PR. COMMISSIONER OF INCOME TAX-1, JODHPUR vs. VIRENDRA CHOUDHARY

Order 05/03/2022 This appeal is filed by the Revenue to challenge the judgment of the Income Tax Appellate Tribunal. Following questions were argued before us:

“1. Whether on the facts and circumstances of the case, the Ld. ITAT is correct in law to adjudicate on limitation matter instead of adjudicating the jurisdiction of CIT(A) to decide on limitation matter when such ground was not taken by the assessee before CIT(A), as per the ground raised by the department before it?

(2 of 6) [ITA-9/2021] on 31.03.2016, the assessee challenged the same before the Commissioner (Appeals) and raised the question of assessment being framed after expiry of period of limitation. The Commissioner (Appeals) referred to Section 153-B of the Income- Tax Act, 1961 (for short, ‘the Act’) as it stood at the relevant time and came to the conclusion that the order of assessment was passed after the period of limitation had expired. The relevant observations of the Commissioner (Appeals) are quoted below:

“4. 3. Before I proceed to decide the issue regarding time- limit for completion of this assessment u/s. 153C of the Act, it would be appropriate to refer to the provisions of sec. 153B of the Act which is relevant to the issue at hand. Section 153B of the Act reads as under:- “[Time-limit for completion of assessment under section 153 A.] (1) Notwithstanding anything contained in section 153, the Assessing officer shall make an order of assessment or reassessment, - a) in respect of each assessment year falling within six assessment years referred to in clause (b) of [sub- section (1) of section 153A], within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed; b) In respect of the assessment year relevant to the previous year in which search is conducted under section 132 of requisition is made under section 132A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed: [Provided further that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this sub-section or one year from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later :]

(3 of 6) [ITA-9/2021] [Provided further that in the case where the last of the authorisations for search under section 132 or for requisition under section 132A was executed during the financial year commencing [on the 1st day of April, 2004 or any subsequent financial year],- (i) The provisions of clause (a) or clause (b) of this sub- section shall have effect as if for the words “two years” the words “twenty-one months” has been substituted; (ii) the period of limitation for making the assessment or reassessment in case of other person referred to in section 153C, shall be the period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later :] [Provided also that in case where the last of the authorisations for search under section 132 or for requisition under section 132A was executed during the financial year………………..” 4.3. 1. The prominent facts as extracted from the assessment order and assessment records of this case are that search u/s. 132 of the Act was carried out at various premises of Siyaram Group (Katta) on 31.07.2012 in which certain papers pertaining to the assessee were seized. As in this case, the last of the authorization for search u/s. 132 was executed during the financial year 2012-13, therefore, as per second proviso of section 153B which is inserted by the Finance Act, 2006 w.e.f. 01.06.2006, the time limit for completion of assessment u/s. 153C would be twenty-one months from the end of the financial year 2012-13. Thus this time limit would be upto 31.12.2014. 4.3. 2. Upon perusal of letter dated 26.09.2014, it clearly evident that ACIT, Central Circle-3, Jaipur had sent these information/documents relating to the assessee to DCIT, Circle-2, Bikaner vide this letter, which was received by the office of DCIT, Circle-2, Bikaner on 30.09.2014. (4 of 6) [ITA-9/2021] 4.3. 3. Thus, it is obvious that documents were received by the DCIT, Circle-2, Bikaner 30.09.2014 and therefore, the time-barring date as per second proviso to section 153B which has been emphasized above for passing order u/s. 153C of the Act would be nine months from the end of the financial year 2014-15 i.e. 31.12.2015. The later of the two dates 31.12.2014 or 31.12.2015 would be the time-barring date for passing order u/s. 153C of the Act in this case which is 31.12.2015. However the order u/s. 153C/143(3) has been passed on 31.03.2016 which is beyond the limitation date of 31.12.2015 as discussed above. The above facts make it clear that the order has been passed beyond the limitation date and is time-barred. An order which is barred by limitation is not a valid order and is liable to be quashed.” The revenue challenged the order of the Commissioner (Appeals) before the Tribunal. The Tribunal dismissed the appeal, upon which this appeal has been filed before the High Court. In this appeal, two main grounds are raised. One, that the Commissioner (Appeals) committed an error in entertaining the ground of assessment order being time-barred at the appellate stage when such ground was not raised before the assessing officer. The second challenge is to the very interpretation of the time-limit provision contained in the Act adopted by the Commissioner and the Tribunal. With respect to the first ground we have no hesitation in rejecting the same. The facts necessary to ascertain whether the order of assessment was passed within the period of limitation prescribed under the Act or not were very much on record. Being a pure question of law, it was open for the Commissioner to entertain the same for the first time at the appellate stage also.

Coming to the interpretation of the provision contained in the Act, the Commissioner in his above quoted portion of the order has reproduced Section 153B as it stood at the relevant time.

(5 of 6) [ITA-9/2021] This section lays down the period of limitation for completing assessment under Section 153A. Sub-Section (1) of Section 153B starts with non-obstante clause providing that notwithstanding anything contained under Section 153, the assessing officer shall make an order of assessment or re-assessment as per the time limitation provided the said sub-section (1). Clause (b) of sub- section (1) of Section 153B provides that the time limit for completing the assessment or re-assessment in respect of assessment year relevant to the previous year in which search is conducted under Section 132 or requisition is made under Section 132A would be withihn a period of two years from the end of the financial year in which the last of the authorisations for the search under Section 132 or for requisition under Section 132A was issued. This clause has two provisos. We are concerned with the further proviso and it provides that in the case where the last of the authorisations for search under Section 132 or for requisition under Section 132A was issued during the financial year commencing on first day of April 2004 for such subsequent financial year, as per sub-clause (ii), the period of limitation for making assessment or re-assessment in case of other person referred to in Section 153C would be twenty-one months from the end of the financial year in which the last of the auhorisations for search under Section 132 or for requisition is made under Section 132A was issued or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under Section 153C to the assessing officer having jurisdiction over such other person, whichever is later.

(6 of 6) [ITA-9/2021] The case of the assessee thus was covered under clause (ii) of further proviso to Section 153B(1)(b). The Commissioner, therefore, correctly examined the factual position in the background of such legal proviso and noted that the documents relating to the assessee were sent to the assessing officer and were received by him on 30.09.2014. As per the second proviso, the time-limit for passing assessment would be nine months from the end of financial year of 2014-15 i.e. 31.12.2015 or twenty-one months from the end of financial year in which last of the authorisation and search were made, whichever is later. In this case, these two relevant dates were 31.12.2015 and 31.12.2014 respectively. The assessing officer had to pass the order of assessment latest by 31.02.2015. He completed the assessment on 31.03.2016, which was clearly time-barred. No question of law arises.

The appeal is dismissed. (REKHA BORANA),J (AKIL KURESHI),CJ 15-a.asopa/-