M/s Pt. Ranglal Trust, Kanpur V. Asstt. Commissioner of Income Tax-1, Kanpur

ITA 320/LKW/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6583 (ITAT-LUCKNOW)
• Duration Of Justice: 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 19-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEELAM AGRAWAL
• Keywords: Period of limitation
• Section: 147; 148; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 320/LKW/2018 ASSESSMENT YEAR: 2005 - 06 PT. RUNG LAL TRUST 7/40, TILAK NAGAR KANPUR V . ACIT - 1 KANPUR T AN /PAN : AABTP0284E (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SMT. NEELAM AGRAWAL, D.R. DATE OF HEARING: 02 0 5 201 8 DATE OF PRONOUNCEMENT: 03 0 5 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - 1, KANPUR DATED 26/3/2018. 2 . IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT AND CONSEQUENTIAL ORDER PASSED UNDER SEC TION 147/143(3) OF THE ACT SINCE BEING WITHOUT JURISDICTION AND THAT THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS BEYOND THE STATUTORY TIME OF SIX YEARS FROM THE END OF THE ASSESSMENT YEAR AS PRESCRIBED UNDER THE ACT. 3 . IN THIS CASE, RE - ASSESSMENT ORDE R HAS BEEN FRAMED PURSUANT TO NOTICE UNDER SECTION 148 OF THE ACT AND DEMAND HAS BEEN RAISED BY THE ASSESSING OFFICER. THE FACTS OF THE CASE ARE THAT NOTICE UNDER SECTION 148 WAS ISSUED FOR ASSESSMENT YEAR 2005 - 06 ON 14/1/2016. IN ITA NO.320/LKW/2018 PAGE 2 OF 8 RESPONSE TO THAT NOTICE , ASSESSEE HAD SUBMITTED A WRITTEN REPLY STATING THAT NOTICE UNDER SECTION 148 WAS BARRED BY LIMITATION IN VIEW OF THE PROVISIONS OF SECTION 149 OF THE ACT. SO FAR REVENUE IS CONCERNED, THE CASE IS THAT THE SAID NOTICE UNDER SECTION 148 OF THE ACT HAS BEE N ISSUED AS PER PROVISIONS OF SECTION 150(1) OF THE ACT WHEREIN IT IS PROVIDED THAT WHERE AN ASSESSMENT IS IN PURSUANCE OF AN ORDER OF APPEAL, THE NOTICE UNDER SECTION 148 CAN BE ISSUED AT ANY TIME IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRE CTION CONTAINED IN AN ORDER PASSED BY ANY APPELLATE AUTHORITY. IN THE CASE OF THE ASSESSEE, THE LD. CIT(A) OBSERVED AS UNDER: - 'IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION, I AM OF THE CONSIDERED VIEW THAT SINCE .THE PROPERTY IN QUESTION STOOD TRANSFERRED IN THE F.Y. 2004 - 05, AND NOT IN A,Y. 2008 - 09, THERE ARISES NO LIABILITY FOR CAPITAL GAINS TAX DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE AO MAY CONSIDER THE COMPUTATION OF CAPITAL GAINS IN A. Y. 2005 - 06'. 4 . AGAINST THE ORDER OF CIT(A) , DEPARTMENT FIL ED AN APPEAL BEFORE THE ITAT. THE ITAT HAD OBSERVED AS UNDER: - 'HAVING TAKING INTO ACCOUNT ALL THESE FACTS, THE LD. CIT(A) HAS TAKEN A VIEW THAT THE CAPITAL GAIN DOES NOT ARISE IN THE IMPUGNED ASSESSMENT YEAR, AS IT ARISE IN FINANCIAL YEAR 2004 - 05, RELEVA NT TO THE ASSESSMENT YEAR 2005 - 06 AND THE ASSESSING OFFICER MAY CONSIDER COMPUTATION OF CAPITAL GAIN IN THAT ASSESSMENT YEAR. SINCE IT HAS BEEN ESTABLISHED THAT THE TRANSFER TOOK PLACE AS PER PROVISION OF SECTION 2(47](VI) OF THE ACT, NO CAPITAL GAIN CAN B E COMPUTED IN THE IMPUGNED ASSESSMENT YEAR. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND WE CONFIRM THE SAME.' 5 . THEREAFTER, AN APPEAL WAS FILED BEFORE HON'BLE ALLAHABAD HIGH COURT BY THE DEPARTMENT IN ITA NO. 268 OF 2015 AND THE HON'B LE HIGH COURT OBSERVED AS UNDER: ITA NO.320/LKW/2018 PAGE 3 OF 8 'IN VIEW OF THE AFORESAID, WE ARE OF THE OPINION THAT THE LONG TERM CAPITAL GAINS COULD ONLY BE COMPUTED IN THE YEAR WHEN THE PROPERTY WAS TRANSFERRED, NAMELY, IN THE FINANCIAL YEAR 2004 - 05 THAT IS ASSESSMENT YEAR 2005 - 06.' 6 . THE REVENUE THEREAFTER STATES THAT IN ALL THE ORDERS OF THE APPELLATE AUTHORITIES, THERE IS A CLEAR FINDING THAT THE ASSESSING OFFICER MAY CONSIDER COMPUTATION OF CAPITAL GAIN IN ASSESSMENT YEAR 2005 - 06. THEREFORE, THE REVENUE FURTHER CONTENDS THAT THIS MEANS THAT THE APPELLATE AUTHORITIES ARE OF THE VIEW THAT LONG TERM CAPITAL GAIN IN THE CASE OF THE ASSESSEE SHOULD BE TAXED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2005 - 06. ACCORDINGLY, NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE. CONSEQUENT LY, AN ASSESSMENT WAS FRAMED AND DEMAND WAS RAISED. 