A.O.ANTONY V. INCOME TAX OFFICER

OP/31520/2002

AI Insights

The case involves A.O. Antony (deceased), represented by A.A. Ouseph, challenging the orders passed by the Income Tax Officer and the Commissioner of Income Tax, Thrissur, under Sections 155 and 264 of the Income Tax Act, 1961, respectively. The petitioner was a partner in M/S Modern Arecanut Company during the assessment years 86-87 to 88-89. The core issue was the applicability of the limitation period for the orders passed under the aforementioned sections, following a series of orders and rectifications by the Settlement Commission. The court examined whether the final order of the Settlement Commission or the subsequent rectification and revision orders should determine the limitation period for the tax assessments.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 755845 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 07-06-2013
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income tax, Kanpur v. Kailashpat Jutha Lal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: K M V P ANDALA
• Keywords: Assessment; Income Tax; Rectification; Revision; Settlement commission
• Section: 154; 264; 155

Judgement Text

"1IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE B.P.RA Y FRIDAY, THE 7TH DAY OF JUNE 2013/17TH JYAISHTA 1935 OP.No. 31520 of 2002 (B) ------------------------- PETITIONER(S): -------------------------- A.O.ANTONY (DECEASED) REPRESENTED BY L/H. A.A. OUSEPH, M/S. MODERN ARECANUT CO., KOKKALAI, THRISSUR. BY ADV. SRI.KMV.PAND ALAI. RESPONDENT(S): ---------------------------- 1. INCOME TAX OFFICER, WARD 5, DIVISION I, THRISSUR. 2. THE COMMISSIONER OF INCOME TAX, THRISSUR. BY ADV. MR.JOSE JOSEPH, SC - INCOME TAX THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 24/01/2012, ALONG WITH OP. NO.27619 OF 2002 AND CONNECTED CASES,THE COURT ON 07/06/2013 DELIVERED THE FOLLOWING: rs. OP.No. 31520 of 2002 (B) APPENDIX PETITIONER'S EXHIBITS:- EXT.P1 COPY OF THE COMMON ORDER PASSED BY THE SETTLEMENT COMMISSION ON 28/12/1995 FOR 86-87 TO 94-95 IN THE CASE OF MODERN ARECANUT CO. EXT.P2 COPY OF THE ORDER PASSED BY THE SETTLEMENT COMMISSION ON 18/08/1999. EXT.P3 COPY OF THE NOTICE U/S. 154/155 DATED 16/06/2000 ISSUED BY THE 1ST RESPONDENT FOR 1986-87. EXT.P3A COPY OF THE NOTICE U/S. 154/155 DATED 16/06/2000 ISSUED BY THE 1ST RESPONDENT FOR 1987-88. EXT.P3B COPY OF THE NOTICE U/S. 154/155 DATED 16/06/2000 ISSUED BY THE 1ST RESPONDENT FOR 1988-89. EXT.P4 COPY OF THE OBJECTION FILED BY THE PETITIONER ON 07/07/2000 FOR 86-87, 87-88 AND 88-89. EXT.P5 COPY OF THE ORDER U/S. 155 PASSED BY THE 1ST RESPONDENT ON 11/08/2000 FOR 1986-87. EXT.P5A COPY OF THE ORDER U/S. 155 PASSED BY THE 1ST RESPONDENT ON 11/08/2000 FOR 1987-88. EXT.P5B COPY OF THE ORDER U/S. 155 PASSED BY THE 1ST RESPONDENT ON 11/08/2000 FOR 1988-89. EXT.P6 COPY OF THE REVISION PETITION DATED 23/08/2000 FILED U/S. 264 BEFORE THE 2ND RESPONDENT FOR 86-87. EXT.P6A COPY OF THE REVISION PETITION DATED 28/08/2000 FILED U/S. 264 BEFORE THE 2ND RESPONDENT FOR 87-88. EXT.P6B COPY OF THE REVISION PETITION DATED 28/08/2000 FILED U/S. 264 BEFORE THE 2ND RESPONDENT FOR 88-89. EXT.P7 COPY OF THE ORDER U/S. 264 DATED 11/03/2002 PASSED BY THE 2ND RESPONDENT FOR 1986-87. EXT.P7A COPY OF THE ORDER U/S. 264 DATED 11/03/2002 PASSED BY THE 2ND RESPONDENT FOR 1987-88. EXT.P7B COPY OF THE ORDER U/S. 264 DATED 11/03/2002 PASSED BY THE 2ND RESPONDENT FOR 1988-89. RESPONDENT'S EXHIBITS:- NIL. //TRUE COPY// P.A. TO JUDGE. rs. B.P.RAY, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - O.P.Nos.31520, 31519, 29565 & 27619 OF 2002 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 7th day of June, 2013 JUDGMENT Since the issues involved in these four original petitions are common, they are being disposed of by this common judgment. 