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Judgment
Dhirendra Mishra, J.—The aforesaid appeals are being disposed of by this common judgment, as both these appeals pertain to the dispute between the parties relating to block assessment for the same period.
For the purposes of this judgment, the facts of Tax Case No. 28 of 2006 are relevant.
This appeal u/s 260A of the Income Tax Act, 1961 (for short "the Act") against the order of the Income Tax Appellate Tribunal, Nagar, (for short "the Tribunal") has been admitted on November 27, 2006, on substantial questions of law as detailed under the caption "Substantial questions of law" in the memo of appeal.
Briefly stated the facts of the case, as projected in the impugned order of the Tribunal, are that search and seizure operations in the premises of the Dhuppad group were conducted between December 20/23, 2001 and proceeding u/s 158BD was initiated against the assessee and the assessment was completed on February 2, 2006. In the assessment order, it was mentioned that the assessee filed return showing nil income on January 19, 2004, for the block period. The present incumbent had taken over the charge of Assistant Commissioner of income tax-2(1), Raipur and issued notice to the assessee u/s 158BE read with Section 129 of the Act, therefore, limitation for finalizing the assessment u/s 158BD stood extended by a period of 60 days. Since the present Assessing Officer started proceedings on December 5, 2005, limitation stood extended up to February 3, 2006 and the case did not get time-barred in view of the provisions of Section 129 of the Act. However, on appeal by the assessee, the Commissioner of Income Tax (Appeals) after considering the provisions of Section 158BE and Section 129 of the Act annulled the order of the Assessing Officer by declaring the order as time-barred.
The Revenue, being aggrieved by the order of the learned Commissioner of Income Tax (Appeals), preferred an appeal before the Tribunal and the Tribunal even after arriving at a conclusion that assessment in dispute is time-barred by two days and the Assessing Officer should have completed the assessment as per the provisions of Section 158BE by January 31, 2006 but the Assessing Officer has completed the assessment on February 2, 2006 which is delayed by only two days. Having held this, the learned Tribunal further observed that "Had the Assessing Officer noticed that the assessment is getting time-barred by two days on February 2, 2006, it was not difficult for him to pass the ante dated order on February 2, 2006 mentioning the date of assessment order as January 31, 2006. Therefore, mistake committed by the Assessing Officer is bona fide and for the bona fide mistake committed by the Assessing Officer in passing the order on February 2, 2006, the Revenue should not suffer. It would be a rigid view against the Revenue if we quash the impugned assessment which is being time-barred by only two days." And accordingly cancelled the order of the Commissioner of Income Tax (Appeals) and restored the matter back to the file of the Commissioner of Income Tax (Appeals) with a direction to decide the issue of addition of Rs. 17,90,000 made in the assessment order by the Assessing Officer on the merits as per law after affording a reasonable opportunity of being heard to the assessee. The instant appeal is directed against the aforesaid order of the Tribunal.
Shri Neelabh Dubey, learned Counsel for the appellant would argue that admittedly notice u/s 158BD of the Act was served on the appellant on January 8, 2004. The period of limitation for completion of block assessment in the case of other persons referred to in Section 158BD as per Clause (b) of Sub-section (2) of Section 158BE is two years from the end of the month in which notice u/s 158BD is served on such other person. Thus, assessment of the appellant under Chapter XIV-B should have been completed by January 31, 2006 whereas assessment was completed on February 2, 2006. The Appellate Commissioner after elaborately considering the facts of the case and the provisions of law held that no hearing had taken place prior to December 22, 2005, the date new incumbent had taken over charge, therefore, there is no question of rehearing of the case. The matter was never heard by the predecessor Assessing Officer and in these circumstances, the provisions of Section 129 had no application and the Assessing Officer does not get extended time of 60 days for passing the order.
The Tribunal also recorded a finding that the Assessing Officer had issued one notice u/s 158BE read with Section 129 on December 22, 2005 fixing the case on December 29, 2005. Virtually, the hearing of the case was started from this date only and no hearing took place prior to this date, except issue of fixation notice and questionnaire. The case was heard by the new incumbent, i.e., by the present Assessing Officer only from December 22, 2005 and it was not reheard since the proceedings were itself started from December 22, 2005. Under these circumstances, the Assessing Officer cannot take shelter of the provisions of Section 129 for extending the limitation. The provisions u/s 129 could be resorted to had there been any hearing earlier and any demand by the assessee for rehearing after taking over of new incumbent and thus, assessment should have been completed by January 31, 2006 as per the provisions of Section 158BE. However, the Tribunal illegally held that passing of order with a delay of 2 days is a bona fide mistake committed by the Assessing Officer and for this bona fide mistake, the Revenue would not suffer and the assessment cannot be quashed as being time-barred.
