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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 160 / 2008 Commissioner Of Income Tax Jai ----Appellant Versus Shri Jugal Kishore Garg ----Respondent Connected With D.B. Income Tax Appeal No. 170 / 2008 Commissioner Of Income Tax Jai ----Appellant Versus Shri Jugal Kishore Garg Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anil Mehta For Respondent(s) : Mr. Gunjan Pathak with Mr. Aditya Bohra _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 09/05/2017
Both these appeals involve common question of law and facts, hence, are decided by this common judgment. 1. By way of these appeals, the department has assailed the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal preferred by the department and partly allowed the appeal preferred by the assesseee.
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This Court while admitting the appeal (160/2008) on the following substantial question of law:- “Whether the ITAT was right and justified in dismissing the appeal as having become infructuous and not deciding the same on merits, on the ground that the asseessment order has been quashed on the ground of being barred by limitation?” 3. Another appeal (170/2008) has been admitted on the following questions of law”- “i) Whether the ITAT was right and justified in quashing the assessment order by holding ity to be barred by limitation, inspite of the fact that the order was passed within the limitation and the said issue was never raised by the assessee before the first appellant authority? ii) Whether the ITAT was justified in observing that the AO has initiated reassessment proceedings during the pendency of a fresh assessment of the set aside case, ignoring the fact that in the present case the ITAT vide its earlier order dated 29.05.98 has held the assessment made under Section 144 as invalid and not legally correct and thus, in the present case there was no issue of set aside assessment?” 4. Counsel for the appellant contended that the Tribunal has seriously committed an error in dismissing the appeal preferred by the department and appeal preferred by the assessee has wrongly been partly allowed. 5. However, we have gone through the order of the CIT(A) as well as the Tribunal. The Tribunal in para 2.5 observed as under:- “2.5. We have considered the arguments advanced by the parties in view of orders of the lower authorities and the decisions relied upon by the Ld. AR. The proviso to sub-section (2A) to section 153 of the Act has come in effect from 01.06.2001
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substituted by the Finance Act, 2001. In this proviso it has been made clear that where the order u/s 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order u/s 263 or section 264 is passed by the Chief Commissioner or Commissioner, on or after the first day of April, 1999 but before the first day of April, 2000, such an order of fresh assessment may be made at any time upto the 31st day of March, 2002. In the present case before us the order in the appeal in the first round was passed on 29.05.1998 which might have been received by the Chief Commissioner or Commissioner well before 01.04.1999 as no such objection has been raised by the department in the present case that the order of the Tribunal was received on or after 01.04.1999 and before 01.04.2000. Thus the computation of limitation of time for passing of assessment order in compliance of the order of the Tribunal will not come within the ambit of the proviso to sub-section(2A) to section 153 of the Act, as submitted by the Ld. DR. The prescribed time limitation for passing of assessment order in compliance of the order of the Tribunal as per sub- section (2A) to section 153 of the Act before its amendment with effect from 01.06.2001 was two years from the end of the financial year in which the order u/s 254 is received by the chief commissioner or commissioner. After amendment of this sub section with fact from 01.06.2001 this time limit has been reduced to 1 year. Thus in the present case the time limit for passing the assessment order before the AO was upto 31.03.2001. The assessment order however has been passed on 28.03.2002 i.e. much after the expiry of the time limit. Besides above we find substance in the submission of the Ld. AR that in view of decision of Hon’ble Supreme Court in the case of CIT Vs. Rao Thakur Narayan Singh (supra) the assessment cannot be reopened merely to get over adverse finding given by any appellate authority in original assessment proceedings. It is also unestablished position of law that in case an assessment had been completed by the AO and the same is set aside in appeal, in such a situation, initiation of reassessment proceeding is not possible till a fresh assessment of the set aside case has been completed. This is so because, so long as assessment, as per appellate direction, or otherwise, is pending, the AO cannot have any reason to believe that income for the year has escaped assessment. Income cannot be said to have escaped assessment within the meaning of section 147, if the assessment proceeding in respect of income are still pending and have not yet
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terminated in a final order. In this regard we find support from the decision of Hob’ble Supreme Court in the case of Ghanshyam Das Vs. Regional Asst. Comm. Of S.T. (supra) and of Hon’ble Allahabad High Court in the case of S.P. Kochhar Vs. ITO (supra) relied on by the Ld. AR. We thus hold that the assessment order dated 28.03.02 in the present case is barred by limitation. The same is thus quashed. The ground Nos. 1 to 3 are thus decided in favour of the assessee.” 6. Taking into consideration the decision of the Supreme Court in the case of Ghanshyam Das vs. Regional Assistant Commissioner of S.T. (1964) 51 ITR 557 (Sc) and the decision of the Allahabad High Court in the case of S.P. Kochar vs. ITO, (1984) 145 ITR 255,264 (All.), in our considered opinion, the Tribunal has not committed any error. 7. The issue is answered in favour of the assessee and against the department. 8. The appeals stand dismissed. A copy of this order be placed in each file.
(VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. A.Sharma/84-85