2. Petitioners in these original petitions were partners in a firm M/S Modern Arecanut Company during the period relevant for the assessment years 86-87; 87-88 and 88-89. The petitioners are challenging Exts.P5, P5 (a) and P5(b) orders dated 11-8-2000 passed by the first respondent under Section 155 of the IT Act, 1961 and Exts.P7, P7(a) and P7(b) Revision orders dated 11-3-2002 passed by the second respondent under Section 264 of the Act. 3. Learned counsel for the petitioners submits that the Settlement Commission passed Ext.P1 order on 28-12-1995 under Section 254D in the case of the firm in which the petitioners were partners for the assessment years 86-87 to 94-95 and apportioned the total income among the partners. Subsequently Ext.P2 order was passed by the Settlement Commission on 18-8-1999 rectifying the mistakes crept in the calculation of interest payable by the firm. According to learned counsel for the petitioners, as per Ext.P2 order there was no alteration or variation in the total income of O.P.Nos.31520, 31519, 29565 & 27619 OF 2002 :: 2 :: the firm or the apportionment of the total income among the partners. Once an order of rectification is passed the assessment itself is modified and what remains is not the order of rectification, but the order of assessment. Therefore, Ext.P1 order dated 28-12-1995 is the final order. 4. Heard learned counsel for the petitioners and Sri.Jose Joseph, learned Standing Counsel appearing for the respondents. I have gone through Exts.P1 and P2 orders. 5. Mr.Jose Joseph, learned Standing Counsel appearing for the Income Tax Department contends that since the matter was pending before the Settlement Commission at the behest of the petitioners by filing rectification application, the date of disposal is to be considered and not Ext.P1 order. 6. Learned counsel for the petitioners has relied upon a decision reported in (1980) 125 ITR II (Commissioner of Income tax, Kanpur v. Kailashpat Jutha Lal) wherein the Court held as follows: “in our opinion since the apportionment of total income amongst the partners constitutes a part of the assessment procedure of ascertainment and imposition of tax liability on the firm as also on the partners, the final order shall be taken to have been passed on the date on which such apportionment order is made and for the purpose of amendment under O.P.Nos.31520, 31519, 29565 & 27619 OF 2002 :: 3 :: Section 155(1) or (2) four years period is to be counted from the date of that order”. Considering the entire facts and circumstances of the case, I find no substantial change in the nature of the order passed in the year 1995. Therefore, Ext.P1 order dated 28-12-1995 is final order. For any order passed under Section 155 of the Act, the limitation period is to be reckoned with reference to Ext.P1 order dated 28-12-1995 passed by the Settlement Commission. Thus, in this case, orders under Section 155 ought to have been passed before 31-3-2000 i.e., 4 years from the end of the financial year in which Ext.P1 order was passed by the Settlement Commission. Hence the impugned orders Exts.P5 and P7 series are liable to be quashed and I do so. The original petitions are allowed. There will be no orders as to cost. B.P.RAY, JUDGE jes O.P.Nos.31520, 31519, 29565 & 27619 OF 2002 :: 4 :: B.P.RAY, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - O.P.Nos.31520, 31519, 29565 & 27619 OF 2002 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - JUDGMENT Dated 7th June, 2013 "