Commissioner of Income Tax vs Drs. X-Ray and Pathology Institute Pvt. Ltd.

We have heard Shri Sambhu Chopra, learned counsel for the appellant. This income tax appeal u/s 260A of the income tax Act, 1961, arises out of order dated April 25, 2013, passed by the income tax Appellate Tribunal in I.T.A. No. 410/LKW/2012--since reported as Deputy CIT v. Drs. X-Ray and Pathology Institute P. Ltd. [2013] 27 ITR (Trib) 434 (Lucknow)).

The Department has preferred the appeal on the following questions of law:

Whether the hon''ble income tax Appellate Tribunal has erred in law and on facts in annulling the assessment without appreciating the fact that the communication of dismissal of the assessee''s writ petition against the proceedings initiated u/s 158BC of the income tax Act, 1961, was made to the Assessing Officer on November 9, 2009, and then the Assessing Officer could not have proceeded to take up the assessment proceedings before November 9, 2009, consequently the period of limitation was counted from such date?

Whether the hon''ble income tax Appellate Tribunal has erred in law and on facts in applying the ratio of the decision of the hon''ble court in the case of Collector of Central Excise, Madras Vs. M.M. Rubber and Co., Tamil Nadu, page 16 of 68 and Municipal Corporation of Delhi Vs. Qimat Rai Gupta and Others, ?

Whether the hon''ble income tax Appellate Tribunal was justified in ignoring the provisions of the income tax Act in the case of a proceeding under the income tax Act and applying the provisions of the High Court Rules which would be applicable in the case of proceedings in the High Court only?

In this case, search was conducted at the assessee''s address on September 14, 2002, and notice u/s 158BC of the Act was issued on April 29, 2003. Consequent thereto the return was filed by the assessee on June 16, 2003. The search proceeding was challenged by the assessee before the High Court by filing writ petition. The assessment proceedings were stayed, vide interim order dated February 12, 2004. The interim order was vacated on August 26, 2009.

Section 158BC provides to complete assessment proceedings within two years. It further provides that period during which the proceedings have been stayed shall be excluded.

In the present case, the stay was vacated by the High Court on August 26, 2009. The Assessing Officer took the date of vacation of the interim order to be the date, when it was received by him on November 9, 2009, and passed the assessment order on June 22, 2010, which was clearly beyond two years as limitation would restart from August 26, 2009, and ended on April 15, 2010.

Apart from the fact that the Assessing Officer had sufficient time the Tribunal has held that there is no procedure in the High Court to communicate the order to the party to make it effective. The provisions of the income tax Act for filing of the appeal from the date of service of the order will not be attracted to calculate the period of limitation to complete the assessment.

In the present case, we are not concerned with limitation for any particular act to be performed, but the arrest of the limitation by an interim order passed by the High Court. As soon as the order was vacated, the limitation will restart and will exhaust itself on the period of limitation provided under the Act.

In order to appreciate the submissions of Shri Sambhu Chopra that the Assessing Officer should get knowledge of the order, the facts as to when the counsel appearing for the Department applied for copy and communicated to the Assessing Officer have not been brought on record. Shri Sambhu Chopra has relied upon Auto and Auto and Metal Engineers and Others Vs. Union of India (UOI) and Others, with regard to limitation of assessment proceedings in the Explanation to section 153 and the effect of the stay order and Commissioner of Income Tax Vs. Durga Shankar Kansara, .

In both the cases cited for the Revenue the limitation as provided u/s 158BE was under consideration. The question as to whether the order should be communicated by the court, which had stayed the proceedings to restart the period of limitation was neither raised nor considered.

We do not find any error of law in the judgment of the Tribunal holding that the assessment was clearly barred by limitation. The questions of law as framed are not substantial questions of law, which may arise for consideration from the facts of the case. The income tax appeal is dismissed.