The Brief Facts Necessary For The Disposal Of The Writ Petitionare As Follows v. Wp(C)

NOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH MONDAY, THE 4 DAY OF MARCH 2024 / 14TH PHALGUNA, 1945 WP(C) NO. 10436 OF 2023 PETITIONER: JOSEPH MADATHIPARAMBIL MICHAEL,AGED 68 YEARS MADATHIPARAMBIL HOUSE, NIRAVATH ROAD, MARADU P.O., ERNAKULAM, KERALA, PIN – 680620 BY ADVS.SRI.ANIL D. NAIRSMT.TELMA RAJUSMT.ANJANA A.SRI.P.K.BIJUSRI.AADITYA NAIR RESPONDENTS: 1DEPUTY COMMISSIONER OF INCOME TAX,KERALA, PIN – 682018 CORPORATE CIRCLE - 1(1), I.S. PRESS ROAD, ERNAKULAM, 2COMMISSIONER OF INCOME TAX -APPEALS,C.R. BUILDING, I.S. PRESS ROAD, ERNAKULAM, KERALA, PIN – 6820183ASSISTANT COMMISSIONER OF INCOME TAX,CORPORATE CIRCLE - 1(1), I.S. PRESS ROAD, ERNAKULAM, KERALA, PIN - 682018 CORPORATE CIRCLE - 1(1), I.S. PRESS ROAD, ERNAKULAM, BY SRI.JOSE JOSEPH,SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON04.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Dr. A.K.Jayasankaran Nambiar, J. This Writ Petition has been placed before us by the order of theChief Justice, pursuant to a Reference Order dated 03.11.2023 of alearned Single Judge in the Writ Petition. 2. The brief facts necessary for the disposal of the Writ Petitionare as follows: The petitioner, an assessee under the provisions of the IncomeTax Act, 1961 (hereinafter referred to as the 'IT Act') approached thisCourt impugning Ext.P8 order dated 17.02.2023 passed by theAssessing Authority purportedly giving effect to an order dated24.05.2016 of the Income Tax Appellate Tribunal, Cochin Bench, underSection 254 of the IT Act, 1961. The limited ground on which the WritPetition was filed was that the consequential order (Ext.P8) passed bythe assessing authority was beyond the time limit specified underSection 153(2A) of the IT Act as it stood prior to the amendments witheffect from 01.06.2016. The learned Single Judge was referred to ajudgment of another Single Judge of this Court in Patel R.P. (Dr.) v. Assistant Commissioner of Income Tax, Kottayam [2015 (4) KLTSN 97] where under almost identical circumstances, the learned Judgehad found that even in a case where only one issue has been directed tobe considered afresh by the Appellate Tribunal, the limitation underSection 153(2A) would apply. It was found on the facts of that case thatthe Appellate Tribunal had directed the assessing authority to considerafresh one of the issues that had arisen for consideration in the appeal,and the said remand was sufficient for attracting the provisions ofSection 153 (2A) of the IT Act. The learned Single Judge at whoseinstance the issue has now been placed before us for considerationdiffered with the judgment in Dr. R.P. Patel (supra) and referred thefollowing issue for consideration by the Division Bench: “ Whether the limitation of one year for passing afresh assessment order in pursuance to an order passedunder Sections 250 or 254 or 263 or 264 of the IncomeTax Act, would apply where the case has been remandedby the appellate or revisional authority on one particularissue and the assessment order has not been set aside orcancelled completely?” 3. We have heard Sri.Anil D.Nair, the learned counsel for the writ petitioner and the Sri.Jose Joseph, the learned Standing counsel for theIncome Tax Department. “ Whether the limitation of one year for passing afresh assessment order in pursuance to an order passedunder Sections 250 or 254 or 263 or 264 of the IncomeTax Act, would apply where the case has been remandedby the appellate or revisional authority on one particularissue and the assessment order has not been set aside orcancelled completely?” 3. We have heard Sri.Anil D.Nair, the learned counsel for the writ petitioner and the Sri.Jose Joseph, the learned Standing counsel for theIncome Tax Department. 