Commissioner Of Income Tax, Faridabad v. Shri M.l. Saini

ITA No. 468 of 2007 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax, Faridabad Versus Shri M.L. Saini ITA No. 468 of 2007 Date of Decision: 4.4.2011 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel,for the appellant.for the appellant. AJAY KUMAR MITTAL, J. 1.Since the Registry has not been able to send the file of ITANo. 468 of 2007 on account of the fire incident in the concerned Branchof the Court, learned counsel for the revenue has furnished photostatcopies of the paper books which are taken on record and the same aretreated as reconstructed files of the appeal. 2.This order shall dispose of ITA Nos. 468 of 2007 and 641 of2008 as, according to the learned counsel, identical questions areinvolved in both the appeals. For brevity, the facts are being extractedfrom ITA No. 468 of 2007. 3.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 10.6.2006 passed by the Income Tax Appellate ITA No. 468 of 2007 Tribunal, Delhi Bench “C”, New Delhi (hereinafter referred to as “theTribunal”) in IT(SS) A. No. 228/Del/2004 for the block assessmentperiod from 1.4.1989 to 31.3.1999, claiming the following substantialquestions of law:- “(i)Whether, on the facts and in the circumstances of thecase, the order of the Hon'ble ITAT is correct inannulling the order passed by the Assessing Officeru/s 158BC of the Income Tax Act, 1961 incompliance with the order u/s 263 passed by CIT?(ii)Without prejudice to ground No.1, on the facts andcircumstances of the case, whether the Hon'ble ITATis right in holding that the order passed by theAssessing Officer was passed beyond the time limitprescribed for completing assessment under ChapterXIV-B of the Income Tax Act due to non-applicabilityof Section 153 of the Income Tax Act in this case?” 4.Briefly stated, the facts necessary for adjudication of theappeal are that the assessee is a individual and has been derivingincome from the business of sale and purchase of property. A searchand seizure operation was carried out at the residential and businesspremises of the assessee on 12.3.1999. Original assessment underSection 158BC/143(3) of the Act was completed at an income ofRs.56,91,230/- on 31.3.2001. The said assessment order was set asideon 20.11.2001 by the Commissioner of Income Tax (CIT) under Section263 of the Act. In pursuance of the order of the CIT, the AssessingOfficer framed fresh assessment again at an income of Rs.56,91,230/- on 31.3.2003 against which the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [in short “the CIT(A)”]. The CIT(A) allowed relief of Rs.29,74,579/- and directed the Assessing Officerto reconsider the certain issues vide order dated 31.3.2004. Dissatisfiedwith the order dated 31.3.2004, passed by the CIT(A), the assesseefiled an appeal before the Tribunal who vide order dated 10.6.2006allowed the appeal and annulled the order dated 31.3.2003 passed bythe Assessing Officer on the ground that the assessment order passedby the Assessing Officer was barred by limitation. However, in themeantime, in pursuance of order dated 31.3.2004, the Assessing Officerpassed another order on 28.6.2005 determining the taxable income forthe block period at Rs.27,16,655/-. The present appeal has beenpreferred by the revenue challenging the order dated 10.6.2006 passedby the Tribunal. 5.We have heard learned counsel for the revenue. 6.The issue that arises for consideration in these appeals iswhether the order passed by the Assessing Officer for the blockassessment proceedings initiated in pursuance of the order passed bythe CIT under Section 263 of the Act was within the time prescribedunder the Act. 5.We have heard learned counsel for the revenue. 6.The issue that arises for consideration in these appeals iswhether the order passed by the Assessing Officer for the blockassessment proceedings initiated in pursuance of the order passed bythe CIT under Section 263 of the Act was within the time prescribedunder the Act. 7.Learned counsel for the revenue submitted that the searchand seizure operation was carried out on the premises of the assesseeon 12.3.1999 and the block assessment was framed on 31.3.2001which was within limitation in terms of Section 158BE of the Act.Further, the CIT in exercise of jurisdiction under Section 263 of the Acthad passed an order on 20.11.2001 and in compliance thereto, the block assessment order was passed by the Assessing Officer on31.3.2003. According to the learned counsel for the revenue in view ofSection 158BH incorporated in Chapter XIV-B, the other provisions ofthe Act were applicable and the Assessing Officer was required to passfresh assessment order within one year from the end of the financialyear in which the order under Section 263 of the Act had been passed.Elaborating further, learned counsel submitted that accordingly, oneyear period was to be counted from 1.4.2002 and the blockassessment framed on 31.3.2003 was, thus, within limitation. 8.We find substantial force in the submissions made bylearned counsel for the revenue. 9.Section 158BE of the Act prescribes time limit of one yearfor completion of block assessment where the searches were initiatedbetween Ist July, 1995 and 31[st] December, 1996, and a period of twoyears in cases of searches conducted after Ist January, 1997.However, in view of Section 158BH of the Act, all other provisions of theAct apply to block assessments made under Chapter XIV-B. This beingan enabling provision makes all the provisions of the Act applicable toblock assessment proceedings except as provided under the saidChapter. By virtue of the aforesaid provision, Section 263 of the Actbeing applicable, equally limitation for passing fresh assessment orderin terms thereof under Section 153(2A) of the Act also applies.According to Section 153(2A) of the Act, a fresh assessment order maybe made at any time before the expiry of one year from the end of thefinancial year in which the order under Section 263 of the Act is passedby the CIT. 10.Having crystalized the legal position as noticed above, wenow advert to factual matrix in the present case. Admittedly, orderunder Section 263 of the Act was passed by the CIT on 11.11.2001 andaccordingly, the end of the financial year, therefore, would be31.3.2002. The period of limitation of one year in which freshassessment order could be passed was to expire on 31.3.2003. Thus,the assessment order dated 31.3.2003 was within limitation. 11.The Tribunal had grossly erred in holding that forcalculating limitation for passing block assessment order, the period asprescribed under Section 158BE of the Act was to be followed evenwhere the CIT had initiated action under Section 263 of the Act. Thisinterpretation adopted by the Tribunal cannot be accepted. 12.In view of the above, the appeals are allowed and the orderdated 10.6.2006 passed by the Tribunal is set aside. The matter isremanded to the Tribunal for fresh decision on merits in accordancewith law. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) JUDGE ITA No. 468 of 2007 -6- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax, Faridabad Versus Shri Madan Lal Saini ITA No. 641 of 2008 Date of Decision: 4.4.2011 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel,for the appellant. AJAY KUMAR MITTAL, J. The appeal is allowed. For reasons, see order of even date passed in ITA No. 468 12.In view of the above, the appeals are allowed and the orderdated 10.6.2006 passed by the Tribunal is set aside. The matter isremanded to the Tribunal for fresh decision on merits in accordancewith law. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) JUDGE ITA No. 468 of 2007 -6- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax, Faridabad Versus Shri Madan Lal Saini ITA No. 641 of 2008 Date of Decision: 4.4.2011 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel,for the appellant. AJAY KUMAR MITTAL, J. The appeal is allowed. For reasons, see order of even date passed in ITA No. 468 of 2007 (Commissioner of Income Tax, Faridabad v. Shri M.L. Saini). (AJA Y KUMAR MITTAL) JUDGE April 4, 2011gbs (ADARSH KUMAR GOEL) JUDGE