The Commissioner Of Income Tax,Hisar v. Rakesh Kumar Garg, J

ITA No.418 of 2006 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.418 of 2006Date of decision: 28.3.2008 The Commissioner of Income tax,Hisar ......Appellant Versus Smt. Anchi Devi, C/o Vikas w.s.p. Ltd. Siwani (Bhiwani) ......Respondent CORAM:-HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG * * * Present:Mr. Yogesh Putney, Advocate for the appellant-revenue. Mr. Sanjay Bansal, Sr. Advocate instructed by Mr. Prashant Bansal, Advocate and Mr. Parvesh Saini, Advocate for the respondent-assessee. * * * Rakesh Kumar Garg, J . 1.The revenue has filed the present appeal under Section 260Aof Income Tax Act, 1961 (hereinafter referred to as the 'Act') against theorder dated 6.7.2005 passed by the Income Tax Appellate Tribunal DelhiBench “A” New Delhi in ITA No.4075/Del/2003 for the assessment year1998-99 raising the following substantial questions of law- “1. Whether on the facts and circumstances of thecase, the ITAT was right in upholding the finding of theLd. CIT(A) quashing the assessment framed underSection 143(3)/147 by interpreting the main Section 153(2) of the Income Tax Act, 1961 by reading the provisoin such a manner so as to ascribe a particular meaningto the main provision without appreciating that theproviso only gives an exemption/different interpretation in case a particular circumstance exists and since in theinstant case, the notice u/s 148 was not served on adate between 1.4.1999 and 1.4.2000, the proviso is notattracted and is irrelevant to the interpretation of ambitin Section 153 (2) of the Income Tax Act, 1961? 2.Whether on the facts and circumstances of thecase, the ITAT is right in dismissing the Departmentalappeal without appreciating that the amended provisionsof Section 153(2) operating from 1.6.2001 is effectiveonly in respect of notices u/s 148 served on or after1.6.2001 and is prospective in nature?” 2.The assessee filed return of income on 31.10.1998 declaringan income of Rs.46,440/- and an agricultural income of Rs.84,286/-. Thereturn was processed under Section 143 (1)(a) of the Act on 18.5.1999.Subsequently, action under Section 147 of the Act was initiated and anotice under Section 148 of the Act was issued on 8.1.2001 and the samewas served upon the assessee on 11.1.2001. In respect thereto, theassessee filed a return of income on 28.2.2001 declaring the same incomeas shown in the original return and this return was also processed underSection 143(1)(a) of the Act on 30.3.2001 accepting the returned income.Thereafter, notices were issued under Section 143 (2) and Section 142(1)of the Act and the assessment under Section 143(3) read with Section 147was completed on 14.2.2003 on a total income of Rs.17,01,235. Variousadditions and disallowances were made in this assessment. 3.Being not satisfied with the order of the Assessing Officer, theassessee filed an appeal before the CIT (Appeals) and besides contestingthe disallowances made in the assessment, took up a ground that theassessment was time barred in view of section 153(2) of the I.T.Act and, therefore, the same should be quashed. It was contended that undersection 153(2), the assessment proceedings have to be completed withinone year from the end of the financial year in which the notice undersection 148 was served. It was pointed out that the notice was served onthe assessee on 11.01.2001, which is a day which fell before 01.06.2001and, therefore, in such a case, the assessment ought to have beencompleted on or before 31.03.2002. Since it was completed only on14.02.2003, the assessment, it was contended was beyond the period oflimitation therefore, the same should be quashed. It was contended that undersection 153(2), the assessment proceedings have to be completed withinone year from the end of the financial year in which the notice undersection 148 was served. It was pointed out that the notice was served onthe assessee on 11.01.2001, which is a day which fell before 01.06.2001and, therefore, in such a case, the assessment ought to have beencompleted on or before 31.03.2002. Since it was completed only on14.02.2003, the assessment, it was contended was beyond the period oflimitation 4.The Commissioner of Income Tax (Appeals) held that sincesection 153(2) was amended with effect from 01.06.2001 to reduce thetime limit available for completion of the assessment from two years to oneyear from the end of the financial year in which the notice under section148 was served, the amended provision would operate in the present case,notwithstanding that the notice was served before 01.06.2001, andtherefore the assessment ought to have been completed on or before31.03.2002 and since it was completed only on 14.02.2003, it was beyondthe period of limitation. Thus, the CIT (A) applied the amended Sections153(2) to restrict the time limit available to the Assessing Officer tocomplete the assessment. The appeal of the assessee was allowed videorder dated 20.6.2003. 5. Feeling aggrieved against this order, the revenue filed anappeal before the Tribunal who vide impugned order dated 6.7.2005 heldthat the view taken by the CIT(A) that the assessment ought to have beencompleted on or before 31.3.2002 is correct in law and thus, dismissed theappeal. 