+R.c v. !Counsel For The Applicant: Sri S.r.ashok

* HONOURABLE SRI JUSTICE G. CHANDRAIAH&HONOURABLE SRI JUSTICE CHALLA KODANDA RAM +R.C.No. 169 of 2000 %18-02-2014 Commissioner of Income-tax ….Applicant Vs. $ M/s.Amarchand Sharma & Udani, Secunderabad ….Respondent !Counsel for the Applicant: Sri S.R.AshoK Counsel for Respondent: None appeared <Gist : >Head Note: ? Cases referred: 1.[1997] 104 STC 497 (A.P.) HON'BLE SRI JUSTICE G.CHANDRAIAH&HON’BLE SRI JUSTICE CHALLA KODANDA RAMR.C. No. 169 of 2000 O R D E R:- (per Hon’ble Sri Justice Challa Kodanda Ram) At the instance of the Revenue, two questions of lawas set out below arising out of the order dated 14.09.1994of the Tribunal in I.T.A.No. 1992/Hyd/88 for theassessment year 1977-78, are referred for opinion of thisCourt: i)Whether on the facts and in the circumstances of thecase, the I.T.A.T. was correct in approving the reasoning ofthe Appellate Commissioner that the assessment order forthe year 1977-78 passed under Section 144 read withSection 251 of the Act on 30.03.1987 was time-barred?case, the I.T.A.T. was correct in approving the reasoning ofthe Appellate Commissioner that the assessment order forthe year 1977-78 passed under Section 144 read withSection 251 of the Act on 30.03.1987 was time-barred? ii)Whether on the facts and in the circumstances of the case,the I.T.A.T. was correct in law in canceling the assessmentorder for the assessment year 1977-78 passed on30.03.1987 under Section 144 read with Section 251 of theAct?the I.T.A.T. was correct in law in canceling the assessmentorder for the assessment year 1977-78 passed on30.03.1987 under Section 144 read with Section 251 of theAct? Originally, the assessee was assessed to income-tax under Section 143(3) of the Income-tax Act, 1961 (forshort “the Act”) on 26.03.1983, and thereafter,assessment order came to be set aside by theCommissioner on 21.03.1985 in exercise of the powersconferred under Section 263 of the Act with a direction tomake fresh assessment in accordance with law. The case pertains to the assessment year 1977-78. After along lapse of time, the assessee filed an appeal beforethe Income-tax Appellate Tribunal against the order of theCommissioner made under Section 263 of the Act, andduring its pendency, the assessee filed a letter dated30.04.1987 before the Tribunal seeking permission towithdraw the appeal for the reason that the time formaking assessment consequent upon the orders underSection 263 was 31.03.1987 and inasmuch as noassessment was made on or before 31.03.1987 noassessment could be made, as such, the same is time-barred. The appellant’s appeal was dismissed aswithdrawn. Thereafter, on 10.09.1987, the assesseereceived assessment order dated 30.03.1987 said tohave been made under Section 144 read with Section251 of the Act which was dispatched on 08.05.1987. TheCommissioner of Income-tax (Appeals), after goingthrough the records, had found that the assessment orderthough dated as 30.03.1987 was obviously not made onor before 31.03.1987 and in that view of the matter, hadcanceled the assessment made in pursuance of the orderpassed under Section 263 of the Act. For the purpose ofcoming to that conclusion, the Commissioner also verifiedthe record and on appreciation of the facts on record,found that the notice as required under Section 143(2) ofthe Act was also not issued. The Revenue challengedthe order of the Commissioner canceling the assessment order dated 30.03.1987 made under Section 144 readwith Section 251 of the Act before the Income-taxAppellate Tribunal. Before the Tribunal the Departmentfailed to produce the demand and collection register forthe assessment year 1977-78 and made no effort todislodge the finding recorded by the Commissioner. TheTribunal having verified the facts on record, came to acategorical opinion that the assessment order is anti-dated as 30.03.1987, but was obviously made after thatdate, and in that view of the matter, dismissed the appealfiled by the Revenue. order dated 30.03.1987 made under Section 144 readwith Section 251 of the Act before the Income-taxAppellate Tribunal. Before the Tribunal the Departmentfailed to produce the demand and collection register forthe assessment year 1977-78 and made no effort todislodge the finding recorded by the Commissioner. TheTribunal having verified the facts on record, came to acategorical opinion that the assessment order is anti-dated as 30.03.1987, but was obviously made after thatdate, and in that view of the matter, dismissed the appealfiled by the Revenue. The learned senior counsel for theDepartment/Revenue submits that merely because theorder was dispatched on 08.05.1987 and received on10.09.1987, the Tribunal could not have drawn aninference that it was not made on 30.03.1987. He furthersubmits that the Tribunal had erred in finding that theorder was not made on 30.03.1987 merely because thesame was served later. The late service by itself cannotbe the basis for drawing an inference that the same wasnot made on the day on which the order bears. Further,Section 144 of the Act does not envisage any timestipulation for service of the order and it is enough if theorder is served within reasonable time and what isrequired to be considered is making of the order and notthe service. In that view of the matter, the learned counselsubmits that the conclusion arrived at by the Tribunal that the order made under Section 144 of the Act in thepresent case as time-barred is unsustainable. He wouldrely on the judgment of this Court reported in Shaw Wallace & Co. Ltd. Vs. State of Andhra Pradesh[[1]],andwould submit that only when there is an abnormal delay inserving the assessment order and if such delay is notexplained, presumption can be drawn that the orderthough having not been made on that date, it purports tohave been made on that particular