Honourable Mr. Justice Bhargav D. Karia v. Income Tax Officer Ward 6(1)(5

C/SCA/2850/2020 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 2850 of 2020 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA ================================================================ ================================================================SUPER SERVICE STATION Versus INCOME TAX OFFICER WARD 6(1)(5) ================================================================ Appearance:UCHIT N SHETH(7336) for the Petitioner(s) No. 1,2MRS MAUNA M BHATT(174) for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 19/02/2020 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1.Rule, returnable forthwith. Learned Standing Counsel Mrs. Mauna M. Bhatt waives service of notice of Rule for the respondent. 2.By this petition under Articles 226 of the Constitution of India, the petitioner has prayed for the following reliefs: By this petition under Articles 226 of the “A. This Hon'ble Court may be pleased to issue a writ of certiorari or a writ in nature of certiorari or any other appropriate writ or order quashing and setting aside impugned orderdated30.12.2019alongwith consequential demand notice dated 30.12.2019 (collectively annexed at Annexure A) issued by the Respondent authority;writ of certiorari or a writ in nature of certiorari or any other appropriate writ or order quashing and setting aside impugned orderdated30.12.2019alongwith consequential demand notice dated 30.12.2019 (collectively annexed at Annexure A) issued by the Respondent authority; B. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to stay the operation and implementation of the impugned order dated 30.12.2019 and impugned demand notice dated 30.12.2019 (collectively annexed at Annexure A) as well as stay penalty proceedings ordered to be commenced as per the impugned order dated 30.12.2019;of this petition, this Hon'ble Court may be pleased to stay the operation and implementation of the impugned order dated 30.12.2019 and impugned demand notice dated 30.12.2019 (collectively annexed at Annexure A) as well as stay penalty proceedings ordered to be commenced as per the impugned order dated 30.12.2019; C. Ex parte ad interim relief in terms of prayer B may kindly be granted.B may kindly be granted. C1. This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate writ or order quashing and setting aside the bank attachmentnoticesdated13.2.2020 (collectively annexed at Annexure R) issued for recovery of assessed dues which are subject matter of the present petition.writ of mandamus or a writ in nature of mandamus or any other appropriate writ or order quashing and setting aside the bank attachmentnoticesdated13.2.2020 (collectively annexed at Annexure R) issued for recovery of assessed dues which are subject matter of the present petition. C. Ex parte ad interim relief in terms of prayer B may kindly be granted.B may kindly be granted. C1. This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate writ or order quashing and setting aside the bank attachmentnoticesdated13.2.2020 (collectively annexed at Annexure R) issued for recovery of assessed dues which are subject matter of the present petition.writ of mandamus or a writ in nature of mandamus or any other appropriate writ or order quashing and setting aside the bank attachmentnoticesdated13.2.2020 (collectively annexed at Annexure R) issued for recovery of assessed dues which are subject matter of the present petition. C2. Pending admission and final hearing of this petition, this Hon'ble Court may be pleased to stay the operation, execution and implementation of the bank attachment notices dated 13.02.2020 (collectively annexed at Annexure R) and the petitioner may please be allowed to operate the bank accounts in question.petition, this Hon'ble Court may be pleased to stay the operation, execution and implementation of the bank attachment notices dated 13.02.2020 (collectively annexed at Annexure R) and the petitioner may please be allowed to operate the bank accounts in question. D. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray.”facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray.” 3. under: The brief facts of the case are as 3.1.The petitioner no.1 a partnership firm, has filed this petition through its partner- petitioner no.2. 3.2.The petitioners are engaged in the business of operating an authorized petrol pump of Hindustan Petroleum Corporation Limited. 3.3.Thepetitionersfiledonline statement on 07.02.2017 showing total cash deposited by the petitioner, in compliance of the online report demanded by the respondent – Income Tax Department on account of the demonetization of Rs.500/- and Rs.1000/- currency notes w.e.f. 08.11.2016. 3.4.It is the case of the petitioners that, the Assistant Director of Income Tax (Investigation)issuedsummonsdated 21.03.2017 to the petitioners along with the questionnaire, wherein, it was mentioned that the petitioners had made a cash deposit of Rs.4,19,92,190/- with HDFC Bank Limited. The petitioners in compliance of the summons, furnished the details, and further clarified that petitioners had deposited cash in the bank after the demonetization amounting to Rs.7,82,90,640/- and not Rs.4,19,92,190/- as mentioned in the summons. 