Commissioner Of Income Tax Jai v. Shri Jugal Kishore Garg

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 160 / 2008 Commissioner Of Income Tax Jai ----Appellant Versus Shri Jugal Kishore Garg ----Respondent Connected With D.B. Income Tax Appeal No. 170 / 2008 Commissioner Of Income Tax Jai ----Appellant Versus Shri Jugal Kishore Garg Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anil Mehta For Respondent(s) : Mr. Gunjan Pathak with Mr. Aditya Bohra _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 09/05/2017 Both these appeals involve common question of law andfacts, hence, are decided by this common judgment. 1.By way of these appeals, the department has assailed thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal preferred by the department and partlyallowed the appeal preferred by the assesseee. 2.This Court while admitting the appeal (160/2008) on the following substantial question of law:- “Whether the ITAT was right and justified indismissing the appeal as having becomeinfructuous and not deciding the same on merits,on the ground that the asseessment order hasbeen quashed on the ground of being barred bylimitation?” 3.Another appeal (170/2008) has been admitted on the following questions of law”- “i) Whether the ITAT was right and justified inquashing the assessment order by holding ity to bebarred by limitation, inspite of the fact that theorder was passed within the limitation and the saidissue was never raised by the assessee before thefirst appellant authority?barred by limitation, inspite of the fact that theorder was passed within the limitation and the saidissue was never raised by the assessee before thefirst appellant authority? ii) Whether the ITAT was justified in observing thatthe AO has initiated reassessment proceedingsduring the pendency of a fresh assessment of theset aside case, ignoring the fact that in the presentcase the ITAT vide its earlier order dated 29.05.98has held the assessment made under Section 144as invalid and not legally correct and thus, in thepresent case there was no issue of set asideassessment?” 4.Counsel for the appellant contended that the Tribunal hasseriously committed an error in dismissing the appeal preferred by the department and appeal preferred by the assessee has wronglybeen partly allowed. 5.However, we have gone through the order of the CIT(A) aswell as the Tribunal. The Tribunal in para 2.5 observed as under:- “2.5. We have considered the arguments advancedby the parties in view of orders of the lowerauthorities and the decisions relied upon by the Ld.AR. The proviso to sub-section (2A) to section 153 ofthe Act has come in effect from 01.06.2001 4.Counsel for the appellant contended that the Tribunal hasseriously committed an error in dismissing the appeal preferred by the department and appeal preferred by the assessee has wronglybeen partly allowed. 5.However, we have gone through the order of the CIT(A) aswell as the Tribunal. The Tribunal in para 2.5 observed as under:- “2.5. We have considered the arguments advancedby the parties in view of orders of the lowerauthorities and the decisions relied upon by the Ld.AR. The proviso to sub-section (2A) to section 153 ofthe Act has come in effect from 01.06.2001 substituted by the Finance Act, 2001. In this proviso ithas been made clear that where the order u/s 250 orsection 254 is received by the Chief Commissioner orCommissioner or, as the case may be, the order u/s263 or section 264 is passed by the ChiefCommissioner or Commissioner, on or after the firstday of April, 1999 but before the first day of April,2000, such an order of fresh assessment may bemade at any time upto the 31[st] day of March, 2002. Inthe present case before us the order in the appeal inthe first round was passed on 29.05.1998 whichmight have been received by the Chief Commissioneror Commissioner well before 01.04.1999 as no suchobjection has been raised by the department in thepresent case that the order of the Tribunal wasreceived on or after 01.04.1999 and before01.04.2000. Thus the computation of limitation oftime for passing of assessment order in compliance ofthe order of the Tribunal will not come within theambit of the proviso to sub-section(2A) to section 153of the Act, as submitted by the Ld. DR. The prescribedtime limitation for passing of assessment order incompliance of the order of the Tribunal as per sub-section (2A) to section 153 of the Act before itsamendment with effect from 01.06.2001 was twoyears from the end of the financial year in which theorder u/s 254 is received by the chief commissioner orcommissioner. After amendment of this sub sectionwith fact from 01.06.2001 this time limit has beenreduced to 1 year. Thus in the present case the timelimit for passing the assessment order before the AOwas upto 31.03.2001. The assessment order howeverhas been passed on 28.03.2002 i.e. much after theexpiry of the time limit. Besides above we findsubstance in the submission of the Ld. AR that in viewof decision of Hon’ble Supreme Court in the case ofCIT Vs. Rao Thakur Narayan Singh (supra) theassessment cannot be reopened merely to get overadverse finding given by any appellate authority inoriginal assessment proceedings. It is alsounestablished position of law that in case anassessment had been completed by the AO and thesame is set aside in appeal, in such a situation,initiation of reassessment proceeding is not possibletill a fresh assessment of the set aside case has beencompleted. This is so because, so long as assessment,as per appellate direction, or otherwise, is pending,the AO cannot have any reason to believe that incomefor the year has escaped assessment. Income cannotbe said to have escaped assessment within themeaning of section 147, if the assessment proceedingin respect of income are still pending and have not yet terminated in a final order. In this regard we findsupport from the decision of Hob’ble Supreme Courtin the case of Ghanshyam Das Vs. Regional Asst.Comm. Of S.T. (supra) and of Hon’ble Allahabad HighCourt in the case of S.P. Kochhar Vs. ITO (supra)relied on by the Ld. AR. We thus hold that theassessment order dated 28.03.02 in the present caseis barred by limitation. The same is thus quashed. Theground Nos. 1 to 3 are thus decided in favour of theassessee.” 6.Taking into consideration the decision of the Supreme Court terminated in a final order. In this regard we findsupport from the decision of Hob’ble Supreme Courtin the case of Ghanshyam Das Vs. Regional Asst.Comm. Of S.T. (supra) and of Hon’ble Allahabad HighCourt in the case of S.P. Kochhar Vs. ITO (supra)relied on by the Ld. AR. We thus hold that theassessment order dated 28.03.02 in the present caseis barred by limitation. The same is thus quashed. Theground Nos. 1 to 3 are thus decided in favour of theassessee.” 6.Taking into consideration the decision of the Supreme Court in the case of Ghanshyam Das vs. Regional AssistantCommissioner of S.T. (1964) 51 ITR 557 (Sc) and the decision ofthe Allahabad High Court in the case of S.P. Kochar vs. ITO,(1984) 145 ITR 255,264 (All.), in our considered opinion, theTribunal has not committed any error. 7.The issue is answered in favour of the assessee and againstthe department. 8.The appeals stand dismissed. A copy of this order be placed in each file. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. A.Sharma/84-85