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Judgment
S.RAVINDRA BHAT, J
In all these writ petitions, the narrow question agitated by the assessees is that assessment order made on 22.12.2017 under Section 153A read with
Section 254 of Income Tax Act, 1961 (here in after „the Act’) for Assessment Year 2005-06 and subsequent years (up-to 2012-13) covered by
search assessment, were barred and therefore, needs to be quashed.
The brief facts necessary to decide these writ petitions are that pursuant to search and seizure proceedings under Section 132 of the Act, the
assessment was completed for the block period on 28.03.2013 by the concerned Assessing Officer (AO). The Commissioner of Income Tax (A)
partly allowed the assessee’s appeal on 14.08.2014.
The matter was carried further to the Income Tax Appellate Tribunal (ITAT) which remitted the matter back to the AO to complete the assessment
de novo. The assessee contends that in fact the concerned AO sought tax effect by re-computing the income under Section 153A of the Act, in
effect, following the ITAT’s order of 18.02.2016. Relying upon that order, the assessment proceedings were taken up after remand by the AO
who completed them on 22.12.2017. Relying upon the Full Bench decision of this Court in Odeon Builders Pvt. Ltd. vs. Pr. Commissioner of Income
Tax-4,(2017) 393 ITR 27, it is urged on behalf of the assessees that the impugned order is per se illegal and void. It was contended that apart from the
AO’s order made after the ITAT’s decision (on 18.02.2016), there is other evidence as well, in the form of reply to the assessee’s ITR
queries dated 12.03.2018 where the revenue clearly admitted that the order was served by hand to the Commissioner of Income Tax (Departmental
Representative) on 30.03.2016. Taking strength from the then existing proviso to Section 153(2A), it is urged that time available then to the AO in this
case was only up-to 31.12.2016, for working out of the remand and completing the assessment.
The revenue resisted the proceedings and urged that the impugned order was made within the time prescribed. Firstly, it is urged that petitioners
cannot be heard to complain as they did not attend to the queries and co-operate in an assessment proceeding which got delayed. Learned counsel
emphasized that as a result the petitioners could not be given any discretionary relief given that the petitioner was an entry provider/facilitator and that
the search resulted in addition of `70 crores as income in his hand. Secondly, it was argued that the plain reading of Section 153A of the Act would
reveal that it overrides the other provisions of the Act because of the nonobstante clause. Elaborating further, it was submitted that period of limitation
prescribed by Section 153B i.e. two years is substantial that excludes search assessment and therefore, excludes applicability of Section 153(2A)
which is general and governs all demands other than those concerning search assessment.
The question as to what would be the starting point of limitation with respect to any proceedings which are to be initiated by the revenue or any
steps to be taken by it, was the precise issue of point of determination by this Court in Odeon Builders (supra). The Court then held as follows:
“28. The above decisions under Section 256 (3) are clearly distinguishable. The limitation for the purpose of Section 256 begins to run the moment
the order is communicated to the parties. Another distinction to be drawn is that the word used in Section 256 of the Act “served†whereas under
Section 260A it is “receivedâ€. The word “received†has to be seen in the context of the decision in CIT v. Sudhir Choudhrie (supra), which
made it mandatory for pronouncement of the orders of the Income-tax Appellate Tribunal. At the time of such pronouncement, apart from the
authorized representative of the assessee, the Departmental representative is expected to remain present. Through him the Department becomes
immediately aware of the said judgment of the Income-tax Appellate Tribunal.
The “concerned†Commissioner of Income-tax
Viewed differently, the contextual interpretation of the expression “receive†would be when the parties notified of the pronouncement are
represented at that time in the open court. When pronounced, both parties are said to receive it. The agency which they choose for transmission to the
official or executive component to authorise an appeal is not the concern of the judicial system.
Consequently, where the order is common to several appeals, while for the assessee the starting point for limitation will be when the assessee
aggrieved by such order first receives a copy thereof; for the Revenue, the date when the Department representative of the Commissioner of Income-
tax (Judicial) first receives a copy thereof will be the starting point for limitation for all the appeals.