4. On a consideration of the facts and circumstances of the caseand the submissions made across the bar, we find from the facts in theinstant case that the petitioner assessee had filed his return for theassessment year 2007-2008 under Section 139(1) of the Income Tax Actreturning a total income of Rs.41,75,640/-. The said return wasscrutinized under Section 143(2) of the IT Act, and in the resultantassessment under Section 143(3) read with Section 147 of the IT Act,the petitioner was assessed, inter alia, to a long term capital gain ofRs.81,79,879/-. The assessment order was passed on 31.12.2010. In theappeal that was carried by the petitioner against the said order, theFirst Appellate Authority, by an order dated 28.12.2011, found in favourof the petitioner on the issue of indexed cost of acquisition and againstthe petitioner on the claim under Section 54F of the IT Act. The matterwas, thereafter, remanded to the Assessing Officer for passingconsequential orders. In the consequential orders that were passed bythe Assessing Authority on 18.01.2012, the petitioner was assessed toan amount of Rs.39,12,924/-, which he paid. 5. The facts in the Writ Petition would indicate that thereafter WP(C).No.10436 of 2023 both the petitioner assessee and the Department preferred appealsagainst the order dated 28.12.2011 of the First Appellate Authority tothe extent it had remanded the matters to the assessing authority. TheTribunal considered all the appeals together and by a common orderdated 24.05.2016, found in favour of the petitioner assessee on theissue of claim of reduction under Section 54F of the IT Act andremanded the said issue for de novo consideration by the AssessingAuthority after verification of certain factual aspects. Although theconsequential order, pursuant to the remand, had to be passed by theassessing authority within a year thereafter, as contemplated by theprovisions of Section 153(2A) of the IT Act as it then stood, theassessing authority did not pass any such order till 17.02.2023 onwhich date Ext.P8 order was passed. It is significant that in themeanwhile, finding that no consequential order had been passed by theAssessing Authority within the period of limitation prescribed underSection 153(2A) of the IT Act, the petitioner had preferred anapplication dated 08.07.2022 seeking a refund of alleged excessamounts paid by him, apparently in anticipation of a favourable orderfrom the Assessing Authority consequent to the remand by the Tribunal. 6. As already noticed, it was on being served with Ext.P8consequential order of the Assessing Authority that the petitioner WP(C).No.10436 of 2023 approached this Court through the Writ Petition aforementioned, whichled to the issue being referred for consideration by this bench. 7. The provisions of Section 153 (2), (2A), and (3) of the IT Act asit stood during the relevant time read as follows: “Section 153(1)............ (2) No order of assessment, reassessment orrecomputation shall be made under section 147 after theexpiry of one year from the end of the financial year inwhich the notice under section 148 was served : Provided that where the notice under section 148 wasserved on or after the 1[st] day of April, 1999 but before the1[st] day of April, 2000, such assessment, reassessment orrecomputation may be made at any time up to the 31[st] dayof March, 2002 : WP(C).No.10436 of 2023 approached this Court through the Writ Petition aforementioned, whichled to the issue being referred for consideration by this bench. 7. The provisions of Section 153 (2), (2A), and (3) of the IT Act asit stood during the relevant time read as follows: “Section 153(1)............ (2) No order of assessment, reassessment orrecomputation shall be made under section 147 after theexpiry of one year from the end of the financial year inwhich the notice under section 148 was served : Provided that where the notice under section 148 wasserved on or after the 1[st] day of April, 1999 but before the1[st] day of April, 2000, such assessment, reassessment orrecomputation may be made at any time up to the 31[st] dayof March, 2002 : Provided further that where the notice under section148 was served on or after the 1[st] day of April, 2005 butbefore the 1[st] day of April, 2011, the provisions of this sub-section shall have effect as if for the words “one year”, thewords “nine months” had been substituted : Provided also that where the notice under section 148was served on or after the 1[st] day of April, 2006 but beforethe 1[st] day of April, 2010 and during the course of theproceedings for the assessment or reassessment orrecomputation of total income, a reference under sub-section (1) of section 92CA- (i)was made before the 1[st] day of June, 