Op/31520/2002 Of A.o.antony v. Income Tax Officer

1IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE B.P.RAY FRIDAY, THE 7TH DAY OF JUNE 2013/17TH JYAISHTA 1935 OP.No. 31520 of 2002 (B) ------------------------- PETITIONER(S): -------------------------- A.O.ANTONY (DECEASED) REPRESENTED BY L/H. A.A. OUSEPH, M/S. MODERN ARECANUT CO., KOKKALAI, THRISSUR. BY ADV. SRI.KMV.PANDALAI. RESPONDENT(S): ---------------------------- 1. INCOME TAX OFFICER, WARD 5, DIVISION I, THRISSUR. WARD 5, DIVISION I, THRISSUR. 2. THE COMMISSIONER OF INCOME TAX, THRISSUR. BY ADV. MR.JOSE JOSEPH, SC - INCOME TAX THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 24/01/2012, ALONG WITH OP. NO.27619 OF 2002 AND CONNECTED CASES,THE COURT ON 07/06/2013 DELIVERED THE FOLLOWING: rs. PETITIONER'S EXHIBITS:- EXT.P1COPY OF THE COMMON ORDER PASSED BY THE SETTLEMENTCOMMISSION ON 28/12/1995 FOR 86-87 TO 94-95 IN THE CASEOF MODERN ARECANUT CO.COMMISSION ON 28/12/1995 FOR 86-87 TO 94-95 IN THE CASEOF MODERN ARECANUT CO. EXT.P2COPY OF THE ORDER PASSED BY THE SETTLEMENT COMMISSIONON 18/08/1999.ON 18/08/1999. EXT.P3COPY OF THE NOTICE U/S. 154/155 DATED 16/06/2000 ISSUED BY THE 1ST RESPONDENT FOR 1986-87.BY THE 1ST RESPONDENT FOR 1986-87. EXT.P3ACOPY OF THE NOTICE U/S. 154/155 DATED 16/06/2000 ISSUED BYTHE 1ST RESPONDENT FOR 1987-88.THE 1ST RESPONDENT FOR 1987-88. EXT.P3BCOPY OF THE NOTICE U/S. 154/155 DATED 16/06/2000 ISSUED BYTHE 1ST RESPONDENT FOR 1988-89.THE 1ST RESPONDENT FOR 1988-89. EXT.P4COPY OF THE OBJECTION FILED BY THE PETITIONER ON 07/07/2000FOR 86-87, 87-88 AND 88-89.FOR 86-87, 87-88 AND 88-89. EXT.P5COPY OF THE ORDER U/S. 155 PASSED BY THE 1ST RESPONDENTON 11/08/2000 FOR 1986-87.ON 11/08/2000 FOR 1986-87. EXT.P5ACOPY OF THE ORDER U/S. 155 PASSED BY THE 1ST RESPONDENTON 11/08/2000 FOR 1987-88.ON 11/08/2000 FOR 1987-88. EXT.P5BCOPY OF THE ORDER U/S. 155 PASSED BY THE 1ST RESPONDENTON 11/08/2000 FOR 1988-89.ON 11/08/2000 FOR 1988-89. EXT.P6COPY OF THE REVISION PETITION DATED 23/08/2000 FILED U/S.264 BEFORE THE 2ND RESPONDENT FOR 86-87.264 BEFORE THE 2ND RESPONDENT FOR 86-87. EXT.P6ACOPY OF THE REVISION PETITION DATED 28/08/2000 FILED U/S.264 BEFORE THE 2ND RESPONDENT FOR 87-88.264 BEFORE THE 2ND RESPONDENT FOR 87-88. EXT.P6BCOPY OF THE REVISION PETITION DATED 28/08/2000 FILED U/S.264 BEFORE THE 2ND RESPONDENT FOR 88-89.264 BEFORE THE 2ND RESPONDENT FOR 88-89. EXT.P7COPY OF THE ORDER U/S. 264 DATED 11/03/2002 PASSED BY THE 2ND RESPONDENT FOR 1986-87.THE 2ND RESPONDENT FOR 1986-87. EXT.P7ACOPY OF THE ORDER U/S. 264 DATED 11/03/2002 PASSED BY THE 2ND RESPONDENT FOR 1987-88.THE 2ND RESPONDENT FOR 1987-88. EXT.P7BCOPY OF THE ORDER U/S. 264 DATED 11/03/2002 PASSED BYTHE 2ND RESPONDENT FOR 1988-89.THE 2ND RESPONDENT FOR 1988-89. RESPONDENT'S EXHIBITS:- NIL. //TRUE COPY// P.A. TO JUDGE. B.P.RAY, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - O.P.Nos.31520, 31519, 29565 & 27619 OF 2002- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 7[th] day of June, 2013 JUDGMENT Since the issues involved in these four original petitions are common,they are being disposed of by this common judgment. 2. Petitioners in these original petitions were partners in a firm M/S Modern Arecanut Company during the period relevant for the assessmentyears 86-87; 87-88 and 88-89. The petitioners are challenging Exts.P5, P5(a) and P5(b) orders dated 11-8-2000 passed by the first respondent underSection 155 of the IT Act, 1961 and Exts.P7, P7(a) and P7(b) Revision ordersdated 11-3-2002 passed by the second respondent under Section 264 of theAct. O.P.Nos.31520, 31519, 29565 & 27619 OF 2002- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 7[th] day of June, 2013 JUDGMENT Since the issues involved in these four original petitions are common,they are being disposed of by this common judgment. 