3.5.The petitioners filed return of income for A.Y. 2017-18 on 24.10.2017 declaring total income of Rs.12,18,570/-. The return of income filed by the petitioners was processed under Section 143(1) of the Income Tax Act, 1961 (for short 'the Act, 1961'). 3.6.It appears that, the case of the petitioners was selected for scrutiny assessment and notice was issued under Section 143(2) of the Act on 21.09.2018 and the assessment proceedings for the year in question was conducted by way of e-assessment. Accordingly, the proceedings including issuance of notice as well as submission of reply were to be filed online. The petitioners received an online notice dated 19.05.2019 calling for information and documents for the purpose of assessment. 3.5.The petitioners filed return of income for A.Y. 2017-18 on 24.10.2017 declaring total income of Rs.12,18,570/-. The return of income filed by the petitioners was processed under Section 143(1) of the Income Tax Act, 1961 (for short 'the Act, 1961'). 3.6.It appears that, the case of the petitioners was selected for scrutiny assessment and notice was issued under Section 143(2) of the Act on 21.09.2018 and the assessment proceedings for the year in question was conducted by way of e-assessment. Accordingly, the proceedings including issuance of notice as well as submission of reply were to be filed online. The petitioners received an online notice dated 19.05.2019 calling for information and documents for the purpose of assessment. 3.7.According to the petitioners, all the documents and details as demanded were submitted online on 24.06.2019 and uploaded on the portal of the Income Tax Department. The petitioners provided all the details regarding cash deposits made by the petitioners as part of the reply in Annexure-1. The petitioners also submitted bank statement and bank book along with the certificate from the bank certifying the old currency notes deposited by the petitioners during the period of demonetization. 3.8.According to the petitioner in spite of submitting the details, the respondent issued a notice on 13.11.2019 alleging that the petitioners did not submit the details as per notices dated 19.05.2019 and 10.10.2019. 3.9.It is the case of the petitioners that, petitioners by letter dated 18.11.2019 addressed to the respondent Assessing Officer pointed out that petitioners had already submitted the documents in detail with reply dated 24.06.2019. The petitioners also submitted the tabular details required as per the notice dated 13.11.2019 regarding cash sales and cash deposits with letter dated 27.11.2019. 3.10.The petitioners received another notice dated 06.12.2019 from the respondent alleging that the details as called for by notices dated 19.05.2019, 10.10.2019 and 13.11.2019werenotsubmitted.The petitioners by reply dated 12.12.2019 again clarified that the petitioners has submitted all the documents and details called for by the earlier notices. The petitioners also visited the office of the respondent to inform him about the online submission of details, so as to avoid communication gap in this regard. 3.11.Thepetitioners,thereafter, received the impugned assessment order dated 30.12.2019 passed by the respondent making huge addition of more than Rs.13 Crore to the income of the petitioners, for which neither notice was given by the respondent to the petitioner to show cause nor the respondent relied upon the documents and information furnished by the petitioners. The respondent on the basis of the Income Tax details with the department came to the conclusion that the petitioners deposited cash amounting to Rs.19,76,23,060/- during the period of demonetization. The respondent, therefore, C/SCA/2850/2020 JUDGMENT made an addition of Rs.11,81,85,010/- on account of cash deposited by the petitioners. The Assessing Officer also made an addition of Rs.51,99,656/- on account of cash on hand and further added Rs.99,25,000/- on account of time deposits with the bank, as per the informationreceivedandinformation collected under Section 133(6) of the Act, 1961. The Assessing Officer thus assessed the income of Rs.13,45,28,236/-. C/SCA/2850/2020 JUDGMENT made an addition of Rs.11,81,85,010/- on account of cash deposited by the petitioners. The Assessing Officer also made an addition of Rs.51,99,656/- on account of cash on hand and further added Rs.99,25,000/- on account of time deposits with the bank, as per the informationreceivedandinformation collected under Section 133(6) of the Act, 1961. The Assessing Officer thus assessed the income of Rs.13,45,28,236/-. 4.Learned advocate Mr. Uchit N. Sheth appearing for the petitioners submitted that without giving an opportunity of hearing and without taking into consideration any of the replies to the show cause notices, the respondent has passed the impugned assessment order by making the additions only on the basis of the details available with the respondent is not tenable in law. 4.1.It was submitted that, the impugned order is passed in breach of principles of natural justice as the respondent has made additions without giving any opportunity of hearing to the petitioners. The respondent never parted with the information in his possession with regard to the total cash deposits made by the petitioner during thedemonetizationperiodamountingto C/SCA/2850/2020 JUDGMENT Rs.19,76,23,060/-, no notice was given by the respondent calling upon the petitioners to show cause with regard to the additions made in the assessment order. It was, therefore, submitted that, the impugned assessment order is required to be quashed and set aside. 