M/S Maheshwari Synthetics Private Limited, Hoshiarpur v. Commissioner Of Income Tax (Central), Ludhiana And Another

Income Tax Appeal No.101 of 2001 1 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. Income Tax Appeal No.101 of 2001Date of Decision: 17.11.2014 M/s Maheshwari Synthetics Private Limited, Hoshiarpur versus ..Appellant Commissioner of Income Tax (Central), Ludhiana and another. ..Respondents CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE B.S.WALIA Present:Mr. Pankaj Jain, Senior Advocate,with Ms. Divya Suri, Advocateand Mr. Sachin Bhardwaj, Advocatefor the appellant. Mr. Rajesh Katoch, Advocate,for the respondents. RAJIVE BHALLA, J.(ORAL) By way of this order, we shall dispose of Income TaxAppeals Nos.101, 102, 103, 104, 105, 106, 107, 108, and 139 of2001 as they require an answer of the same substantialquestions of law and lay challenge of the same order dated4.12.2000 passed by the Income Tax Appellate Tribunal. The assessee is before us challenging assessmentorder dated 26.9.1997 and order dated 4.12.2000 passed by the Income Tax Appeal No.101 of 2001 2 Income Tax Appellate Tribunal, Amritsar Bench, Amritsar(hereinafter referred to as “the Tribunal”).Counsel for theassessee/appellant and the respondents are ad idem thatdecision on questions of law framed on 27.11.2002, at the timeof admission of the appeals, shall answer questions of law,arising in ITA Nos.102 to 108 and 139 of 2001. The questions oflaw are as follows:- “1)Whether the Tribunal was right in law in holding that the block assessment was not barred by time? 2)Whether the Tribunal was justified in notquashing the assessment order after holding that theassessee had not been afforded a reasonableopportunity of hearing during the assessmentproceedings? 3)Whether the Tribunal was right in law in notframing the block assessment in the status of“association of persons” even after holding it to be acase of Maheshwari Group?” Counsel for the assessee/appellant fairly concedesthat the third question does not survive and, therefore, confineshis argument to questions nos. 1 and 2 only. Counsel for the assessee submits that the blockassessment, was barred by time as the period of limitation forconcluding assessment was one year from the date of Income Tax Appeal No.101 of 2001 3 conclusion of the search. The subsequent amendment, inSection 158BE of the Income Tax Act, 1961 (hereinafter referredto as “the Act”), by adding Explanations 2(a) and (b), thatincreased the period for limitation to two years, does not apply tothe case of the assessee. It is further argued that a perusal ofthe record reveals that adequate opportunity was not providedto the assessee as relevant documents, were supplied, afterdelay. The Tribunal having accepted that adequate opportunitywas not provided to the assessee, it should not haveremanded the matter to the Assessing Officer for adjudicationafresh. Counsel for the revenue, however, submits thatExplanation 2(a) and (b), added in Section 158BE of the Act, ismerely clarificatory and as the assessment order was passedwithin two years of conclusion of the search, the Tribunal hasrightly held that the assessment order is not barred by limitation.Counsel for the revenue further submits that the Tribunal waswell within its jurisdiction to remand the assessment to theAssessing Officer and though certain other findings recorded bythe Tribunal are under challenge in appeals filed by the revenue,the order passed by the Tribunal holding that the assessment isnot barred by limitation or remanding the matter for adjudicationafresh, does not call for interference. We have heard counsel for the parties and appraised Income Tax Appeal No.101 of 2001 4 We have heard counsel for the parties and appraised Income Tax Appeal No.101 of 2001 4 the impugned order, but find no reason to answer questions 1and 2, in favour of the assessee/appellant. The searchcommenced on 30.8.1996. Admittedly, the assessment orderwas passed on 26.9.1997. During this period, the Act wasamended by adding Explanation 2(a) and (b) to Section 158BE,of the Act, which reads as follows:- “ Explanation 2: For the removal of doubts, it is herebydeclared that the authorisation referred to in sub-section (1) shall be deemed to have been executed:-declared that the authorisation referred to in sub-section (1) shall be deemed to have been executed:- (a)in the case of search, on the conclusion ofsearch as recorded in the last panchnama drawn inrelation to any person in whose case the warrant ofauthorisation has been issued; (b)in the case of requisition under section 132 A onthe actual receipt of the books of account or otherdocuments or assets by the authorised officer.” The explanation is clarificatory and, therefore,applies to the assessment proceedings. The Tribunal hasrightly held that the assessment cannot be said to be barred bylimitation and for the said purpose, has rightly relied upon ajudgment of the Kerala High Court in T.O.Abrahim & Co. versusAssistant Director of Income Tax (Investigation) and others,(1999) 238 ITR 501 (Kerala). We find no reason to differ with theinterpretation of the High Court of Kerala or the opinion recorded Income Tax Appeal No.101 of 2001 5 by the Tribunal. The first question is answered against theassessee. As regards the second question, the Tribunal has,while holding that adequate opportunity was not provided toassessee, remanded the matter to the Assessing Officer foradjudication afresh. We are unable to infer any prejudice thatmay have been caused to the assessee as the assessee'sargument of lack of adequate opportunity was accepted. Theassessment order was, therefore, rightly set aside and thematter was remitted to afford adequate opportunity to theassessee to put forth its case. A principle that inhers in alladjudications is that If an order is set aside for want ofadherence to principles of natural justice, a Court or a Tribunal,shall call upon the authority that has violated principles of naturaljustice to re-appraise the matter and record a fresh order. TheTribunal, has, after due consideration of proceedings before theAssessing Officer, recorded a finding that adequate opportunitywas not granted to the assessee and rightly remanded thematter for providing adequate opportunity to the assessee. Weare in complete agreement with the opinion recorded by theTribunal and find no reason to hold that the impugned order isperverse or arbitrary. The second question is also answeredagainst the assessee. In view of what has been recorded hereinabove, we Income Tax Appeal No.101 of 2001 6 answer question nos.1 and 2, against the assessee and dispose of all the appeals accordingly. ( RAJIVE BHALLA ) JUDGE 17.11.2014VK ( B.S. WALIA ) JUDGE