Pr. Commissioner Of Income Tax-1, Jodhpur, Jodhpur v. Virendra Choudhary

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 9/2021 Pr. Commissioner Of Income Tax-1, Jodhpur, Jodhpur ----Appellant Versus Virendra Choudhary, C/o Marwar Motors, Jaipur Road, Bikaner ----Respondent For Appellant(s) : Mr. K.K. Bissa, AGC.For Respondent(s): Mr. Anjay Kothari. HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MS. JUSTICE REKHA BORANA 05/03/2022 Order This appeal is filed by the Revenue to challenge thejudgment of the Income Tax Appellate Tribunal. Following questions were argued before us: “1.Whether on the facts and circumstances of thecase, the Ld. ITAT is correct in law to adjudicate onlimitation matter instead of adjudicating thejurisdiction of CIT(A) to decide on limitation matterwhen such ground was not taken by the assesseebefore CIT(A), as per the ground raised by thedepartment before it?2.Whether on the facts and circumstances of thecase and in law, the ld. ITAT was justified in upholdingthe order of the CIT (A) relying upon the amendmentmade in section 153B of the Income-tax Act, 1961 byFinance Act, 2016, w.e.f. 01.06.2016 while theamendment were applicable w.e.f. 01.06.2016 wherasthe order u/s 153C of the Income-tax Act, 1961 waspassed on 31.03.2016 i.e. much before theamendment?” The short controversy is with respect to limitation forcompletion of assessment in case of a person other than searchedperson. The assessing officer having completed the assessment on 31.03.2016, the assessee challenged the same before theCommissioner (Appeals) and raised the question of assessmentbeing framed after expiry of period of limitation. TheCommissioner (Appeals) referred to Section 153-B of the Income-Tax Act, 1961 (for short, ‘the Act’) as it stood at the relevant timeand came to the conclusion that the order of assessment waspassed after the period of limitation had expired. The relevantobservations of the Commissioner (Appeals) are quoted below: “4.3. Before I proceed to decide the issue regarding time-limit for completion of this assessment u/s. 153C of the Act,it would be appropriate to refer to the provisions of sec.153B of the Act which is relevant to the issue at hand.Section 153B of the Act reads as under:-limit for completion of this assessment u/s. 153C of the Act,it would be appropriate to refer to the provisions of sec.153B of the Act which is relevant to the issue at hand.Section 153B of the Act reads as under:- “[Time-limit for completion of assessment under section 153 A.] (1) Notwithstanding anything contained in section 153, theAssessing officer shall make an order of assessment orreassessment, -Assessing officer shall make an order of assessment orreassessment, - a) in respect of each assessment year falling within sixassessment years referred to in clause (b) of [sub-section (1) of section 153A], within a period of twoyears from the end of the financial year in which the lastof the authorisations for search under section 132 or forrequisition under section 132A was executed;assessment years referred to in clause (b) of [sub-section (1) of section 153A], within a period of twoyears from the end of the financial year in which the lastof the authorisations for search under section 132 or forrequisition under section 132A was executed; (1) Notwithstanding anything contained in section 153, theAssessing officer shall make an order of assessment orreassessment, -Assessing officer shall make an order of assessment orreassessment, - a) in respect of each assessment year falling within sixassessment years referred to in clause (b) of [sub-section (1) of section 153A], within a period of twoyears from the end of the financial year in which the lastof the authorisations for search under section 132 or forrequisition under section 132A was executed;assessment years referred to in clause (b) of [sub-section (1) of section 153A], within a period of twoyears from the end of the financial year in which the lastof the authorisations for search under section 132 or forrequisition under section 132A was executed; b) In respect of the assessment year relevant to theprevious year in which search is conducted undersection 132 of requisition is made under section 132A,within a period of two years from the end of thefinancial year in which the last of the authorisations forsearch under section 132 or for requisition undersection 132A was executed:previous year in which search is conducted undersection 132 of requisition is made under section 132A,within a period of two years from the end of thefinancial year in which the last of the authorisations forsearch under section 132 or for requisition undersection 132A was executed: [Provided further that in case of other person referredto in section 153C, the period of limitation for makingthe assessment or reassessment shall be the period asreferred to in clause (a) or clause (b) of this sub-sectionor one year from the end of the financial year in whichbooks of account or documents or assets seized orrequisitioned are handed over under section 153C to theAssessing Officer having jurisdiction over such otherperson, whichever is later :]to in section 153C, the period of limitation for makingthe assessment or reassessment shall be the period asreferred to in clause (a) or clause (b) of this sub-sectionor one year from the end of the financial year in whichbooks of account or documents or assets seized orrequisitioned are handed over under section 153C to theAssessing Officer having jurisdiction over such otherperson, whichever is later :] [Provided further that in the case where the last of theauthorisations for search under section 132 or forrequisition under section 132A was executed during thefinancial year commencing [on the 1[st] day of April, 2004or any subsequent financial year],- (i) The provisions of clause (a) or clause (b) of this sub-section shall have effect as if for the words “two years”the words “twenty-one months” has been substituted; (ii) the period of limitation for making theassessment or reassessment in case of otherperson referred to in section 153C, shall be theperiod of twenty-one months from the end of thefinancial year in which the last of theauthorisations for search under section 132 or forrequisition under section 132A was executed ornine months from the end of the financial year inwhich books of account or documents or assetsseized or requisitioned are handed over undersection 153C to the Assessing Officer havingjurisdiction over such other person, whichever islater :] [Provided also that in case where the last of theauthorisations for search under section 132 or forrequisition under section 132A was executed during thefinancial year………………..” (ii) the period of limitation for making theassessment or reassessment in case of otherperson referred to in section 153C, shall be theperiod of twenty-one months from the end of thefinancial year in which the last of theauthorisations for search under section 132 or forrequisition under section 132A was executed ornine months from the end of the financial year inwhich books of account or documents or assetsseized or requisitioned are handed over undersection 153C to the Assessing Officer havingjurisdiction over such other person, whichever islater :] [Provided also that in case where the last of theauthorisations for search under section 132 or forrequisition under section 132A was executed during thefinancial year………………..” 