4.2.The learned advocate for the petitioners also invited our attention that after issuance of the notice by this Court on 03.02.2020, the respondent has issued notice under Section 226(3) of the Act, 1961 for attachment of the bank account of the petitioners on 13.02.2020 for recovery of dues, which are the subject matter of the present petition. 4.3.During the course of hearing, it was submitted that the respondent has recovered the sum of Rs.15,50,657.60 lying in the bank account of the petitioners. 5.1. On the other hand, learned Senior Advocate Mr. M.R. Bhatt assisted by learned Senior Standing Counsel Mrs. Mauna M. Bhatt for the respondent submitted that the petition is not maintainable, as there is an alternative efficacious remedy available under the provision of the Act, 1961 to prefer an Appeal before the CIT (Appeals), if the petitioner is aggrieved by the impugned assessment order. C/SCA/2850/2020 JUDGMENT 5.2. It was further submitted that, on merits without prejudice to the plea of alternative remedy available to the petitioners, that the Assessing Officer was justified in passing the impugned order on the basis of the information in his possession which is available from the bank of the petitioners. C/SCA/2850/2020 JUDGMENT 5.2. It was further submitted that, on merits without prejudice to the plea of alternative remedy available to the petitioners, that the Assessing Officer was justified in passing the impugned order on the basis of the information in his possession which is available from the bank of the petitioners. 6. Having heard the learned advocates appearing for the respective parties and having gone through the materials on record, we are of the opinion that the impugned assessment order passed by the respondent is in violation of the principles of natural justice, as the petitioner was never provided with the information in possession of the respondent Assessing Officer which is made the basis for making the additions. Moreover, the respondent has not taken into consideration the replies along with the various details and documents submitted by the petitioners online. Thus, the impugned assessment order is in nature of ex-parte, in nature of best judgment assessment order under Section 144 of the Act, 1961. However, the respondent has passed the impugned assessment order under Section 143(3) of the Act, 1961 which requires providing an opportunity to the assessee to rebut the proposed additions to be made as there are provisions under the Act, 1961 to issue show cause notices under Section 142(1) and under Section 143(2) of the Act calling upon the assessee to furnish the details and explanation for the additions proposed to be made by the Assessing Officer. 7.On perusal of the impugned assessment order, it appears that, the Assessing Officer has never provided the information in his possession with regard to the cash deposits of Rs.19,76,23,060/-, as against, the details of cash deposits provided bythepetitionersamountingfor Rs.7,94,38,050/-. Similarly, the details with regard to the information collected under Section 133(6) of the Act from the bank for the time deposit of Rs.99,25,000/- was also not provided to the petitioners, so as to seek explanation before making additions. 8.In view of the above undisputed facts, the impugned assessment order is liable to be quashed and set aside. 9.With regard to the contention made on the part of the respondent that there is an alternative efficacious remedy available to the petitioners, we may note that when the impugned assessment order is passed in breach of the principles of natural justice, this petition would be maintainable under Article 226 of the Constitution of India, as held by the Hon'ble Apex Court in the case of Whirlpool Coproation v. Registrar of Trade Marks, Mumbai and others, reported in (1998) 8 SCC 1, wherein, the Supreme Court held as under: 8.In view of the above undisputed facts, the impugned assessment order is liable to be quashed and set aside. 9.With regard to the contention made on the part of the respondent that there is an alternative efficacious remedy available to the petitioners, we may note that when the impugned assessment order is passed in breach of the principles of natural justice, this petition would be maintainable under Article 226 of the Constitution of India, as held by the Hon'ble Apex Court in the case of Whirlpool Coproation v. Registrar of Trade Marks, Mumbai and others, reported in (1998) 8 SCC 1, wherein, the Supreme Court held as under: “14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the fundamental rights contained in Part III of the Constitution but also for “any other purpose”.15.Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the Writ Petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point but to cut down this circle of forensic whirlpool, we would rely or some old decisions of the evolutionary era of the constitutional law as they still hold the field. 16.Rashid Ahmad vs. Municipal Board, kairana, AIR 1960 SC 163, laid down that existence of an adequate legal remedy was a factor to be taken into consideration in the matter of granting Writs. This was followed by another Rashid case, namely, K.S.Rashid & Son Vs. The Income Tax Investigation Commissioner AIR 1954 SC 207 which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to C/SCA/2850/2020 JUDGMENT interfere in a petition under Article 226.This proposition was, however, qualified by the significant words, "unless there are good grounds therefor", which indicated that alternative remedy would not operate as an absolute bar and that Writ Petition under Article 226could still be entertained in exceptional circumstances. 17.A specific and clear rule was laid down in State of U.P. vs. Mohd. Nooh 1958 SCR 595 = AIR 1958 SC 86, as under : "But this rule requiring the exhaustion of statutory remedies before the Writ will be granted is a rule of policy convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies." 18.This proposition was considered by a ConstitutionBenchofthisCourtin A.V.Venkateswaran, Collector of Customs. Bombayvs Ramchand Sobhraj Wadhwani & Anr. AIR 1961 SC 1506 and was affirmed and followed in the following words: exceptional circumstances. 17.A specific and clear rule was laid down in State of U.P. vs. Mohd. Nooh 1958 SCR 595 = AIR 1958 SC 86, as under : "But this rule requiring the exhaustion of statutory remedies before the Writ will be granted is a rule of policy convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies." 18.This proposition was considered by a ConstitutionBenchofthisCourtin A.V.Venkateswaran, Collector of Customs. Bombayvs Ramchand Sobhraj Wadhwani & Anr. AIR 1961 SC 1506 and was affirmed and followed in the following words: "The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the learned solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus per-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court". C/SCA/2850/2020 JUDGMENT 19.Another Constitution Bench decision in Calcutta Discount co.Ltd. vs Income Tax Officer Companies Distt. I AIR 1961 SC 372 laid down : "Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment. the High Court will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against Income Tax Officer acting without jurisdiction under 8.34 I.T.Act". 20.Much water has since flown beneath the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a Writ Petition under Article 226of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the Writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.” 10.The only question, which arises, if the assessment order is quashed and the matter is remanded back to the assessing officer, whether the Assessing Officer would be entitled to pass afresh assessment order, in view of the limitation for passing the assessment order as provided under Section 153 of the Act, 1961 as the assessment would lapse for want of limitation. 10.The only question, which arises, if the assessment order is quashed and the matter is remanded back to the assessing officer, whether the Assessing Officer would be entitled to pass afresh assessment order, in view of the limitation for passing the assessment order as provided under Section 153 of the Act, 1961 as the assessment would lapse for want of limitation. 11.Learned advocate Mr. Uchit Sheth for the petitioner submitted that as per Section 153(6) of the Act, 1961, the Assessing Officer has time to pass an assessment order within a period of twelve months from the date of the order passed by this Court. He relied upon the decision of the Apex Court in the case of The Director of Inspection of Income Tax (Investigation), New Delhi and Another v. M/s. Pooran Mal & Sons and Another reported in (1975) 4 SCC 568, wherein, the Apex Court has held as under: “6. Even if the period of time fixed under Section 132 (5) is held to be mandatory that was satisfied when the first order was made. Thereafter if any direction is given under Section 132 (12) or by a Court in writ proceedings, as in this case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under Section 132 (5). Once the order has been made within ninety days the aggrieved person has got the right to approach the notified authority under Section 132 (11) within thirty days and that authority can direct the Income-tax Officer to pass a fresh order. We cannot accept the contention on behalf of the respondents that even such a fresh order should be passed within ninety days. It would make the sub-sections (11) and (12) of S. 132 ridiculous and useless. It cannot be said that what the notified authority could direct under Section 132 could not be done by a Court which exercises its powers under Article 226 of the Constitution. To hold otherwise would make the powers of courts under Article 226 wholly ineffective. The Court in exercising its powers under Article 226 has to mould the remedy to split the facts of a case. If in a particular