It is, therefore, not possible to accept the submission that till a particular jurisdictional Commissioner of Income-tax or Principal Commissioner of
Income-tax has not received the order of the Income-tax Appellate Tribunal, the period of limitation for filing an appeal against that order does not
commence.
Answers to the questions
The answers to the questions referred to this Court are answered thus:
Question : (i) What is the correct interpretation to be placed on the expression “received by the assessee or the Principal Chief Commissioner or
the Chief Commissioner or Principal Commissioner†in Section 260A (2) (a) of the Act ? Does it mean “received†by any of the named officers
including the Commissioner of Income-tax (Judicial)?
Answer : The word “received†occurring in section 260A (2) (a) would mean received by any of the named officers of the Department, including
Commissioner of Income-tax (Judicial). The provision at present names four particular officers i.e. the Principal Commissioner, Commissioner,
Principal Chief Commissioner, and the Chief Commissioner of Income Tax. These are the only designations of the officers who could receive a copy
of the order. In the absence of a qualifying prefix “concernedâ€, the receipt of a copy of the order of the Income- tax Appellate Tribunal by any of
those officers in the
Department including the Commissioner of Income-tax (Judicial) will trigger the period of limitation.
Question: (ii) Does limitation begin to run for the purposes of Section 260A (2)(a) only when a certified copy of the order of the Income-tax Appellate
Tribunal is received by the “concerned†Commissioner of Income-tax within whose jurisdiction the case of the assessee falls notwithstanding that
it may have been received by any other Commissioner of Income- tax, including the Commissioner of Income-tax (Judicial) prior thereto? Is it open to
the court to read the word “concerned†into section 260A(2(a) of the Act as a prefix to any of the officers of the Department named therein?
Answer : In section 260A(2) of the Act, the words Commissioner of Income-tax, Principal Commissioner of Income-tax or Chief Commissioner of
Income-tax are not prefixed or qualified by the word “concernedâ€. There is no warrant for the court to read into the provision such a qualifying
word. The Court rejects the contention of the Revenue that limitation for the purposes of section 260A(2)(a) begins to run only when a certified copy
of the order of the Income-tax Appellate Tribunal is received by the “concerned†Commissioner of Income-tax within whose jurisdiction the case
of the assessee falls notwithstanding that it may have been received by any other Commissioner of Income-tax, including the Commissioner of
Income-tax (Judicial) prior thereto.
Question : (iii) In the context of section 254 (3) of the Act, is there an obligation on the Income-tax Appellate Tribunal to send a certified copy of its
order to a Commissioner of Income-tax other than the one whose details are given to it during the pendency of the appeal? Will change in the
jurisdiction concerning the case of the respondent-assessee to another Commissioner of Incometax subsequent to the order of the Income-tax
Appellate Tribunal have the effect of postponing the time, from which limitation would begin to run in terms of section 260A(2)(a) of the Act, to when
such Commissioner of Income-tax receives the order of the Income-tax Appellate Tribunal?
Answer : As far as the obligation of the Income-tax Appellate Tribunal under Section 254 (3) of the Act is concerned, the said obligation is satisfied
once the Income-tax Appellate Tribunal sends a copy of an order passed by it to the assessee as well as to the Principal Commissioner of Income-tax
or the Commissioner of Income-tax or even the Commissioner of Income-tax (Judicial). The Income-tax Appellate Tribunal has to be simply go by the
details as provided to it in the memo of parties. If there is a change concerning the jurisdiction of the Commissioner of Income-tax and it is some other
Commissioner of Income-tax who has jurisdiction, it will not have the effect of postponing the commencement of the period of limitation in terms of
section 260A(2)(a) of the Act. The statute is not concerned with the internal arrangements that the Department may make by changing the jurisdiction
of its officers. It is for the officer of the Department who first receives a copy of the Income-tax Appellate Tribunal‟s order to reach it in time to the
officer who has to take a decision regarding the filing of an appeal.
Question : (iv) After the decision of this court in CIT v. Sudhir Choudhrie [2005]278 ITR 490 (Delhi), do the decisions in CIT v. Arvind Construction
Co. (P.) Ltd. [1992] 193 ITR 330 and CIT v. ITAT [2000] 245 ITR 659 (Delhi) require to be reconsidered, explained or reconciled?