date. We have perused the orders of the appellateCommissioner as well as the Income-tax Tribunal. Thecrucial aspect of the matter in the present case is non-issuance of notice under Section 143(2) of the Act before passing the order under Section 144 of the Act. Sections 143(2) & 144 of the Income-tax Act, 1961 at the relevant point of time may be noticed as under: Section 143(2): In a case referred to in sub-section (1), if theAssessing Officer considers it necessary or expedient to ensurethat the assessee has not understated the income or has notcomputed excessive loss or has not under-paid the tax in anymanner, he shall serve on the assessee a notice requiring him,on a date to be specified therein, either to attend his office or toproduce, or cause to be produced there, any evidence on whichthe assess may rely in support of the return: Provided that no notice under this sub-section shall be servedon the assessee after the expiry of the financial year in whichthe return is furnished or the expiry of six months from the end ofthe month in which the return is furnished, whichever is later.Section 144: If any person- a)fails to make the return required [under sub-section (1) ofsection 139] and has not made a return or a revised returnunder sub-section (4) or sub-section (5) of that section, orsection 139] and has not made a return or a revised returnunder sub-section (4) or sub-section (5) of that section, or b)fails to comply with all the terms of a notice issued under sub-section (1) of section 142 [or fails to comply with adirection issued under sub-section (2A) of that section], or c)having made a return, fails to comply with all the terms of anotice issued under sub-section (2) of section 143. the Assessing Officer, after taking into account all relevantmaterial which the Assessing Officer has gathered [shall, aftergiving the assessee an opportunity of being heard, make theassessment] of the total income or loss to the best of hisjudgment and determine the sum payable by the assessee onthe basis of such assessment: b)fails to comply with all the terms of a notice issued under sub-section (1) of section 142 [or fails to comply with adirection issued under sub-section (2A) of that section], or c)having made a return, fails to comply with all the terms of anotice issued under sub-section (2) of section 143. the Assessing Officer, after taking into account all relevantmaterial which the Assessing Officer has gathered [shall, aftergiving the assessee an opportunity of being heard, make theassessment] of the total income or loss to the best of hisjudgment and determine the sum payable by the assessee onthe basis of such assessment: [Provided that such opportunity shall be given by theAssessing Officer by serving a notice calling upon the assess toshow cause, on a date and time to be specified in the notice,why the assessment should not be completed to the best of hisjudgment: Provided further that it shall not be necessary to give suchopportunity in a case where a notice under sub-section (1) ofsection 142 has been issued prior to the making of anassessment under this section]. A combined reading of Section 143 read with Section 144of the Act would go to show that firstly, a notice underSection 143(2) is mandatory for making an assessment,and further, on account of the proviso, no notice shall beissued if the assessment is being made after the expiry ofthe financial year in which the return is furnished or theexpiry of six months from the end of the month in whichthe return is furnished whichever is later. In the presentcase, proviso does not apply as the assessment wasmade pursuant to the orders made by the revisionalCommissioner under Section 263 of the Act. Section 144of the Act, at the relevant point of time, further mandatesissuance of a notice and an opportunity of hearing to theassessee before making the best judgment assessment. In this case, the finding of the authorities below is to theeffect that no notice under Section 143(2) was ever issuedto the assessee. Issuance of a notice under Section143(2) is mandatory. Even the requirement of notice ofhearing before making the best judgment assessmentunder Section 144 of the Act has not been complied with. Considering all these aspects, both the appellateCommissioner as well as the Tribunal came to theconclusion that the assessment order dated 30.03.1987was really not made on that day and obviously the samehas been made subsequent to that date. One also shouldnot loose sight of the fact that the order dated 30.03.1987came to be dispatched on 08.05.1987 and received bythe assessee on 10.09.1987, after the assessee filed theletter before the Tribunal pointing out the time for passingassessment order expired. On going through the factualmatrix available on record, we have no manner of doubtthat there is no error apparent on the face of the recordand the Tribunal came to the right conclusion that theassessment order was not really made 30.03.1987 andthe same was made subsequent to that date. All thisbeing in the realm of the appreciation of the facts onrecord, in our considered opinion, there is no question oflaw which arises from the order of the Tribunal asconclusions reached by the Tribunal are based onappreciation of pure questions of fact. In that view of thematter, we do not find any reason to interfere with the order of the Tribunal and the referred questions of law areanswered against the Revenue and in favour of theassessee. Accordingly, the Referred Case is disposed of. Noorder as to costs. As a sequel to the disposal of the Referred Case, Miscellaneous Petitions, if any pending, shall standdisposed of as infructuous. _________________ G. CHANDRAIAH, J 18.02.2014 ______________________ CHALLA KODANDA RAM,J Note: L.R. Copy to be marked b/o bcj [1][1997] 104 STC 497 (A.P.)[1997] 104 STC 497 (A.P.)