case a Court takes the view that the Income-tax Officer while passing an order under Section 132 (5) did not give an adequate opportunity to the party concerned it should not be left with the only option of quashing it and putting the party at an advantage even though it may be satisfied that on the material before him the conclusion arrived at by the Income-tax Officer was correct or dismissing the petition because otherwise the party would get unfair advantage. The power to quash an order under Article 226 can be exercised not merely when the order sought to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be directed to deal with it. But in the circumstances of a case the Court might take the view that another authority has the jurisdiction to deal with the matter and may direct that authority to deal with it or where the order of the authority which has the jurisdiction is vitiated by circumstances like failure to observe the principles of natural justice the Court may quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party a reasonable opportunity of putting forward its case. Otherwise, it would mean that where a Court quashes an order because the principles of natural justice have not been complied with it should not while passing that order permit the Tribunal or the authority to deal with it again irrespective of the merits of the case. A Division Bench of the Punjab High Court, in C. I. T. v. Ramesh Chander ,93 ITR 450 at p. 478 = (1973) Tax LR 1427 at p. 1440 (Punj) ) took the view that what the notified authority could do under Section 132 (12) a Court could do in writ proceedings. Though the observation was obiter we consider that it is correct. In this connection we must refer to the decision of the Gujarat High Court, relied upon by the respondents, in Ramjibhai Kalidas v. I. G. Desai, (1971) 80 ITR 721 (Guj). In that case it was held that Rule 112-A, which provides that a show cause notice in respect of an inquiry under Section 132 (5) is to be made within 15 days from the date of the seizure, is mandatory and if that is not done no order under Section 132 (5) can be passed. It seems to have been admitted before the Bench by the Advocate General who appeared on behalf of the Revenue that he did not dispute that the period of ninety days prescribed under Section 132 (5) is a mandatory period. That decision is, therefore, no authority for the proposition that the period fixed under Section 132 (5) is mandatory. But even if it were the decision that R. 112-A is also mandatory is clearly erroneous. When Section 132 (5) permits an Income-tax Officer to pass an order within ninety days that power cannot be in any way whittled down by a rule made under that section. 7. On behalf of the respondents a number of decisions were relied upon for contending that no equitable consideration should enter into in deciding the matter. Reliance was placed. on the observations of Rowlatt. J. in Cape BrandySyndicatev.InlandRevenue Commissioners; (1921-1KB 64 at p. 71), referred to with approval in the decision in Commr. of Income-tax v. Ajax Products Ltd., 55 ITR 741 at p. 747 = (AIR 1965 SC 1358 at pp. 1361, 1362), that : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 7. On behalf of the respondents a number of decisions were relied upon for contending that no equitable consideration should enter into in deciding the matter. Reliance was placed. on the observations of Rowlatt. J. in Cape BrandySyndicatev.InlandRevenue Commissioners; (1921-1KB 64 at p. 71), referred to with approval in the decision in Commr. of Income-tax v. Ajax Products Ltd., 55 ITR 741 at p. 747 = (AIR 1965 SC 1358 at pp. 1361, 1362), that : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." We do not consider that every provision of a taxing statute will fall within this rule. The question whether a certain provision of law is directory does not fall to be decided on different standards because it is found in a taxing statute. There is no rule that every provision in a taxing statute is mandatory. The strict construction that a citizen does not become liable to tax unless he comes within the specific words of a statute is a different proposition. That a person cannot be taxed on the principle of estoppel does not admit of much argument. Article 265 of the Constitution lays down that no tax shall be levied except when authorised by law. 8.It was also argued based on Explanation 1 to Section 132 and similar provision in certain other sections which lay down that in computing the period of limitation any period during which any proceeding is stayed by an order or injunction of any court shall be excluded, that where it is intended that the period of limitation prescribed by any of the provisions of the Income-tax Act should not be strictly enforced the law itself makes a specific provision. It is a well established principle of judicial procedure that where any proceedings are stayed by an order of a Court or by an injunction issued by any Court that period should be excluded in computing any period of limitation laid down by law. Especially after the Limitation Act 1963, the provisions of which are now applicable to all proceedings, a provision like