Commissioner of Income Tax vs Subhash Chand Goyal

The Commissioner of Income Tax, Agra, has filed the present application u/s 256(2) of the Income Tax Act, 1961, for a direction to the Income Tax Appellate Tribunal, Delhi Bench, Delhi, to draw up a statement of the case and to refer the following two questions of law for opinion to this court :

"(1) Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that the assessment orders in relation to the assessment years 1980-81 to 1986-87 are clearly beyond the period of limitation especially when the period from January 1, 1990, being the date of filing the settlement petition to August 6, 1991, being the date of receipt of order u/s 245DD by the Commissioner of Income Tax will have to be excluded and after such exclusion the time available for assessment was up to November 5, 1992 ?

(2) Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal is correct in law in holding that the assessment order in relation to the assessment years 1980-81 to 1986-87 are clearly beyond the period of limitation especially when the High Court of Judicature at Allahabad stayed the proceedings u/s 147/148 of the Income Tax Act, 1961, vide order dated February 22, 1989, thus a period of ten months and seven days are also available for assessment beyond November 5, 1991 ?"

We have heard Sri A. N. Mahajan, learned counsel appearing for the Commissioner of Income Tax, and Sri Rajesh Kumar, learned counsel appearing on behalf of the assessee-opposite party.

Briefly stated the facts giving rise to the present application are that for the assessment year 1980-81 the assessment order was passed u/s 143(3)/148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), on October 30, 1992. The assessee-opposite party made an application purporting to be u/s 154 of the Act contending that the assessment order was void and unlawful as the assessment was completed after the limitation had expired. The Assessing Officer did not accept the plea of the assessee and held that the assessment was completed well within time in view of the provisions of Section 153(3), Explanation 1(v) of the Act. Consequently, the application filed by the assessee-opposite party u/s 154 of the Act was rejected.

The first appeal filed by the assessee-opposite party was rejected by the Commissioner of Income Tax (Appeals). However, in the second appeal filed by the assessee-opposite party, the Tribunal vide order dated March 5, 1997, had allowed the appeal and had set aside the assessment order on the ground that it had been passed beyond the period of limitation prescribed for making the assessment for the assessment year in question. The Tribunal also declined to refer the questions of law proposed by the Commissioner of Income Tax for the opinion to this court.

It is not in dispute that the assessee-opposite party had filed an application relating to the assessment year 1980-81 before the Settlement Commission. The said application was filed on January 1, 1990. The Settlement Commission had rejected the application made by the assessee-opposite party on April 26, 1991. According to the Commissioner of Income Tax, the order of the Settlement Commission was served upon him on August 6, 1991, and therefore, in view of the provisions of Explanation 1(v) to Section 153 of the Act, the period commencing from the date of making of an application before the Settlement Commission till the date on which the order has been received by the Commissioner of Income Tax is liable to be excluded while computing the period of limitation in making the assessment in question. According to learned counsel for the applicant the period commencing from January 1, 1990, till August 6, 1991, is liable to be excluded and if the aforesaid period is excluded then the assessment made was well within the period of limitation.

Learned counsel for the assessee opposite party, however, submitted that the date on which the order passed by the Settlement Commission rejecting the assessee''s application has been received by the Commissioner of Income Tax is not on record and, therefore, at best, the period commencing from the date of making the application till the date of the order of the Settlement Commission is only to be excluded for computing the period of limitation for making the assessment in question.

After considering the rival submissions, we find that in this case the question is as to whether while excluding the period of limitation as provided under Explanation l(v) to Section 153 of the Act, any other date other than what has been mentioned in the said clause of the Explanation can be applied or not? Thus, question No. 1 proposed by the Commissioner of Income Tax is a question of law and does arise out of the order of the Income Tax Appellate Tribunal, which requires consideration by this court.

The Tribunal is directed to draw up a statement of the case and to refer question No. 1 reproduced above for the opinion to this court.

In the result, the application is partly allowed. However, the parties shall bear their own costs.