CIT vs. MADAN LAL SAINI

ITA/468/2007HC Punjab & HaryanaPHHC01073170200704 April 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL6 pages
AI SummaryRemanded

What were the facts?

The Revenue (Commissioner of Income Tax, Faridabad) appealed against an order of the Income Tax Appellate Tribunal (ITAT) which annulled a block assessment order passed against the assessee, Shri M.L. Saini. A search and seizure operation was conducted on the assessee's premises on March 12, 1999. An initial block assessment for the period April 1, 1989, to March 31, 1999, was completed on March 31, 2001. This order was set aside by the Commissioner of Income Tax (CIT) under Section 263 on November 20, 2001. Following the CIT's order, a fresh assessment was framed on March 31, 2003. The assessee appealed to the CIT(Appeals), who granted partial relief. The assessee then appealed to the ITAT, which annulled the Assessing Officer's order dated March 31, 2003, on the grounds of limitation.

What did the High Court hold?

The High Court found substantial force in the revenue's submissions. It noted that Section 158BE prescribes time limits for block assessments, but Section 158BH states that all other provisions of the Act apply to block assessments. Therefore, Section 263 of the Act is applicable, and consequently, the limitation for passing a fresh assessment order under Section 153(2A) also applies. Section 153(2A) allows a fresh assessment order to be made within one year from the end of the financial year in which the order under Section 263 is passed. In this case, the CIT's order under Section 263 was passed on November 11, 2001 (though paragraph 4 states November 20, 2001, paragraph 10 clarifies November 11, 2001, for calculation). The end of that financial year was March 31, 2002. Therefore, the fresh assessment order could be passed by March 31, 2003. The assessment order dated March 31, 2003, was thus within the prescribed limitation. The High Court held that the ITAT erred in applying the limitation period of Section 158BE even when the CIT had initiated action under Section 263. The appeals were allowed, and the ITAT's order was set aside, remanding the matter to the ITAT for a fresh decision on merits.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the order of the ITAT is correct in annulling the order passed by the Assessing Officer under Section 158BC of the Income Tax Act, 1961, in compliance with the order under Section 263 passed by the CIT? (Question of law) 2. Without prejudice to the first ground, on the facts and circumstances of the case, whether the ITAT is right in holding that the order passed by the Assessing Officer was passed beyond the time limit prescribed for completing assessment under Chapter XIV-B of the Income Tax Act due to non-applicability of Section 153 of the Income Tax Act in this case? (Question of mixed law and fact) Revenue's Contention: The revenue argued that the search was conducted on March 12, 1999, and the initial assessment on March 31, 2001, was within the time limit under Section 158BE. Following the CIT's order under Section 263 on November 20, 2001, a fresh assessment was passed on March 31, 2003. The revenue contended that Section 158BH made other provisions of the Act applicable, including Section 153(2A), which allowed for a fresh assessment within one year from the end of the financial year in which the Section 263 order was passed. Thus, the assessment on March 31, 2003, was within the one-year period from April 1, 2002, to March 31, 2003. Assessee's Contention: The judgment does not record any specific contentions made by the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 158BC,Section 143(3),Section 263,Section 158BE,Section 158BH,Section 153(2A),Section 153

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 4.4.2011 Commissioner of Income Tax, Faridabad ....Appellant. Versus Shri M.L. Saini ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel, for the appellant. AJAY KUMAR MITTAL, J.

1.

Since the Registry has not been able to send the file of ITA No. 468 of 2007 on account of the fire incident in the concerned Branch of the Court, learned counsel for the revenue has furnished photostat copies of the paper books which are taken on record and the same are treated as reconstructed files of the appeal.

2.

This order shall dispose of ITA Nos. 468 of 2007 and 641 of 2008 as, according to the learned counsel, identical questions are involved in both the appeals. For brevity, the facts are being extracted from ITA No. 468 of 2007. 3. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 10.6.2006 passed by the Income Tax Appellate -2- Tribunal, Delhi Bench “C”, New Delhi (h

The order continues below.

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