Explanation 1 to Section 132 is superfluous and no argument can be based on it.14. In, Wright v. John Bagnall and Sons Ltd., (1900) 2 QB 240, a case arising under the Workmen's Compensation Act, 1897 which requires the claim for compensation to be made within six months of the occurrence of the accident causing the injury, it was held that:"An agreement arrived at between the parties shortly after the accident that there is a statutory liability on the employer to pay compensation, the amount of compensation being left open for future settlement, is evidence upon which the judge or arbitrator may properly find that the employer is estopped from setting up the defence that the request for arbitration was not filed within six months of the accident". The agreement between the parties in this case that the Income-tax Officer may pass a fresh order within two months of the order of the High Court is an agreement which proceeded on the basis that the Income-tax Officer had jurisdiction to pass a fresh order. The principle of these decisions is also stated in Craies on Statute Law (6th Edn.) at page 269 as follows: "As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court." jurisdiction to pass a fresh order. The principle of these decisions is also stated in Craies on Statute Law (6th Edn.) at page 269 as follows: "As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court." There is no question of the period of limitation in Section 132 (5) involving public interests. It is intended for the benefit of the parties.” 12.On the other hand, learned Senior Advocate Mr. Bhatt appearing for the respondent submitted that, the Assessing Officer would not be entitled to pass any order on remand made by this Court under Section 153(6) of the Act, 1961. The reliance was placed on the decision of the Apex Court in the case of Rajinder Nath and Others v. Commissioner of Income Tax, Delhi reported in (1979) 120 ITR 14 (SC). The Hon'ble Apex Court in the said decision held as under: “10. The case has been dealt with throughout on the basis that if S. 153 (3) (ii) of the Act applies, and the bar of limitation thereby removed, it is immaterial that the assessments have been made under S. 147 (a) of the Act. The question, therefore, is whether S. 153 (3) (ii) can be invoked. It is not contended on behalf of the assessees that they are not on the basis that if S. 153 (3) (ii) of the Act applies, and the bar of limitation thereby removed, it is immaterial that the assessments have been made under S. 147 (a) of the Act. The question, therefore, is whether S. 153 (3) (ii) can be invoked. It is not contended on behalf of the assessees that they are not covered by the expression "any person" in S. 153 (3) (ii) of the Act. The only contention is that there is no "finding" or "direction" within the meaning of S. 153 (3) (ii) of the Act in the order of the Appellant Assistant Commissioner in consequence of which or to give effect to which the impugned assessments have been made. 11. The expression "finding" and "direction" are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of A, a finding in respect of B may be called for. For instance, where the facts show that the income can belong either to A. or B and to no one else, a finding that it belongs to B or does not belong to B would be determinative of the issue whether it can be taxed as A's income. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regard the expression "direction" in S. 153 (3) (ii) of the Act, it is now well settled that if must be an express direction necessary for the disposal of the case before the authority or court. It must also be a direction which the authority or court is empowered to give while deciding the case before it. The expressions "finding" and C/SCA/2850/2020 JUDGMENT "direction" in Section 153 (3) (ii) of the Act must be accordingly confined. Section 153 (3) (ii) is not a provision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation for making an assessment order under S. 143 or Section 144 of S. 147. Income-tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das (1964) 52 ITR 335 (SC) and N. Kt.Sivalingam Chettiar v. Commr. of Income-tax Madras (1967) 66 ITR 586 (SC). The question formulated by the Tribunal raises the point whether the Appellate Assistant Commissioner could convert the provisions of S. 147 (1) into those of Section 153 (3) (ii) of the Act. In view of Section 153 (3) (ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point. 