2007 butan order under sub-section (3) of that section has notbeen made before such date; or(ii)is made on or after the 1[st] day of June, 2007, the provisions of this sub-section shall, notwithstandinganything contained in the second proviso, have effect as iffor the words “one year”, the words “twenty-one months”had been substituted: Provided also that where the notice under section 148was served on or after the 1[st] day of April, 2010 andduring the course of the proceeding for the assessmentor reassessment or recomputation of total income, areference under sub-section (1) of section 92CA is made,the provisions of this sub-section shall, notwithstandinganything contained in the second proviso, have effect asif for the words “one year”, the words “two years” hadbeen substituted. (2A) Notwithstanding anything contained in sub-sections(1), (1A), (1B) and (2), in relation to the assessment yearcommencing on the 1[st] day of April, 1971, and anysubsequent assessment year, an order of freshassessment in pursuance of an order under section 250or section 254 or section 263 or section 264, settingaside or cancelling an assessment, may be made at anytime before the expiry of one year from the end of thefinancial year in which the order under section 250 orsection 254 is received by the Principal ChiefCommissioner or Chief Commissioner or PrincipalCommissioner or Commissioner or, as the case may be,the order under section 263 or section 264 is passed bythe Principal Chief Commissioner or Chief Commissioneror Principal Commissioner or Commissioner: Provided that where the order under section 250 orsection 254 is received by the Principal ChiefCommissioner or Chief Commissioner or PrincipalCommissioner or Commissioner or, as the case may be,the order under section 263 or section 264 is passed bythe Principal Chief Commissioner or Chief Commissioneror Principal Commissioner or Commissioner, on or afterthe 1[st] day of April, 1999 but before the 1[st] day of April,2000, such an order of fresh assessment may be made atany time up to the 31[st] day of March, 2002 : Provided further that where the order under section254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner orCommissioner or, as the case may be, the order undersection 263 or section 264 is passed by the PrincipalCommissioner or Commissioner on or after the 1[st] day ofApril, 2005 but before the 1[st] day of April, 2011, theprovisions of this sub-section shall have effect as if forthe words “one year”, the words “nine months” had beensubstituted: Provided further that where the order under section254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner orCommissioner or, as the case may be, the order undersection 263 or section 264 is passed by the PrincipalCommissioner or Commissioner on or after the 1[st] day ofApril, 2005 but before the 1[st] day of April, 2011, theprovisions of this sub-section shall have effect as if forthe words “one year”, the words “nine months” had beensubstituted: Provided also that where the order under section 254 isreceived by the Principal Chief Commissioner or ChiefCommissionerorPrincipalCommissionerorCommissioner or, as the case may be, the order undersection 263 or section 264 is passed by the PrincipalCommissioner or Commissioner on or after the 1[st] day ofApril, 2006 but before the 1[st] day of April, 2010, andduring the course of the proceedings for the freshassessment of total income, a reference under sub-section (1) of section 92CA- (i) was made before the 1[st] day of June, 2007 butan order under sub-section (3) of section 92CA hasnot been made before such date; or (ii) is made on or after the 1[st] day of June, 2007, the provisions of this sub-section shall, notwithstandinganything contained in the second proviso, have effect asif for the words “one year”, the words “twenty-onemonths” had been substituted: Provided also that where the order under section 254 isreceived by the Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner or Commissioneror, as the case may be, the order under section 263 orsection 264 is passed by the Principal Commissioner orCommissioner on or after the 1[st] day of April, 2010, andduring the course of the proceeding for the freshassessment of total income, a reference under