ASST. COMMISSIONER OF INCOME TAX, CC-2, SURAT vs. M/S. SAFFRON GEMS PVT. LTD., , SURAT

This is bunch of eight appeals, consisting four appeals filed by the Revenue and four cross appeals filed by the different assessees, pertaining to assessment years 2012-13 and 2017-18 (assessment year-wise), all are directed against the separate orders passed by the Learned Commissioner of Income-Tax (Appeals)-4, , 436, 350, 346, 431,440,351 & 347/SRT/22 A.Ys.12-13 &17-18 Surat (for short ‘Ld. CIT(A)’, dated 19.10.2022, 28.09.2022 and 29.09.2022, which in turn arise, out of separate assessment orders passed by the Assessing Officer under section 143(3)/ 147 of the Income Tax Act, 1961 (in short ‘the Act’).

At the outset, we note that appeal filed by the assessee in the case of M/s Nobal Jewels Pvt. Ltd. in for A.Y. 2017-18 is barred by limitation by one day. The Ld. Counsel for the assessee has explained that actually, it is not a delay in filing the appeal; it is rather a mistake in computing the days of delay, hence there is no question for condonation of delay.

We have heard both the parties on this preliminary issue and noted that while computing the delay, the date on which appeal has been filed, has not been excluded. We are of the view that the date on which appeal has been filed by the assessee, should not be included in computing the delay in filing the appeal, the reason being on said date the appeal has reached to the Registry of the Tribunal. Therefore, if the date of filing is excluded than there is no delay in filing this appeal. Hence, having regard to the reasons given by the Ld. Counsel for the assessee, we find that there is no delay in filing this appeal and therefore we admit the appeal for adjudication.

Since the issues involved in all these appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in in for assessment year 2017-18, have been taken into consideration for deciding the above appeals en masse.

The grounds of appeal

We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. First of all, we note that additional ground raised by the assessee, ought not to be treated as an additional ground. In the appeal memo along with Form No.36, the assessee has taken ground No.1 which is akin to an additional ground raised by the assessee before this Tribunal. For the sake of understanding, the original ground No.1 raised by the assessee, along with Form No.36, is reproduced below:

From the above ground of appeal, it is vivid that assessee has already taken the original ground No.1 raised by the assessee, along with Form No.36, which is akin to an additional ground raised by the assessee before this Tribunal. Therefore, we note that ld Counsel for the assessee as well as ld DR for the Revenue, both have misunderstood/confused whether it is an additional ground. No doubt, the assessee has taken an additional ground before this Tribunal, which is akin and similar to original ground No.1 raised by the assessee, hence there was no need to raise such additional ground by the assessee, as the original ground No.1 raised by the assessee is sufficient to adjudicate the legal issue involved.

We agree with the ld DR for the Revenue that assessee has raised first time in the original grounds of appeal

We are of the opinion that such objection raised by the Ld. CIT-DR for the Revenue should not be acceptable. We note ground No.1 raised by the assessee in the original grounds of appeal, is purely a legal issue and all facts are already on record which goes to the root of the matter and no further inquiry is required for deciding the same as all facts are already on record. Therefore, in the light of ratio laid down by the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd., vs. CIT (1998) 229 ITR 382 (SC), we admit the legal ground No.1 raised by the assessee, for adjudication.

On the other hand, Ld. CIT-DR for the Revenue submitted that the assessment order was framed within the extended period allowed by the Income Tax Act. Therefore, assessment should not be time barred and assessment framed by the Assessing Officer should not be quashed. Apart from this, Ld. CIT-DR submitted before the Bench a written submission about the time limit, which is reproduced below:

We have examined these above narrated facts with help of copy of Income Tax Return (ITR) filed before us for A.Y. 2017-18, u/s 139(1) of the Act, wherein it is mentioned that ITR was filed by assessee u/s 139(1) on 06.10.2017. We have examined the notice under section 143(2) of the Act, dated 27.09.2018, issued by the Assessing Officer, which is placed in paper book page-2 filed by the assessee. We have also examined the assessment order framed by the Assessing Officer u/s 143(3) of the Act on 30.09.2021 (vide intimation letter for order u/s 143(3) dated 01.10.2021, which is placed at page-3 of the paper book filed by the assessee). We note that as per section 153(1) of the Act, the time limit for completion of assessment u/s 153(1) of the Act was within 21 months from the end of assessment year, in which the income was first assessable and in assessee`s case it expires on 31.12.2019. Therefore, the Assessing Officer should have passed assessment order , 436, 350, 346, 431,440,351 & 347/SRT/22 A.Ys.12-13 &17-18 u/s 143(3) of the Act on or before 31.12.2019. However, the Assessing Officer has passed/framed assessment order u/s 143(3) of the Act on 30.09.2021, which is beyond the time-limit for completion of assessment u/s 153(1) of the Act. Therefore, based on this factual position, clearly the assessment order framed by the Assessing Officer is time barred and hence liable to be quashed.