2. Petitioners in these original petitions were partners in a firm M/S Modern Arecanut Company during the period relevant for the assessmentyears 86-87; 87-88 and 88-89. The petitioners are challenging Exts.P5, P5(a) and P5(b) orders dated 11-8-2000 passed by the first respondent underSection 155 of the IT Act, 1961 and Exts.P7, P7(a) and P7(b) Revision ordersdated 11-3-2002 passed by the second respondent under Section 264 of theAct. 3. Learned counsel for the petitioners submits that the SettlementCommission passed Ext.P1 order on 28-12-1995 under Section 254D in thecase of the firm in which the petitioners were partners for the assessmentyears 86-87 to 94-95 and apportioned the total income among the partners.Subsequently Ext.P2 order was passed by the Settlement Commission on18-8-1999 rectifying the mistakes crept in the calculation of interestpayable by the firm. According to learned counsel for the petitioners, asper Ext.P2 order there was no alteration or variation in the total income of O.P.Nos.31520, 31519, 29565 & 27619 OF 2002 :: 2 :: the firm or the apportionment of the total income among the partners.Once an order of rectification is passed the assessment itself is modifiedand what remains is not the order of rectification, but the order ofassessment. Therefore, Ext.P1 order dated 28-12-1995 is the final order. 4. Heard learned counsel for the petitioners and Sri.Jose Joseph,learned Standing Counsel appearing for the respondents. I have gonethrough Exts.P1 and P2 orders. 5. Mr.Jose Joseph, learned Standing Counsel appearing for theIncome Tax Department contends that since the matter was pending beforethe Settlement Commission at the behest of the petitioners by filingrectification application, the date of disposal is to be considered and notExt.P1 order. 6. Learned counsel for the petitioners has relied upon a decisionreported in (1980) 125 ITR II (Commissioner of Income tax, Kanpur v.Kailashpat Jutha Lal) wherein the Court held as follows: “in our opinion since the apportionment of total incomeamongst the partners constitutes a part of the assessmentprocedure of ascertainment and imposition of tax liability onthe firm as also on the partners, the final order shall be takento have been passed on the date on which such apportionmentorder is made and for the purpose of amendment under O.P.Nos.31520, 31519, 29565& 27619 OF 2002 :: 3 :: Section 155(1) or (2) four years period is to be counted fromthe date of that order”. Considering the entire facts and circumstances of the case, I find nosubstantial change in the nature of the order passed in the year 1995.Therefore, Ext.P1 order dated 28-12-1995 is final order. For any orderpassed under Section 155 of the Act, the limitation period is to be reckonedwith reference to Ext.P1 order dated 28-12-1995 passed by the SettlementCommission. Thus, in this case, orders under Section 155 ought to havebeen passed before 31-3-2000 i.e., 4 years from the end of the financialyear in which Ext.P1 order was passed by the Settlement Commission.Hence the impugned orders Exts.P5 and P7 series are liable to be quashedand I do so. The original petitions are allowed. There will be no orders asto cost. jes B.P.RAY, JUDGE O.P.Nos.31520, 31519, 29565& 27619 OF 2002 :: 4 :: B.P.RAY, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - O.P.Nos.31520, 31519, 29565 &27619 OF 2002- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - JUDGMENT Dated 7[th] June, 2013