12. In the present case, the Appellate Assistant Commissioner found that the cost of constructing the two buildings had not been met by the partnership firm. The firm had merely advanced money to the individual four co-owners, whose personal accounts in the books of the firm had been debited accordingly. On the material the Appellate Assistant Commissioner held that the partnership was not the owner of the property and consequently any excess over the disclosed cost of construction could not be added in the assessments of the firm. All that has been recorded is the finding that the partnership firm is not the owner of the properties. It is true that the finding proceeds on the basis that the cost has been debited in the accounts of the four co-owners. But that does not mean, without anything more, that the excess over the disclosed cost of construction constitutes the concealed income of the assessees. The finding that the excess represents their individual income re-quires a proper enquiry and for that purpose an opportunity of being heard is needed to be given to the assessees. In deed, that is now plainly required by Explanation 3 to S. 153 (3). The expression "another persons" in the Explanation would include persons intimately connected with the person in whose case the order is made in the sense explained by this Court in Murlidhar Bhagwan Das (supra). It is one thing for the partners of a firm to be required to explain the source of a receipt by the firm, it is quite another for them in their individual status to be asked to explain the source of amounts received by them as separate individuals. On such opportunity being provided it would have been open to the assessees to show that the excess alleged over the disclosed cost of construction did not constitute any taxable income. The finding contemplated in Explanation 3, it will be noted, is a finding that the amount represents the income of another person. We are unable to hold that the observation of the Appellant Assistant Commissioner can be described as such a finding in relation to the assessees. 13. It is also not possible to say that the order of the Appellate Assistant Commissioner contains a direction that the excess should be assessed in the hands of the co-owners. What is a "direction" for the purposes of S. 153 (3) (ii) of the Act has already been discussed. In any event, whatever else it may amount to, on its very terms the observation that the Income-tax Officer "is free to take action" to assess the excess in the hands of the co-owners cannot be described as a "direction". A direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the Income-tax Officer whether or not to take action it cannot, in our opinion, be described as a direction. 13. It is also not possible to say that the order of the Appellate Assistant Commissioner contains a direction that the excess should be assessed in the hands of the co-owners. What is a "direction" for the purposes of S. 153 (3) (ii) of the Act has already been discussed. In any event, whatever else it may amount to, on its very terms the observation that the Income-tax Officer "is free to take action" to assess the excess in the hands of the co-owners cannot be described as a "direction". A direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the Income-tax Officer whether or not to take action it cannot, in our opinion, be described as a direction. 14. Therefore, in our judgment the order of the Appellant Assistant Commissioner contains neither a finding nor a direction within the meaning of Section 153 (3) (ii) of the Income- tax Act in consequence of which or to give effect to which the impugned assessment proceedings can be said to have been taken. 15. Reliance was placed by the Revenue on Commr. of I. T. Andh. Pradesh v. Vadde Pullaiah and Co. (1973) 89 ITR 240 (SC). In that case, there were two appeals before the Appellate Assistant Commissioner, an appeal by the firm and another by Pullaiah a partner of the firm, filed in his individual status. The question was whether the business was the business of the firm or that of Pullaiah. In order to decide the appeal of the firm as well as that of Pullaiah, the Appellate Assistant Commissioner had to decide whether the business was that of the firm or that of Pullaiah. In finding that the business was that of the firm and not of Pullaiah, the AppellateAssistantCommissionerhad necessarily to inquire into a matter which covered the subject matter of both the appeals. 16. In the circumstances, differing from the High Court, we hold that the provisions of S. 153 (3) (ii) of the Income-tax Act are not applicable to the instant case. The question is answered in favour of the assessees and against the Revenue. 17. The High Court did not enter into the first question formulated for its opinion, that is to say, whether the provisions of S. 147 (a) of the Income-tax Act are applicable for the assessment years 1955-56 and 1956-57. It is agreed by the parties that if S. 153 (3) (ii) of the Act cannot be invoked by the Revenue, it is necessary to decide the first question formulated by the Tribunal. In view of the opinion expressed by us on the application of S. 153 (3) (ii) of the Act, the case must go back to the High Court for its opinion on the first question. 18.The appeals are allowed, the judgment dated Sept. 17, 1971 of the High Court governing the cases of the different assessee for the assessment years 1955-56 and 1956-57 is set aside. The provisions of S. 153 (3) (ii) of the Income-tax Act, 1961 are not applicable to the instant case. Accordingly, the second question is answered in favour of the assessees and against the Revenue. The cases are remanded to the High Court for its opinion on the first question formulated by the Income-tax Appellate Tribunal. The assessee are entitled to their costs of these appeals.” 13. would be germane to refer to the provisions of Section 153(