sub-section(1) of section 92CA is made, the provisions of this sub-section shall, notwithstanding anything contained in thesecond proviso, have effect as if for the words “one year”,the words “two years” had been substituted. (3) The provisions of sub-sections (1), (1A), (1B) and (2)shall not apply to the following classes of assessments,reassessments and recomputations which may, subject to the provisions of sub-section (2A), be completed at anytime- (i)[***](ii)where the assessment, reassessment orrecomputation ismade on the assessee or any person inconsequence of or to giveeffect to any finding ordirection contained in an order undersection 250,254, 260, 262, 263, or 264 or in an order of any courtin a proceeding otherwise than by way of appeal orreferenceunder this Act ;(iii)where, in the case of a firm, an assessment ismade on a partner of the firm in consequence of anassessment made on the firm under section 147.” 8.It can be seen from a perusal of the aforesaid statutoryprovisions that a specific provision was made under the statute for atime-bound completion of an assessment in relation to an assessee,pursuant to an order of remand by an Appellate Authority. Inotherwords, the statutory mandate under the IT Act is thatconsequential orders pursuant to a remand by an Appellate orRevisional Authority should be passed within a period of one year fromthe end of the financial year in which the order of theAppellate/Revisional Authority was passed. This was apparently with aview to ensuring finality and certainty in matters of taxation so far as anassessee was concerned. Section 153(3) qualifies the provisions ofSection 153(2A) by clarifying that where the assessment, re-assessment, or re-computation is made on the assessee or any person inconsequence of, or to give effect to, any finding or direction contained in any order passed by an Appellate/Revisional authority or of any courtin a proceeding otherwise than by way of appeal or reference under theAct, the provisions of Section 153(2A) would not apply. In otherwords,the Scheme of the statutory provisions is that, where a consequentialorder of assessment that is required to be passed by the AssessingAuthority to whom the matter has been remanded by anAppellate/Revisional Authority or by a Court, requires the said authorityto apply his mind and re-adjudicate the issue afresh then, such exerciseby the Assessing Authority is required to be completed within the timelimit specified under Section 153(2A) of the Act. On the other hand, ifall that the Assessing Authority is required to do, consequent to aremand by the Appellate/Revisional authority or the court, is toincorporate the effect of the directions issued by such higher authoritywithout application of its judicial mind to the issue at hand, then theprovisions of Section 153 (2A) of the Act would not apply. 9. On the facts of the instant case, we find that the order of theTribunal dated 24.05.2016 specifically directed the Assessing Authorityto re-adjudicate the issue with regard to the claims made by thepetitioner assessee under Section 54F of the IT Act. In accordance withthe provisions of Section 153(2A) of the IT Act, the Assessing Authorityought to have passed the consequential order by 31.03.2018 i.e., before the expiry of one year from 31.03.2017. However, Ext.P8 consequentialorder of the Assessing Authority is dated 17.02.2023 and proceeds onthe assumption that there was more than one issue that was remandedto him for de novo adjudication. While it is the submission of thelearned Standing counsel for the Income Tax Department that only theissue under Section 54F of the IT Act was remanded for de novoadjudication, we do not find it to be of much relevance to the issue thatwe are called upon to decide, namely, whether on a limited remand forde novo adjudication of one of many issues that arise for considerationin an assessment, the consequential order passed by the AssessingAuthority can be seen as one that would attract the provisions ofSection 153(2A) of the IT Act. Taking note of the Scheme of thestatutory provisions as referred to above, as also the inherent objectbehind those provisions, which is to ensure an expeditious finality toassessments, we are of the view that the consequential