It is settled law that the assessment order cannot be passed in the cases of block assessment u/s 158BD beyond the period prescribed u/s 158BE and the provisions of limitation are to be construed strictly, as the appellant is vested with the valuable right not to be assessed and the same cannot be taken away without any express provisions of law and equitable considerations cannot govern cases of limitation. The Tribunal had no power under the Act to bypass the provisions of limitation by treating the assessment made beyond limitation as bona fide mistake and liable to be condoned.
On the other hand, Shri Rajeev Shrivastava, learned Counsel for the Revenue submitted that both the forums below have committed an error of law by arriving at a conclusion that the order of assessment passed by the Assessing Officer was barred by two days. The forums below have arrived at to the aforesaid conclusion without considering the provisions of Section 129/158BE of the Act in its real perspective.
Emphasising upon Explanation 1(iii) and the proviso appended to Section 158BE read with Section 129 of the Act, it was argued that where there is change of incumbent of an office, the Income Tax authority ceases to exercise jurisdiction and succeeded by another, the assessee concerned may demand that before the proceeding is continued the previous proceeding be reopened and he may be reheard before any order of assessment is passed. In such circumstances, time taken in reopening the proceeding or giving an opportunity to the assessee to be reheard under the proviso to Section 129 is to be excluded and after exclusion of the aforesaid period, the period of limitation referred to in Sub-section (1) or Sub-section (2) of Section 158BE available to the Assessing Officer for making an order under Clause (c) of Section 158BC is less than 60 days, such remaining period stands extended to 60 days.
We have heard learned Counsel for the parties.
Indisputably, notice u/s 158BD was issued on January 5, 2004 and served on the assessee on January 8, 2004. As per the provisions of Clause (b) of Sub-section (2) of Section 158BE, the assessment could be completed not later than January 31, 2006. Both the forums below after perusal of the record have held that no hearing had taken place prior to December 22, 2005 and by that date the new incumbent had already taken over charge.
From a bare reading of Section 129 of the Act, it is clear that the same is attracted only when some proceeding had taken place in the past and the same are to be continued by new incumbent. In such circumstances, the assessee may demand for reopening of the previous proceeding or any part thereof and he may also demand for rehearing before the order of assessment is passed against him by the new incumbent. In view of the fact that no hearing had taken place before the new incumbent had taken over the charge, the question of any demand for reopening of the case or rehearing by the assessee does not arise and, therefore, the question of extension of limitation for making an order under Clause (c) u/s 158BC to 60 days after excluding the period of limitation referred to in Sub-section (2) of Section 158BE does not arise. The contingency envisaged in the proviso to Section 158BE arises only when the assessee demands reopening of the previous proceeding or any part thereof or applies for rehearing before any order of assessment is passed by the new incumbent and after excluding the time spent in reopening or rehearing if the limitation prescribed for completing assessment is less than 60 days, in that case, such remaining period stands extended to 60 days.
Indisputably, there is no provision in the Act which confers the Tribunal with any power to condone any delay in framing assessment on the ground of bona fide mistake on the part of the Assessing Officer.
On the basis of the aforesaid discussion, we are of the opinion that the Tribunal had no power to bypass the provision of limitation by treating the assessment made beyond limitation as bona fide mistake on the part of the Assessing Officer and liable to be condoned. Accordingly, we answer the substantial questions of law proposed by the appellant/assessee in the memo of appeal in favour of the assessee and against the Revenue.
Accordingly, we allow Tax Case No. 28 of 2006, set aside the order of the Tribunal and restore the order of the Commissioner of Income Tax (Appeals) and quash the assessment order passed by the Assessing Officer as barred by limitation.
Tax Case No. 4 of 2008
Since we have already set aside the order of the Tribunal and restored the order of the Commissioner of Income Tax (Appeals) and quashed the order of assessment passed by the Assessing Officer, the instant appeal arising out of fresh assessment after remand by the Tribunal is redundant and subsequently, assessment proceedings after remand is redundant and meaningless.
With these observations, we dispose of this appeal.