4.3.1. The prominent facts as extracted from the assessmentorder and assessment records of this case are that searchu/s. 132 of the Act was carried out at various premises ofSiyaram Group (Katta) on 31.07.2012 in which certainpapers pertaining to the assessee were seized. As in thiscase, the last of the authorization for search u/s. 132 wasexecuted during the financial year 2012-13, therefore, as persecond proviso of section 153B which is inserted by theFinance Act, 2006 w.e.f. 01.06.2006, the time limit forcompletion of assessment u/s. 153C would be twenty-onemonths from the end of the financial year 2012-13. Thus thistime limit would be upto 31.12.2014. 4.3.2. Upon perusal of letter dated 26.09.2014, it clearlyevident that ACIT, Central Circle-3, Jaipur had sent theseinformation/documents relating to the assessee to DCIT,Circle-2, Bikaner vide this letter, which was received by theoffice of DCIT, Circle-2, Bikaner on 30.09.2014. 4.3.3. Thus, it is obvious that documents were received bythe DCIT, Circle-2, Bikaner 30.09.2014 and therefore, thetime-barring date as per second proviso to section 153Bwhich has been emphasized above for passing order u/s.153C of the Act would be nine months from the end of thefinancial year 2014-15 i.e. 31.12.2015. The later of the twodates 31.12.2014 or 31.12.2015 would be the time-barringdate for passing order u/s. 153C of the Act in this case whichis 31.12.2015. However the order u/s. 153C/143(3) hasbeen passed on 31.03.2016 which is beyond the limitationdate of 31.12.2015 as discussed above. The above factsmake it clear that the order has been passed beyond thelimitation date and is time-barred. An order which is barredby limitation is not a valid order and is liable to be quashed.” The revenue challenged the order of the Commissioner (Appeals) before the Tribunal. The Tribunal dismissed the appeal,upon which this appeal has been filed before the High Court. In this appeal, two main grounds are raised. One, that theCommissioner (Appeals) committed an error in entertaining theground of assessment order being time-barred at the appellatestage when such ground was not raised before the assessingofficer. The second challenge is to the very interpretation of thetime-limit provision contained in the Act adopted by theCommissioner and the Tribunal. With respect to the first ground we have no hesitation inrejecting the same. The facts necessary to ascertain whether theorder of assessment was passed within the period of limitationprescribed under the Act or not were very much on record. Beinga pure question of law, it was open for the Commissioner toentertain the same for the first time at the appellate stage also. Coming to the interpretation of the provision contained in theAct, the Commissioner in his above quoted portion of the orderhas reproduced Section 153B as it stood at the relevant time. With respect to the first ground we have no hesitation inrejecting the same. The facts necessary to ascertain whether theorder of assessment was passed within the period of limitationprescribed under the Act or not were very much on record. Beinga pure question of law, it was open for the Commissioner toentertain the same for the first time at the appellate stage also. Coming to the interpretation of the provision contained in theAct, the Commissioner in his above quoted portion of the orderhas reproduced Section 153B as it stood at the relevant time. This section lays down the period of limitation for completingassessment under Section 153A. Sub-Section (1) of Section 153Bstarts with non-obstante clause providing that notwithstandinganything contained under Section 153, the assessing officer shallmake an order of assessment or re-assessment as per the timelimitation provided the said sub-section (1). Clause (b) of sub-section (1) of Section 153B provides that the time limit forcompleting the assessment or re-assessment in respect ofassessment year relevant to the previous year in which search isconducted under Section 132 or requisition is made under Section132A would be withihn a period of two years from the end of thefinancial year in which the last of the authorisations for the searchunder Section 132 or for requisition under Section 132A wasissued. This clause has two provisos. We are concerned with thefurther proviso and it provides that in the case where the last ofthe authorisations for search under Section 132 or for requisitionunder Section 132A was issued during the financial yearcommencing on first day of April 2004 for such subsequentfinancial year, as per sub-clause (ii), the period of limitation formaking assessment or re-assessment in case of other personreferred to in Section 153C would be twenty-one months from theend of the financial year in which the last of the auhorisations forsearch under Section 132 or for requisition is made under Section132A was issued or nine months from the end of the financial yearin which books of account or documents or assets seized orrequisitioned are handed over under Section 153C to theassessing officer having jurisdiction over such other person,whichever is later. The case of the assessee thus was covered under clause (ii)of further proviso to Section 153B(1)(b). The Commissioner,therefore, correctly examined the factual position in thebackground of such legal proviso and noted that the documentsrelating to the assessee were sent to the assessing officer andwere received by him on 30.09.2014. As per the second proviso,the time-limit for passing assessment would be nine months fromthe end of financial year of 2014-15 i.e. 31.12.2015 or twenty-onemonths from the end of financial year in which last of theauthorisation and search were made, whichever is later. In thiscase, these two relevant dates were 31.12.2015 and 31.12.2014respectively. The assessing officer had to pass the order ofassessment latest by 31.02.2015. He completed the assessmenton 31.03.2016, which was clearly time-barred. No question of lawarises. The appeal is dismissed. (REKHA BORANA),J 15-a.asopa/- (AKIL KURESHI),CJ