orders passedby the Assessing Authority pursuant to the remand had necessarily tobe passed within the time prescribed under Section 153(2A) of the ITAct. It is significant in this context that the definition of assessmentunder the IT Act includes a re-assessment and in the case of thepetitioner assessee the remand by the Tribunal warranted a re-assessment of the issue in relation to the deductions claimed underSection 54F of the IT Act and the substitution of the revised finding, in place of the original finding on the said issue, in the assessment orderthat was originally passed. We see no reason to take a different viewfrom what was decided by the learned Single Judge of this Court in Dr.R.P. Patel (supra), and we approve the same. In taking the above view,we are also fortified by the decisions of the Delhi High Court in NokiaIndia P. Ltd v. Deputy commissioner of Income Tax[2018 407 ITR20 (Delhi)] and the Bombay High Court in Shelf Drilling RonTappmeyer Limited v. Assistant Commissioner of Income Tax andOthers [457 ITR 161] as also the Madras High Court inCommissioner of Income-Tax and Another v. Roca BathroomProducts P. Ltd. [2022 445 ITR 537 Madras]. place of the original finding on the said issue, in the assessment orderthat was originally passed. We see no reason to take a different viewfrom what was decided by the learned Single Judge of this Court in Dr.R.P. Patel (supra), and we approve the same. In taking the above view,we are also fortified by the decisions of the Delhi High Court in NokiaIndia P. Ltd v. Deputy commissioner of Income Tax[2018 407 ITR20 (Delhi)] and the Bombay High Court in Shelf Drilling RonTappmeyer Limited v. Assistant Commissioner of Income Tax andOthers [457 ITR 161] as also the Madras High Court inCommissioner of Income-Tax and Another v. Roca BathroomProducts P. Ltd. [2022 445 ITR 537 Madras]. 10. There is yet another aspect of the matter. The time limitspecified in Section 153(2A) of the IT Act is also intended to ensure thatamounts due to the Government, if any, are received at the earliestpoint in time after the remand. If an assessee defaults in payment ofthe tax dues after the passing of the consequential order giving effect tothe terms of the remand, he becomes liable to pay statutory interestfrom the date on which he ought to have paid the tax in the firstinstance i.e., along with his return. Thus, an Assessing Authority, who iscalled upon to adjudicate an issue afresh pursuant to a remand from anAppellate Authority, cannot ignore the time limit specified in the statute for passing the consequential order because any delay would operate tothe prejudice of the assessee who would be called upon to pay interestfor a longer time period corresponding to the delay. In the result, the issue referred to us is answered in favour of thepetitioner assessee, and the Writ Petition is allowed by quashing Ext.P8order with consequential reliefs to the petitioner. Sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGESd/- DR. KAUSER EDAPPAGATH JUDGE mns APPENDIX OF WP(C) 10436/2023 PETITIONER EXHIBITS Exhibit P1TRUE COPY OF THEASSESSMENT ORDER UNDERSECTION 143(3)R.W.S. 147 , DATED 31.12.2010ISSUED BY THE 1ST RESPONDENT. Exhibit P2TRUE COPY OF THE APPELLATE ORDER DATED28-12-2011PASSED BY THE 2ND RESPONDENT.12-2011PASSED BY THE 2ND RESPONDENT. Exhibit P3TRUE COPY OF THE ORDER GIVING EFFECT TOEXHIBIT P2 ORDER DATED 18.01.2012 ISSUED BYTHE 1ST RESPONDENT.EXHIBIT P2 ORDER DATED 18.01.2012 ISSUED BYTHE 1ST RESPONDENT. Exhibit P4TRUE COPY OF THE TRIBUNAL ORDER DATED24.05.2016 ISSUED TO THE PETITIONER.24.05.2016 ISSUED TO THE PETITIONER. Exhibit P5TRUE COPY OF REFUND APPLICATION DATED 08-07-2022 ISSUED TO THE 1ST RESPONDENT BY THEPETITIONER.07-2022 ISSUED TO THE 1ST RESPONDENT BY THEPETITIONER. Exhibit P6TRUE COPY OF NOTICE DATED 12-10-2022 ISSUEDBY THE 1ST RESPONDENT TO THE PETITIONER.BY THE 1ST RESPONDENT TO THE PETITIONER. Exhibit P7TRUE COPY OF LETTERDATED 21-10-2022 ISSUEDTO THE 3RD RESPONDENT BY THE PETITIONER.TO THE 3RD RESPONDENT BY THE PETITIONER. Exhibit P8TRUE COPY OF THE ORDER DATED 17-02-2023ISSUED BY THE 1ST RESPONDENTISSUED BY THE 1ST RESPONDENT Exhibit P8 (a)TRUE COPY OF INTIMATION LETTER DATED 20-02-2023 ISSUED BY THE 1ST RESPONDENT.2023 ISSUED BY THE 1ST RESPONDENT.