Commissioner of Income Tax vs State of Rajasthan and Others

P.C. Jain, J.—The petitioner has filed this application u/s 482 of the Criminal Procedure Code, seeking extension in the time limit for completing the block assessment of non-petitioner No. 2 in compliance with the order passed by this court on May 16, 1997, in S. B. Criminal Miscellaneous Petition No. 337 of 1996.

The relevant facts, necessary for the disposal of this application, are all stated in the order dated May 16, 1997. The following order was passed on May 16, 1997, in the above miscellaneous petition :

"In this view of the matter, I allow this petition in part. The impugned order dated April 30, 1996, passed by the learned Additional Chief Judicial Magistrate (Railways), Jodhpur, is modified to this extent that a sum of Rs. 3,34,000 be refunded to the respondent No. 2 on the conditions specified in the said order and the remaining amount be handed over to the petitioner--Department provided it submits an undertaking that the assessment of the amount in question shall be completed within a period of three months from today and after assessment, if any sum deserved to be refunded to the respondent No. 2, the same shall be refunded to him without any delay."

In the petition it is stated by the petitioner that after a lot of persuation, Babu Bhai, non-petitioner, filed a return of income under protest for the block period 1988-89 to 1998-99 on July 14, 1997. The assessee declared nil undisclosed income in respect of the above block years. The Department, therefore, requires more time for making deep inquiries and investigation because the assessee, non-petitioner, has retracted from his earlier admission of having been found in possession of unexplained money of Rs. 8.35 lakhs. Thereafter the Department vigorously pursued the matter. The details of the proceedings taken by the Department in this respect have been furnished on a sheet of paper which has been placed on the record of this file. It was, therefore, prayed that the time allotted to the Income Tax Department for completing the above assessment is not sufficient in the facts and circumstances of the case. The petitioner has, therefore, prayed that the Department may either be allowed to complete the assessment within the time limit as provided in Section 158BE of the Income Tax Act or a further extension of six months may be granted.

I have heard learned counsel for the petitioner as well as non-petitioner No. 2.

Learned counsel for the petitioner has, in the first instance, submitted that Section 158BE allows the statutory period of one year for passing the order u/s 158BC. In the instant case since the assessee is not co-operating and returned a nil undisclosed income, the Department is faced with a stupendous task of making complete detailed and deep inquiries/investigation into the income of the assessee in respect of the above block years. The bona fides of the Department are clear from the resume of the proceedings taken in this respect. If the petitioner is not allowed to avail of the statutory period of one year to complete the assessment of such a nature, he may be allowed an extension of six months for completing the above assessment.

Learned counsel for the non-petitioner has very vehemently opposed the prayer of the petitioner. It was contended that if the petitioner thinks that he is legally entitled to complete the above assessment within one year as contended, this application is liable to be dismissed. Learned counsel has narrated the relevant dates and submitted that the alleged cash was recovered on March 18, 1996, and the warrant of authorisation u/s 132A(1) of the Income Tax Act, 1961, was issued by the Commissioner of Income Tax, Jodhpur, in the name of S. H. O., G. R. P., Abu Road on March 25, 1996. Thereafter, proceedings u/s 102 of the Criminal Procedure Code, in respect of the above seizure of money were taken. The assessee Babu Bhai moved two applications before the learned Additional Judicial Magistrate (Railway), Jodhpur, and the learned magistrate passed the impugned order on April 30, 1996. The learned magistrate, inter alia, directed the Income Tax Department to complete the assessment within a period of one month. He submitted that despite that, no steps were taken for completing the above assessment. The petitioner then filed a revision petition in this court. It is correct that the operation of the order of the learned magistrate was stayed but it was only in respect of the disposal of the money. This court did not pass any order restraining the petitioner from proceeding with the assessment against Shri Babu Bhai. Learned counsel has also alleged that the petitioner-Department is not at all interested in expediting the assessment because time and again, it was avoided on one pretext or the other. Learned counsel has also submitted that the assessment has now become barred by time and the petitioner should not be allowed any extension for this reason.

I have considered the rival contentions. Since the assessment is to be made in respect of the block years as stated above, the Department is obliged to make vigorous and deep inquiries regarding the income of non-petitioner No. 2. The burden of the Department increased by the total denial made by the assessee. Learned counsel for the non-petitioner has shown me the record showing the bona fides of the Department to complete the assessment as early as possible. Looking to the magnitude of the inquiry to be made in respect of the income of the assessee non-petitioner, I am inclined to extend the time for three months. However, it is made clear that this order will not prejudice the right of the assessee non-petitioner in respect of limitation as regards the above assessment. The non-petitioner shall be entitled to challenge the assessment on the ground of limitation if he so desires.

For the above reasons, I allow the petition in part and the time limit for completing the assessment is extended for three months more from the date when it expired in pursuance of the previous order. The petitioner should understand clearly that frequent extension of time in completing the assessment will not be given. The period of limitation prescribed in Section 158BE of the Act is directory and the court in appropriate circumstances can curtail the time limit for completion of block assessment as has been done in the present case.