COMMISSIONER OF INCOME TAX,JLDHR vs. M/S GURU NANAK MERCANTILE CO.,JLDHR

ITR/221/1995HC Punjab & HaryanaPHHC01032281199503 April 2007Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR7 pages
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What did the High Court hold?

The High Court held that the ITAT was not right in law in holding that the extended time limitation period of 180 days under Explanation 1(iv) to Section 153 was not available. The Court reasoned that an Explanation to a section is part of the section and must be read along with it. The Court noted that the order under Section 250 was passed on September 10, 1981. The normal limitation period under Section 153(2A) would have allowed a fresh assessment order by March 31, 1984. However, the proceedings under Section 144B involved a period of 173 days (from January 23, 1984, to July 19, 1984). If this period is excluded as per Explanation 1(iv), the fresh assessment order passed on July 21, 1984, would fall within the extended limitation period. The Court relied on its own previous decisions and the Supreme Court's ruling that explanations are part of the section. Therefore, the question of law was answered in favour of the revenue.

What were the facts?

The assessee, M/s Guru Nanak Mercantile Company, Jalandhar, filed a return for assessment year 1978-79 declaring income at Rs. 94,410. The assessment was completed at Rs. 1,62,740. The Commissioner of Income-tax (Appeals) [CIT(A)] set aside this assessment. A fresh assessment order was passed on July 21, 1984, after a draft order was sent to the assessee on January 23, 1984, and directions were received from the Inspecting Assistant Commissioner on July 19, 1984. The CIT(A) partially deleted additions in appeal. The Income Tax Appellate Tribunal (ITAT) accepted the assessee's further appeal, holding the assessment barred by time under Section 153(2A) as it was not completed within two years of the remand order. The ITAT did not allow the benefit of the extended 180-day limitation period under Explanation 1(iv) to Section 153.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the extended time limitation period of 180 days stipulated under Explanation 1(iv) of Section 153 of the Income Tax Act, 1961, was not available to set aside assessment? Assessee's contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's decision, which was in favour of the assessee, was that the assessment was barred by time and the extended period was not available. Revenue's contention: The revenue argued that the ITAT erred in interpreting Section 153 of the Act. It contended that Explanation 1(iv) to Section 153, which provides for excluding a period not exceeding 180 days for proceedings under Section 144B, is an integral part of the section and must be read along with it. The revenue argued that this extended period should have been considered, making the assessment within the limitation period. The revenue relied on the Supreme Court's decision in K.P. Madhusudhanan Vs. Commissioner of Income-Tax (2001) 251 ITR 99, and this Court's decisions in Commissioner of Income-Tax Vs. Gheru Lal Bal Chand (1998) 233 ITR 82, Commissioner of Income-Tax Vs. Suri Sons (1998) 233 ITR 91, and Commissioner of Income-Tax Vs. Soccer International (2002) 254 ITR 287.

Which sections of the Income-tax Act were involved?

Section 153,Section 143(3),Section 144B,Section 250,Section 256(2)

AI-generated summary — verify with the full judgment below

I.T.R.

-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.

Date of decision: 3.4.2007 **** The Commissioner of Income-Tax, Jalandhar ...Petitioner Versus M/s Guru Nanak Mercantile Company, Jalandhar ...Respondent CORAM: HON'BLE MR.JUSTICE M.M.KUMAR HON'BLE MR.JUSTICE RAJESH BINDAL **** Present: Mr.Sanjiv Bansal, Advocate for the revenue. **** RAJESH BINDAL, J. Following question of law had been referred for opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar ( for short 'the Tribunal') arising out of its order dated 16.10.1992 passed in I.T.A.No.42(ASR)/1988, in respect of the assessment year 1978-79:- “Whether on the facts and in the circumstances of the case, the I.T.A.T. was right in law in holding that the extended time limitation period of 180 days stipulated under explanation 1(iv) of Section 153 of the I.T.Act, 1961 was not available to set aside assessment?” Briefly the facts, as noticed in the statement of case, are that I.T.R.

-2- *** the assessee was deriving income from manufacture and

The order continues below.

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