We do not agree with arguments advanced by the Ld. CIT-DR for the Revenue to the effect that assessee’s case falls in the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 because “The Taxation and other Laws (relaxation and Amendment of Certain Provisions) Act, 2020 came into effect from 20.03.2020 to December, 2020 and further the time- limit was extended upto 30.09.2021.Therefore, we note that assessee’s case does not fall even in the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 because “The Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 came into effect from 20.03.2020 to December, 2020 and further the time-limit was extended upto 30.09.2021, however in the assessee’s case under consideration, the assessment must have been framed before 31.12.2019, which is prior to insertion of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Hence these amended provisions does not apply to the assessee under consideration.

We note that Constitution of India, vide Article 265 of the Constitution of India, which lays down that, “No tax shall be levied or collected except by authority of law”. The Hon’ble Supreme Court of India has held that the provision under Article 265 of the Constitution of India is applicable not only for levy but also for the collection of taxes and the expression “assessment” within its compass covers both the aspects carried out by the executive functionary. Chottabhai Vs. Union of India 1962 SCR Supl.2 1006. Therefore, it is required that whole of the process of taxation must follow the procedures which are valid under the law and must adhere to law i.e. substantive one as well as procedural one too. Therefore, in other words it is , 436, 350, 346, 431,440,351 & 347/SRT/22 A.Ys.12-13 &17-18 provided in the Constitution of India that every step should be taken to ensure that levy and collection of the taxes is strictly in accordance with law – not only substantive one but the procedural law, as well. 18. Time limit is laid down for dealing with the return of income filed by an assessee. The time limit for completion of assessment u/s 153(1) of the Act, in the assessee`s case is within 21 months. In the assesee`s case the assessment was not framed/passed by the Assessing Officer within 21 months from the end of the assessment year in which the income was first assessable, that is, on 31.12.2019. The Assessing Officer should follow the time limit prescribed under the Act, otherwise assessment order passed by him will not be recognized in the eye of law. Why the time limit in the Income Tax Act is so necessary? This is to ensure finality to all matters. Purpose behind time limit laid down in various provisions are: (i) To promote Repose. In the context of limitation of actions, "repose" includes at least four distinct but overlapping concepts: (a) to allow peace of mind; (b) to avoid disrupting settled expectations; (c) to reduce uncertainty about the future; and (d) to reduce the cost of measures designed to guard against the risk of untimely claims. (ii) Minimize Deterioration of Evidence. Another policy underlying statutes of limitation is the policy of avoiding deterioration of evidence. Like the policy of promoting repose, however, avoiding deterioration of evidence serves several distinct but overlapping purposes: (a) to ensure accuracy in fact finding; (b) to prevent the assertion of fraudulent claims; (c) to reduce the costs of litigation; and (d) to preserve the integrity of the legal system. (iii) Place Assessee and Revenue on an Equal Footing. One of the most powerful policies supporting limitation of actions is the concern that the passage of time will not only result in the deterioration of evidence, but that it will also allow the Assessee to gain an unfair advantage over the Revenue or reverse situation may happen. Many cases have recognized that one of the ITA Nos.432, 436, 350, 346, 431,440,351 & 347/SRT/22 A.Ys.12-13 &17-18 purposes of a limitation system is to avoid making it unreasonably difficult for defendants to answer the claims against them. (iv) Encourage the Prompt Enforcement of Substantive Law. Arguably, "the central purpose of law is to guide behavior."

Conclusion: At the cost of repetition, we state that assessment/reassessment framed/passed by the Assessing Officer is in violation of the provisions of the Act, that is, it is outside the time limit for completion of assessment u/s 153(1) of the Act, which was within 21 months. In the assesee`s case, the assessment was not framed/passed by the Assessing Officer within 21 months from the end of the assessment year in which the income was first assessable, that is, on 31.12.2019. The Assessing Officer has passed/framed assessment order u/s 143(3) of the Act on 30.09.2021, which is beyond the time-limit for completion of assessment u/s 153(1) of the Act. Therefore, assessment order framed by the Assessing Officer is in violation of the provisions of section 153(1) of the Act, which is bad in law, hence we quash the assessment order, dated 30.09.2021, framed by the Assessing Officer u/s 143(3) of the Act, being void ab initio.

In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that assessment order framed by the Assessing Officer was not in accordance with law, therefore we have quashed the assessment order. As the assessment/ reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

We have adjudicated the technical/legal issue by taking the “lead” case in in the case of Antique Exim Pvt. Ltd. for A.Y 2017-18 and the same identical and similar facts are involved in other remaining appeals of different assessees, therefore, our instant adjudication shall apply mutatis mutandis to other appeals of assessees also.

In the combined result, these four different assessees` appeals (in ITA No.432/SRT/2022, 350/SRT/2022, 431 & 351/SRT/2022) are allowed whereas , 436, 350, 346, 431,440,351 & 347/SRT/22 A.Ys.12-13 &17-18 Revenue’s four appeals (in 346/SRT/2022, 440/SRT/2022 and 347/SRT/2022) are dismissed.