Answer : The decisions in CIT v. Arvind Construction Co. (P) Ltd. (supra) and CIT v. ITAT (supra) were rendered in the context of Section 256 of
the Act (and not Section 260A(2)(a) of the Act) and also prior to the decision in CIT v. Sudhir Choudhrie (supra). While the former decisions may not
require reconsideration, they require to be reconciled with the latter decision in CIT v. Sudhir Choudhrie (supra). The decisions in CIT v. Arvind
Construction Co. (P) Ltd. (supra) and CIT v. ITAT (supra) are of no assistance to the Revenue in its interpretation of Section 260A(2)(a) of the Act.
Question : (v) After the change of procedure where orders of the Income-tax Appellate Tribunal are pronounced in the open, is it incumbent on the
Department through its Departmental representative or Commissioner of Incometax (Judicial) to apply for a certified copy of the order of the Income-
tax Appellate Tribunal and should limitation for the purposes of Section 260A(2)(a) be computed from the date on which such certified copy is made
ready for delivery by the Income-tax Appellate Tribunal?
Answer : While there is no requirement for the Departmental representative or the Commissioner of Income-tax (Judicial) to apply for a certified copy
of the Income-tax Appellate Tribunal, in any event under the extant Income-tax Appellate Tribunal Rules, a copy of the order is sent to the
Commissioner of Income-tax (Judicial). In the context of Section 260A(2)(a) of the Act, once an order is listed for pronouncement in the Income-tax
Appellate Tribunal, the Departmental representative or the Commissioner of Income-tax (Judicial) should be taken to be aware of the order. From that
point, it is a purely an internal administrative arrangement as to how the Departmental representative or Commissioner of Incometax (Judicial) obtains
and further communicates the order to the officer who has to take a decision on filing the appeal. It is possible that immediately after pronouncement,
the authorized representative or the Departmental representative or both may apply for a certified copy of the order of the Income-tax Appellate
Tribunal. In that case, the time taken for the certified copy to be readied for collection by the applicant will be excluded while computing limitation. But
here again, if earlier to such date, a copy is received by a party from the Income-tax Appellate Tribunal, then such earlier date will be the starting
point for limitation.
Question : (vi) Whether the receipt of a certified copy of the order of the Income-tax Appellate Tribunal by the Commissioner of Income-tax (Judicial)
is sufficient to trigger the commencement of the limitation period under Section 260 A (2) (a) of the Act?
Answer : The receipt of a certified copy of the order of the Income-tax Appellate Tribunal by Commissioner of Income-tax (Judicial) would trigger
the commencement of the limitation period under Section 260 A (2) (a) of the Act.
Question : (vii) In the context of a common order of the Income-tax Appellate Tribunal covering several appeals, whether limitation for all the appeals
would begin to run when the certified copy is received first by either the Commissioner of Income-tax (Judicial) or any one of the officers of the
Department mentioned in Section 260 A (2)
(a) or only when the Commissioner of Income-tax “concerned†receives it? Where the same Commissioner of Income-tax has jurisdiction over
more than one assessee in the batch, will limitation begin to run for all such appeals when such Commissioner of Income-tax receives the order in
either of the assessee's cases?
Answer : Where there, is a common order of the Incometax Appellate Tribunal covering the several appeals, limitation would begin to run when a
certified copy is received first by either the Commissioner of Income-tax (Judicial) or one of the officers of the Department and not only when the
Commissioner of Income-tax “concerned†receives it. When the same Commissioner of Income-tax has jurisdiction for more than one assessee,
the limitation begin to run for all from the earliest of the dates when the Departmental representative of Commissioner of Incometax (Judicial) or any
Commissioner of Income-tax first receives the order in any of the cases forming part of the batch disposed of by the common order. If there are four
separate orders passed, then the limitation begins to run when such separate orders are received first by any officer of the Department.
Question: (viii) Whether administrative instructions issued by the Department for its own administrative convenience can have the effect of altering
the time from which limitation will begin to run for the purposes of Section 260 A(2) (a) of the Act?
