completion ofblock assessment in theicase of other referred to in Section persons158 BD as per clause (b) of sub-section (2) of Section 158BE is 2 from the end of the month in which notice underSection 158BDyearsis servedon such other:person.Thus, assessment of the appellantunder Chapter XIV-B should have been completed by 31st January,2006 whereas assessment was completed on 2-2-2006. The appellateCommissioner after elaborately considering facts of the case and 1 provisions of law held that no hearing had taken place prior to 22-12-2005, the date new incumbent had taken over the charge, therefore,there is no qyestion of re-hearing of the case. The matter was neverheardby the predecessor AO andin these circumstances,theprovisions of Section 129 had no application and the AO does not getextended time of 60 days for passing the order.7. The Tribunal also recorcled a finding that the Assessing Officer hadissued one notice under Section 158BE read with Section 129 on 22-12-2005 fixing the case on 29-12-2005.Virtually, the hearjngof thecase was started from thi? date onlyand no hearing tookplace prior tothis date, except issue of fixation notice and questionnaire. The casewas heard by the new incumbent i.e. by the present Assessing Officeronlyfrom 22-12-2005 and it was not reheard since the proceedingswere itself started from 22-12-2005.Under these circumstances, theAssessing Officer cannot take shelter of the provisions of Section 129for extending the limitation. The provisions under Section 129 could beresorted to had there been any hearing earlier and any demand by theassessee for re-hearing after taking over of new incumbent and thus,assessmentshould have been completed by 31January, 2006 as perthe provisions of Section158BE. However, the Tribunal illegatly heldthat passing of order with a delay of 2 days is a bonafide mistakecommitted by the AO and for this bonafide mistake, the revenue wouldnot suffer and the assessment cannot be quashed as being timebarred. s. It is settled law that the;assessment order cannot be passed in thecases of block assessment under Section 158BD beyond the period s. It is settled law that the;assessment order cannot be passed in thecases of block assessment under Section 158BD beyond the period prescribed under Seetion 158BE and the provisions of limitation are tobe construed strictly, as the appellant is vested with valuable right ofnot to be assessed and the same cannot be taken away without anyexpress provisions of law and equitable consideration cannot governthe cases of limitation.The Tribunal had no under the Act to powerbypass the provisions of limitation by treating the assessment madebeyond limitation as bonafide mistake and liable to be condoned. g. g.On the other hand, Shri Rajeev Shrivastava, learned counsel for theRevenue submitted that both the forums below have committed anerror of law by arriving at a conclusion that the order of assessment by the AO was barred by 2 days.The forums below havepassedarrived to the aforesaid eonclusion without considering the provisionsofSection 129/158BE oftheAct in its real perspective.10. Emphasizing upon Explanation1 (iii) and the proviso appended toSectjon 158BE read with Section 129 of the Act, it was argued thatwhere there is change of incumbent of an office, the Income TaxAuthority ceases to exercise jurisdiction and succeeded by another, theassessee cpricerned may demand that before the proceedingiscontinyed the previous proceeding be reopened and he may bereheardbeforeany order pf assessmentispassed.Insuchcircumstances, time taken in reopening the proceeding or giving anopportunity tothe assessee to be reheard under proviso to Section 129is to be excluded and after exclusion of the aforesaid period, the periodof limitation referred to in sub-section (1) or sub-section (2) of Section158BE available to the A.O. for making an order under clause (c) of Section 158 BC is less than 60 days, such remaining period standsextended to 60 days. 11. We have heard learned counsel for the parties. Section 158 BC is less than 60 days, such remaining period standsextended to 60 days. 11. We have heard learned counsel for the parties. 12. Indisputably, notice under Seetion 158 BD was issued on 5Janudry,2004 and served on the assessee on 8January, 2004.As per theprovisions of sub-clause (b) of clause (2) of Section 158 BE, theassessment could be completed not later than 31January, 2006.Both the forums below after perusal of the record have held that nohearing had taken place prior to 22-12-2005 and by that date newincumbent had already taken over the charge.13. From bare reading of Section 129 of the Act, it is clear that the same isattracted only when some proceeding had taken place in the past andthesameistobecontinuedbynewincumbent.Insuchcircumstances,the assesseemay demand for reopeningof theprevious proceeding or any part thereof and he may also demand forrehearing before the order of assessment is passed against him by thenew incumbent.In view of the fact that no hearing had taken placebefore new incumbent had taken over the charge, the question of anydemand for reopening of the case or rehearing by the assessee doesnot arise and, therefore, question of extension of limitation for makingan order under clause (c) under Section 158BC to 60 days afterexcluding period of limitation referred to in sub-section (2) of Section158 BE does not arise.The contingency envisaged in proviso toSection 158 arises only when the assessee demands reopening of theprevious proceeding[or][ any]part[thereof][ or][ applies][ forrehearing][ before]any order of assessment is passed by the new incumbent and afterprovisions of sub-clause (b) of clause (2) of Section 158 BE, theassessment could be completed not later than 31January, 2006.Both the forums below after perusal of the record have held that nohearing had taken place prior to 22-12-2005 and by that date newincumbent had already taken over the charge.13. From bare reading of Section 129 of the Act, it is clear that the same isattracted only when some proceeding had taken place in the past andthesameistobecontinuedbynewincumbent.Insuchcircumstances,the assesseemay demand for reopeningof theprevious proceeding or any part thereof and he may also demand forrehearing before the order of assessment is passed against him by thenew incumbent.In view of the fact that no hearing had taken placebefore new incumbent had taken over the charge, the question of anydemand for reopening of the case or rehearing by the assessee doesnot arise and, therefore, question of extension of limitation for makingan order under clause (c) under Section 158BC to 60 days afterexcluding period of limitation referred to in sub-section (2) of Section158 BE does not arise.The contingency envisaged in proviso toSection 158 arises only when the assessee demands reopening of theprevious proceeding[or][ any]part[thereof][ or][ applies][ forrehearing][ before]any order of assessment is passed by the new incumbent and after excluding time spentinreopeningorrehearingif thelimitationprescribed for completing assessment is less than 60 days, in thatcase, such remaining period stands extended to 60 days. 14. Indisputably, there is no provision in the Act which confers the Tribunalwith any power to condone any delay in framing assessment on theground of bonafide mistake on the part of the Assessing Officer. excluding time spentinreopeningorrehearingif thelimitationprescribed for completing assessment is less than 60 days, in thatcase, such remaining period stands extended to 60 days. 14. Indisputably, there is no provision in the Act which confers the Tribunalwith any power to condone any delay in framing assessment on theground of bonafide mistake on the part of the Assessing Officer. 15. On the basis of aforesaid discussion, we are of the opinion that theTribunal had no power to bypass the provision of limitation by treatingthe assessment made beyond limitation as bonafide mistake on thepart of the A.O. and liable to be condoned. Accordingly, we answer thesubstantial questions of law proposed by the appellanVassessee in thememo of appeal in favour of the assessee and against the revenue.16. Accordingly, we allow Tax Case No.28/2006, set aside the order of theRevenueandrestoretheorder of theCIT(A)andquashtheassessment order passed by the AO as barred by limitation.Tax Case No.4 of 200817. Since we have already set aside the order of the Tribunal and restoredthe order of CIT (A) and ;quashed the order of assessment passed bytheAssessingOfficer,theinstantappealarisingoutof freshassessmentafterremandbytheTribunalisredundantandsubsequently, assessment proceedings after remand is redundant andmeaningless.