C I T V. M/S PINKCITY VASTRA UDYOG

ITA/108/2004

AI Insights

The case involves multiple appeals by the Commissioner of Income Tax (CIT) against various respondents, including M/S Pinkcity Vastra Udyog and Asha Sharma, concerning the validity of block assessment orders issued under sections 158BC and 158BD of the Income Tax Act. The core issue was the calculation of the limitation period for these assessments, with the ITAT having ruled that the period should be counted from an earlier notice dated 23.7.1998, which was later found to be void and was superseded by a new notice on 23.9.1999. The CIT challenged this interpretation, arguing that the later notice should reset the limitation period. The High Court of Rajasthan, referencing a similar case, upheld the ITAT's decision, dismissing the appeals and confirming that the block assessments were time-barred.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 756106 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 17-01-2017
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. Harsh Enterprises
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P K KASLIWAL
• Assessee Lawyers: ANUROOP SINGHI
• Keywords: Block assessment; Limitation; Time barred; Notice supersession
• Section: 132; 158BC; 158BD; 158BE(2)(b)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 108 / 2004 C I T ----Appellant Versus M/S Pinkcity Vastra Udyog ----Respondent Connected With D.B.INCOME TAX APPEAL No. 113 / 2004 C I T ----Appellant Versus Asha Sharma ----Respondent D.B.INCOME TAX APPEAL No. 116 / 2004 C I T ----Appellant Versus M/S Pinkcity Taxtile Ind ----Respondent D.B.INCOME TAX APPEAL No. 54 / 2005 C I T Jaipur ----Appellant Versus Pathik Bhawan Nirman Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi For Respondent(s) : Mr. P.K. Kasliwal _____________________________________________________ (2 of 5) [ITA-108/2004] HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Judgment 17/01/2017 1. All these appeals since involve identical substantial questions of law, therefore heard together & are being decided by this common judgment. 2. By way of these appeals, the appellants have assailed the judgment and order of the tribunal whereby tribunal has dismissed the appeals preferred by the department and confirmed the order of CIT (A). 3. The facts of the case are that the search u/s 132 of I.T. Act to all these persons. On 23.9.1999, the AO issued another notice u/s 158BD with a covering letter in which it was stated that subsequent notice issued on 23.9.1999 was in supersession to the earlier notice issued on 23.7.1998. When the assessment proceedings were taken up and the matter was fixed for hearing on 20.8.2001, these persons stated that the limitation for completion of block assessment u/s 158BE(2)(b) of the Act was to be counted from the date of first notice i.e. 23.7.1998 and second notice issued on 23.9.1999 was only a reminder/intimation of the earlier notice which was pending. Taking into consideration the first notice issued on 23.7.1998, the limitation of completion of block assessment expired on 31.9.2000 and no assessment order of block assessment was passed till 31.7.2000. Thus, the block assessment was barred by limitation on 1.8.2000. 4. This court while admitting the appeals framed the following substantial questions of law:- Appeal No.108/2004 (3 of 5) [ITA-108/2004] “1. Whether the I.T.A.T. was right and justified in giving relief of Rs.14,34,965/- to the assessee by holding that the assessment order passed u/s 158BD has been time barred as the limitation period will be counted from the date of earlier notice issued u/s 158BC on 23.7.98 and not from the fresh notice issued u/s 158BD on 23.9.09, by which earlier notice issued u/s 158BC was superseded/withdrawn? 2. Whether on the facts and circumstances of the case, the earlier notice issued u/s 158BC can become the basis of calculating the period of limitation when such notice was void ab initio and was superseded by a fresh notice issued u/s 158BD. 3. Whether on the facts and circumstances of the case, the finding of the I.T.A.T. is perverse, contrary to the record and untenable in the eye of law?” Appeal No.116/2004 “1. Whether the I.T.A.T. was right and justified in giving relief of Rs.26,90,969/- to the assessee by holding that the assessment order passed u/s 158BD has been time barred as the limitation period will be counted from the date of earlier notice issued u/s 158BC on 23.7.98 and not from the fresh notice issued u/s 158BD on 23.9.09, by which earlier notice issued u/s 158BC was superseded/withdrawn? 2. Whether on the facts and circumstances of the case, the earlier notice issued u/s 158BC can become the basis of calculating the period of limitation when such notice was void ab initio and was superseded by a fresh notice issued u/s 158BD. 3. Whether on the facts and circumstances of the case, the finding of the I.T.A.T. is perverse, contrary to the record and untenable in the eye of law?” Appeal No.113/2004 “1. Whether the I.T.A.T. was right and justified in giving relief of Rs.4,61,753/- to the assessee by holding that the assessment order passed u/s 158BD has been time barred as the limitation period will be counted from the date of earlier notice issued u/s 158BC on 23.7.98 and not from the fresh notice issued u/s 158BD on 23.9.09, by (4 of 5) [ITA-108/2004] which earlier notice issued u/s 158BC was superseded/withdrawn? 2. Whether on the facts and circumstances of the case, the earlier notice issued u/s 158BC can become the basis of calculating the period of limitation when such notice was void ab initio and was superseded by a fresh notice issued u/s 158BD. 3. Whether on the facts and circumstances of the case, the finding of the I.T.A.T. is perverse, contrary to the record and untenable in the eye of law?” Appeal No.54/2005 “Whether the ITAT was right and justified in giving relief of Rs.7,38,59,888/- to the assessee by holding that the assessement order passed u/s 158BD has been time barred as the limitation period will be counted from the date of earlier notice u/s 158BC on 23.7.98 and not from the fresh notice issued u/s 158BD on 23.09.99, by which the earlier notice issued u/s 158BC was supreseded/withdrawn and whether the finding of the Tribunal is perverse?” 5. The question which is to be considered is whether department can rectify the mistake it has been committed at initial stage while issuing notice under Section 158 BC & 158 BD. The notice issued on 23.7.1998 did not contain reference of both the Sections. However, it was on 17.9.1999, the assessee clarified it in his explanation, therefore, to rectify its mistake second notice in supersession of earlier notice was issued on 23.9.1999. 6. We have heard counsel for the parties. 7. Counsel for the appellant has relied upon the judgment of Gujarat High Court in Commissioner of Income Tax vs. Harsh Enterprises reported in (2016) 73 taxmann.com 230 (Gujarat) (5 of 5) [ITA-108/2004] wherein it has been held as under:- “However, the proceedings initiated on the basis of this Notice stood concluded on 29.08.1997, when the A.O. informed the assessee of having withdrawn the Notice u/s 158BC of the Act, meaning thereby, that the proceedings initiated on 17.10.1996 was valid for all intent and purposes but, stood concluded on 29.08.1997. Therefore, there was no question of reviving those proceedings by way of issuing a fresh Notice under any other Section of the Act. On this count also, there could not have been any assessment on 01.12.1997. Thus, the Revenue’s claim that Notice u/s. 158BD of the Act issued on 29.08.1997 was a valid Notice and that the consequential assessment framed on 24.12.1997 was within limitation cannot be accepted and is void ab initio being barred by time. Thus, the action of the A.O. of withdrawing the Notice u/s. 158BC and issuing fresh Notice u/s. 158BD of the Act is illegal and bad in law. There is no provision in the Act for initiating re-assessment proceedings for block period, either u/s. 147 or 158BC or 158BC of the Act. Therefore, both the actions of the Assessing Officer are illegal and bad in law.” 8. In that view of the matter, the issues are answered in favour of the assessee and against the department. 9. The appeals stand dismissed. 10. A copy of this judgment be placed in each file. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. Brijesh 9 to 12. "