ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PANAJI AND ANR., vs. THE GOA STATE CO-OP. BANK LTD., THR. ITS MANAGING DIRECTOR, A.M. CHODANKAR.,

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CAREV/34/2017HC BombayHCBM05004229201727 December 2017Author: HON'BLE SHRI JUSTICE M. S. SONAK4 pages
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What did the High Court hold?

The High Court clarified that the period of four weeks, during which the department was restrained from giving effect to the assessment order, would have to be excluded for the purpose of determining the limitation as prescribed under Section 153(2) of the Income Tax Act, 1961. This exclusion would grant the department liberty to give effect to the assessment order post-December 31, 2017, without facing technical objections on this score. The Court also clarified that this clarification, or the original order, would not affect or prejudice the rights of the original petitioner (assessee) to challenge the assessment order on merits if it were unfavorable, nor would it affect their right to challenge any order rejecting their objections. The Court noted that neither party had serious disputes regarding the relief granted in the original order, but the department's anxiety was about potential technical objections.

What were the facts?

The applicants, Assistant Commissioner of Income Tax and another, filed a Civil Application (Review) seeking clarification of an order passed by the Bombay High Court at Goa in Writ Petition No. 1087/2017. The original writ petition directed the respondent, The Goa State Co-op. Bank Ltd., to attend a hearing before the Income Tax Officer on December 15, 2017, after which the officer was to pass necessary orders as per law, giving effect to the orders after four weeks. The applicants sought clarification because the four-week period for giving effect to the order would extend beyond December 31, 2017, potentially transgressing the limitation period under Section 153(2) of the Income Tax Act, 1961.

What were the issues?

1. Whether the period of four weeks, during which the department is restrained from giving effect to the assessment order, should be excluded for the purpose of determining the limitation prescribed under Section 153(2) of the Income Tax Act, 1961, to avoid a technical objection regarding the assessment order being passed after the stipulated period. Assessee's Contention (Revenue): The applicants (Revenue) argued that Section 153(2) of the Income Tax Act, 1961, mandates that no order of assessment, reassessment, or recomputation shall be made after the expiry of nine months from the end of the financial year in which the notice under Section 148 was served, which ends on December 31, 2017. They submitted that giving effect to the order after four weeks would transgress this date and requested a suitable clarification. They relied on Section 153(2) of the Income Tax Act, 1961. Revenue's Contention (Assessee): The respondent (Assessee) pointed out that the relief granted was inconsistent with a similar relief in *Allana Cold Storage Ltd. Vs. Income-Tax Officer and others*. They also submitted that any clarification should not prejudice their right to challenge the assessment order on merits if it is unfavorable.

Which sections of the Income-tax Act were involved?

Section 153(2),Section 147,Section 148,Section 153(4)(ii)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF BOMBAY AT GOA. Civil Application (Review) No.34 of 2017 in Writ Petition No.1087/2017 Asst. Commissioner of Income Tax, Circle 1 (1), Panaji and another. Applicants

Versus The Goa State Co-op.Bank Ltd. Through Its Managing Director Respondent … Ms. Susan Linhares, Advocate for the Applicants. Mr. Rana Revonkar, Advocate for the Respondent.

CORAM : M.S.SONAK, J. DATED :27th DECEMBER, 2017. P.C. Heard Ms. S.Linhares, learned counsel for the Income Tax Department and Mr. Rana, learned counsel for the original petitioner.

2.

Though, this petition, is styled as a Review Petition, there is a common ground that what is necessary is not some review but only a clarification.

3.

This Court, while disposing of Writ Petition No.1087/2017, in paragraph 2 has observed as follows:-

2 “The Petitioner will attend the hearing before the Respondents Officer on 15 December 2017 and thereupon the Respondents Officer will pass necessary orders as per law in view of the law laid down by the Hon'ble Apex Court in four weeks as precedent”

4.

Ms. S.Linhares points out that in terms of Section 153 (2) of the Income Tax Act, 1961, no order of assessment, reassessment or recomputation shall be made under Section 147 after the expiry of nine months from the end of the financial year in which the notice under Section 148 was served. She submits that this period ends on 31st December, 2017. She submits that since, there is a direction that the Assessment Order is to be given effect to after a period of four weeks, such period, will transgress the stipulated date of 31st December, 2017. Accordingly, she requests for a suitable clarification.

5.

Mr. Rivonkar points out that the relief granted to the original petitioner in terms of paragraph 2 of the order dated

3 13th December, 2017, is entirely inconsistent with the similar relief granted by the Division Bench in case of Allana Cold Storage Ltd. Vs. Income-Tax Officer and others (supra).

6.

In any case, he submits that, even if, any clarification is received, the same ought not to prejudice the right of the petitioner to challenge the assessment order, in case, the same is unfavourable to the petitioner.

7.

Upon due consideration of the matter, it transpires that neither of the parties have any serious disputes as regards the relief granted in terms of paragraph 2 of the order dated 13th December, 2017. The anxiety of the Department, however, is that no technical objection should be raised by the petitioners, since, in this case, the assessment order, will have given effect to post 31st December, 2017. 8. If the provisions of Section 153 (4) (ii) of the Income Tax Act are taken into consideration, then, there is no necessity for such anxiety. In any case, it is clarified that the period of four weeks during which, the department, is restrained from giving effect to the assessment order, will have to be excluded for the purpose of determining the limitation, as prescribed under Section 153 (2) of the Income Tax Act. This means that 4 the Department, will have liberty to give effect of the assessment order post 31st December, 2017, without fear of any technical objections of this score. The position is clarified accordingly.

9.

It is further clarified that nothing in this clarification/order or for that matter the original order shall in any way, affect or prejudice the rights of the original petitioner to challenge the assessment order on merits in case, such assessment order is unfavourable to the petitioner. Further, nothing in this clarification, will even remotely affect or prejudice the right of the petitioner to challenge the order by which their objections may have been rejected.

10.

With the clarification, as aforesaid, this petition is disposed of.

11.

All concerned to act on the basis of the authenticated copy of the order. M.S.SONAK, J. mukund

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