Answer : Instructions issued by the Department for its administrative convenience cannot alter the time when limitation would begin to run under
Section 260A (2) (a) of the Act. To reiterate these administrative instructions are for the administrative convenience of the Department and will not
override the statute, in particular, Section 260A (2) (a) of the Act.â€
It is quite evident from the decision in Odeon Builders (supra) that limitation begins (for any purpose under the Act) from the point of time when the
departmental representative receives the copy of a decision or an order of the ITAT. The evidenceon record in this case clearly establishes that the
concerned DR (a Commissioner ranking officer) nominated by the revenue received a copy of the ITAT order dated 30.03.2016. The Starting point of
limitation therefore was 31.03.2016.
The next question is whether the non-obstante clause under Section 153 of the Act, which prescribes a specific period of limitation to complete a
search assessment for the block period concerned, could override the general period of limitation. In this context, the Court notices that Section 153 of
the Act generally talks of various periods of limitation. It prescribes that no order of assessment shall be made either under Section 143 or Section 144
of the Act any time after expiry of twenty one months from the end of the assessment year in which the income was first assessable. The exception
carved by way of Section 153(2) relates to reassessment and states that in cases covered by it, the period is reduced to nine months from any of
financial year in which the notice for reassessment is served. The relevant provision which applies at that point of time for purpose of this case, reads
as follows:
“(2A) Notwithstanding anything contained in subsections (1), (1A), (1B) 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 in pursuance of an order under Section 250 or section 254 or section
263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial
year in which the order under Section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner or, as the case may be, the order under Section 263 or Section 264 is passed by the Principal Chief Commissioner or
Chief Commissioner or Principal Commissioner or Commissioner â€
During the relevant period when the assessment was completed, the period prescribed was nine months (on account of substitution carried out by
the amendment). The special provision under Section 153B of the Act in the opinion of the Court carves out a special period of limitation without
which search/block assessments would not be completed. The entire provisions under Chapter XIV relating to block assessment, have been termed by
the Supreme Court to be a complete code. At the same time, a specific period of limitation prescribed is for completion of original block assessments
for the search and seizure proceedings. The period for issuing notice and completion of block assessment for all the concerned years (7 years) is
within two years. Now, in the opinion of the Court, to apply that general two years limitation, the block reassessment proceeding after remand is not a
feasible proposition. In the judgments in Nokia India (P) Ltd. vs. Deputy Commissioner of Income Tax, (2017) 85 Taxmann.com 291 (Del.) as well as
Commissioner of Income Tax vs. Bhan Textile P. Ltd., (2008) 300 ITR 176 (Del.) are relevant authorities. In PrincipalCommissioner ofIncome Tax
vs. PPC Business and Products P. Ltd., (2017) 398 ITR 71 (Del.), this Court emphasized the need to initiate the proceedings wherever the revenue
wished to proceed further in case of search and seizure within the time and underlined that in case the assessments are not initiated and completed
within the time prescribed, the valuable right accrues to the assessee.
The general provision of two years, in the opinion of the Court, has been provided with one important objective i.e. to cater to a specific situation
where upon search and seizure operation, if new material is found, already completed assessments are revisited. Had Parliament not prescribed such
a specific period of limitation, possibly, the assessee’s concern would have successfully urged that search and seizure proceedings would be
confined only to the concerned year in which the search operation took place. It was proposed to tide over such situation. The only provision that
prescribed a period of limitation in respect of remands at the relevant time at least in this case is Section 153(2A). In that sense, that period of
limitation prescribed for completion of remand (nine months) constituted a special provision, which applies to every class of remand regardless
whether they originate from assessments/re-assessments/revisions or search and seizure assessments. In these circumstances, completion of the
assessment proceedings for the block period by the impugned order dated 22.12.2017 was clearly beyond the period of limitation. As noticed earlier,
the last date by which the remand order could have been worked out validly was 31.12.2016.
For the forgoing reasons, the petitions have to succeed. The impugned order pursuant to the remand dated 22.12.2017 and all consequential orders
and actions are hereby quashed. The writ petitions are allowed. All the pending applications stand disposed of.