6.Mr. Yogesh Putney, learned counsel for the revenue hasstrenuously argued that the amended provisions of Section 153(2) of the Act which became operative w.e.f. 1.6.2001 are effective only in respect ofthe notices under Section 148 served on or after 1.6.2001 and areprospective in nature and since in the instant case, the notice underSection 148 of the Act was served before the amendment took place, thetime available to the Assessing officer to complete the assessment shouldbe computed in accordance with the unamended provisions of Section 153(2) of the Act as it stood before the amendment and so the assessmentmade on 14.2.2003 was well in time. 7.However, on the other hand, Mr. Sanjay Bansal, Sr. Advocatehas argued that the Tribunal was right in holding that the assessment wasbeyond the period of limitation as in the case of the assessee, noticeswhich were served before 1.6.2001 were not protected or saved by provisoto sub section (2) of Section 153 of the Act which was substitutedsimultaneously on 1.6.2001 and the period of two years was applicable onthe notices issued between 1.4.1999 to 31.3.2000 as has been provided inthe proviso to Section 153 (2) of the Act and not on the notices served after1.4.2000 and before 1.6.2001 i.e. the date when Section 153(2) of the Actwas amended by the Finance Act, 2001 by substituting the period from twoyears to one year. 8.We have heard learned counsel for the parties and perusedthe record. 9.It is useful to refer Section 153(2) of the Income Tax Act andthe proviso to this sub-section as amended w.e.f. 1.6.2001:- [(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 was served on or after the 1[st] day of April, 1999 but beforethe 1[st]day of April, 2000, such assessmentreassessment or recomputation may be made at anytime up to the 31[st] day of March, 2002].Prior to the amendment Section 153(2) with provisoreads as under:- “[(2)] No order of assessment, reassessment orrecomputation shall be made under Section 147 afterthe expiry of two years from the end of the financial yearin which the notice under Section 148 was served: [(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 was served on or after the 1[st] day of April, 1999 but beforethe 1[st]day of April, 2000, such assessmentreassessment or recomputation may be made at anytime up to the 31[st] day of March, 2002].Prior to the amendment Section 153(2) with provisoreads as under:- “[(2)] No order of assessment, reassessment orrecomputation shall be made under Section 147 afterthe expiry of two years from the end of the financial yearin which the notice under Section 148 was served: Provided that where the notice under Section 148 wasserved on or before 31[st] day of March 1987, suchassessment, reassessment or recomputation may bemade at any time up to the 31[st] day of March 1990.” 10.A perusal of the proviso to the amended Section 153 (2) of theAct clearly provides that the period of two years for completing theassessment has been prescribed only in those cases in which notices wereissued between 1.4.1999 and 31.3.2000, meaning thereby that theamended proviso enlarges the period available to the Assessing Officer forcompletion of the assessment from one year, as available under amendedsub-section (2) of Section 153 of the Act, to, two years, where noticesunder Section 148 were served during such period and the assessmentcould be completed up to 31.3.2002. Thus, only in such cases wherenotices have been served between 1.4.1999 and 31.3.2000, the AssessingOfficer can avail the time limit of two years from the end of financial yearin which notices were served. If the contention of the Department isaccepted that even after 1.6.2001, the limit available for completing theassessment would be governed by the law prevalent before 1.6.2001, namely, two years from the end of the financial year in which the noticewas served, that would completely nullify the effect of amended proviso.There is no provision made in amended Section 153(2) of the Act toprovide that the restricted time limit of one year will not apply to all noticesissued before 1.6.2001. The only protection given is to the notices issuedbetween 1.4.1999 and 31.3.2000 . The proviso itself in a sense recognisesthe position that only in very limited cases, the two year time limit isavailable to the Assessing Officer. Obviously, the legislature in its wisdomthought that in respect of the notices served upon the assessee on orbefore 1.4.2000, sufficient time would be available to the Assessing Officerto complete the assessment within a period of one year from the end of thefinancial year in which the notice was served. For example, if the noticeunder Section 148 of the Act was served upon the assessee on 1.4.2000itself, the Assessing Officer as per the amended sub-section (2) of Section153 of the Act would have time upto 31.3.2002 and that would leave him asin the present case 10 months' time from June 2001 to March 2002 tocomplete the assessment after the amendment came into force. Moreover,in the present case no prejudice has been caused to the revenue byapplying the amended provisions of Section 153(2) of the Act in the case ofthe assessee as the Assessing Officer had sufficient time to complete theassessment. Moreover, the revenue has not pleaded any reasons for notcompleting the assessment upto 30.3.2002. Even otherwise, theprovisions of Section 153(2) of the Act are procedural and are notsubstantive and it is well settled that procedural law is applicable topending cases. 11.In view of this, we find no error in the order of the Tribunal andthe question raised by the revenue is answered in the affirmative i.e. against the revenue and in favour of the assessee. 12.Thus, the appeal filed by the revenue is dismissed. (RAKESH KUMAR GARG) JUDGE March 28, 2008ps (SATISH KUMAR MITTAL) JUDGE