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Judgment
This appeal was admitted in terms of following questions :
"Whether, in the facts and circumstances of the case, the order passed by the AO on 31st May, 1982, u/s 104 of the IT Act, 1961, is within limitation u/s 106(b) of the Act ?"
The relevant assessment year is 1973-74, The order u/s 143(3) of the IT Act was passed on 20th March, 1975 and the order u/s 104 of the Act was passed on 18th March, 1978. Both the orders were challenged before the CIT(A). CIT(A) has set aside both the orders vide his order dt. 31st March, 1980. Fresh assessment order giving effect to the order of CIT(A) was passed on 26th March, 1982 and fresh order u/s 104 giving effect to the order of CIT(A) was passed on 31st May, 1982.
The controversy before us is whether the fresh order passed u/s 104 of the Act giving effect to the order of CIT(A) is within the limitation.
Learned counsel for the appellant submits that in view of the provisions of Section 106(b), the order is within time as that has been passed within a year from the date of reassessment order passed by the AO giving effect to the order in appeal. As that order has been passed on 26th March, 1982, the AO can pass fresh order u/s 104 of the Act within a year from the date of reassessment order, i.e., one year period should be counted from 27th March, 1982.
Mr. Rajendra Mehta, learned counsel for the assessee, submits that provisions of Section 106 deals with assessment order and reassessment order and not the fresh order giving effect to the order in appeal, therefore, there is no question of counting one year period from the date of assessment order passed by the AO to give effect to appeal order. At the most, he submits that period can be counted in accordance with the provisions of Section 153(2A) of the Act and that period also expires on 31st March, 1982.
Relevant provisions of Section 106 of the Act are reproduced as under :
"106. Period of limitation, fox making orders u/s 104.--No order u/s 104 shall be made at any time after--
(a) the expiry of--
(i) four years from the end of the assessment year relevant to the previous year referred to in Sub-section (1) of that section, where such assessment year is an assessment year commencing on or before the 1st day of April, 1974;
(ii) two years from the end of the assessment year relevant to the previous year referred to in Sub-section (1) of that section, where such assessment year is an assessment year commencing after the 1st day of April, 1974; or
(b) the expiry of one year from the end of the financial year in which the assessment or reassessment of the profits and gains of the previous year referred to in Sub-section (1) of that section is made, whichever is later :
Provided that the period of limitation specified in this section shall not apply in a case where the company has made an application to the Board u/s 107A."
From the perusal of the provisions of Section 106 of the Act, it reveals that the word and expression used as "assessment" and "reassessment" that has been defined in the Act. As per the definition, assessment includes reassessment but the order which has been passed in consequence of the appeal order that has not been defined, but the limitation for such order has been given in Section 153(2A) of the Act, which reads as under :
"(2A) Notwithstanding anything contained in Sub-sections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment u/s 146 or in pursuance of an order, u/s 250, Section 254, Section 263 or Section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order u/s 146 cancelling the assessment is passed by the AO or the order u/s .250 or Section 254 is received by the Chief CIT or CIT or, as the case may be, the order u/s 263 or Section 264 is passed by the CIT."
The limitation for consequential orders u/s 153 is two years. Undisputedly, the appeal order has been passed on 31st March, 1980. Therefore, two years period should be counted from 1st April, 1980 and the limitation in this case thus expires on 31st March, 1982.
In the case in hand, when the limitation for giving effect to the order of CIT(A) should be passed on or before 31st March, 1982, the order u/s 104 to give effect of the order of CIT(A) has been passed on 31st May, 1982, thus, the order of AO dt. 31st May, 1982 is beyond limitation and, thus, illegal.
In the result, we see no reason to interfere in the impugned order. The appeal stands dismissed.