7 . AT THE TIME OF HEARING BEFORE US, THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE CASE RELATES TO FINANCIAL YEAR 2004 - 05 RELEVANT TO ASSESSMENT YEAR 2005 - 06 AND THE YEAR ENDING ON 31/3/2005. THE ASSESSMENT YEAR ENDS ON 31/3/200 6. A BARE READING OF SECTION 148 ALONG WITH 149 OF THE ACT REVEALS THAT NOTICE COULD HAVE BEEN ISSUED IN TIME WITHIN SIX YEARS FROM THE END OF THE ASSESSMENT YEAR I.E. TILL 31/ 03 /2012. THE LD. A.R. OF THE ASSESSEE FURTHER STATED THAT THE EMBARGO CAN BE DONE AWAY WITH SECTION 150(1) IF THERE IS ANY FINDING OR DIRECTION BY AN AUTHORITY AS STATED THEREIN. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THERE WAS NO SUCH FINDING OR DIRECTION AND IN THE ABSENCE OF THAT EMBARGO, SEC TION 149 OF THE ACT IS APPLICABLE IN THE CASE OF THE ASSESSEE AND WITHIN 31/3/2012 AT THE MAXIMUM NOTICE UNDER SECTION 148 COULD HAVE BEEN ISSUED, BUT HERE IN THIS CASE ASSESSMENT ORDER ITSELF WAS PASSED ON 28/2/2013. SIMILARLY, ITAT ORDER WAS PASSED ON 5 /6/2015 AND THE ORDER OF THE HON'BLE HIGH COURT WAS PASSED ON ITA NO.320/LKW/2018 PAGE 4 OF 8 28/10/2015. BY THE TIME APPEAL ORDERS WERE PASSED, PERIOD OF LIMITATION I.E. 31/3/2012 HAS ALREADY EXPIRED. 8 . THE LD. D.R. PLACED RELIANCE UPON THE ORDERS OF THE AUTHORITIES BELOW. 9 . WE HAVE PERUSE D THE CASE RECORDS, ANALYSED THE FACTS & CIRCUMSTANCES OF THE CASE AND HEARD THE RIVAL CONTENTIONS. WE FIND THAT SECTION 148 OF THE ACT STATES THAT BEFORE MAKING ANY ASSESSMENT OR RE - ASSESSMENT, NOTICE UNDER SECTION 148 HAS TO BE ISSUED FOR THE PURPOSE OF SUCH ASSESSMENT OR RE - ASSESSMENT UNDER SECTION 147 OF THE ACT. THEREAFTER , SECTION 149 PROVIDES TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 148 , WHICH IS EITHER FOUR YEARS OR SIX YEARS AS PER CONDITIONS STATED IN THE PROVISION. THEREFORE, TO THE MAXIMU M, WITHIN SIX YEARS NOTICE UNDER SECTION 148 HAS TO BE ISSUED. HOWEVER, THIS EMBARGO OR RESTRICTION OF 149 CEASES TO EXIST WITH APPLICATION OF SECTION 150(1) WHEREIN IT IS STATED THAT NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 149, SUCH NOTICE UNDER SE CTION 148 MAY BE ISSUED AT ANY TIME IN ORDER TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN ANY PROCEEDING UNDER THIS ACT BY WAY OF APPEAL, ETC. THEREFORE, THE BASIC TIME LIMIT PRESCRIBED UNDER SECTION 149 , W HICH IS OF SIX YEARS AND IF THERE IS ANY FINDING OR DIRECTION FOR WHICH EFFECT HAS TO BE GIVEN, IN SUCH CASE THIS EMBARGO OF 149 IS LIFTED UP AND AS PER SECTION 150(1) NOTICE UNDER SECTION 148 COULD BE ISSUED AT ANY TIME. THEREFORE, WE HAVE TO UNDERSTAND THE DEFINITION AND MEANING OF FINDING OR DIRECTION . IF IN THIS CASE OF THE ASSESSEE, THE BASIS ON WHICH NOTICE UNDER SECTION 148 I SSUED PERTAINS TO ANY FINDING OR DIRECTION, THEN SECTION 150(1) WILL APPLY OR ELSE EMBARGO PROVIDED UNDER SECTION 149 OF THE ACT WILL BE APPLICABLE. ITA NO.320/LKW/2018 PAGE 5 OF 8 10 . IN THE CASE OF RAJINDER NATH VS. CIT [1979] 2 TAXMAN 204 (SC), THE HON'BLE APEX COURT HAS CLEARLY BROUGHT OUT AND DISCUSSED THE EXPRESSION OF FINDING AND DIRECTION WHEREIN THE HON'BLE APEX COURT HAS OBSERVED AS UNDER: - TH E EXPRESSIONS 'FINDING' AND 'DIRECTION' IN SECTION 153(3) ARE LIMITED IN MEANING. A FINDING GIVEN IN AN APPEAL, REVISION OR REFERENCE ARISING OUT OF AN ASSESSMENT MUST BE A FINDING NECESSARY FOR THE DISPOSAL OF THE PARTICULAR CASE, THAT IS TO SAY, IN RESPE CT OF THE PARTICULAR ASSESSEE AND IN RELATION TO THE PARTICULAR ASSESSMENT YEAR. TO BE A NECESSARY FINDING, IT MUST BE DIRECTLY INVOLVED IN THE DISPOSAL OF THE CASE. IT IS POSSIBLE IN CERTAIN CASES THAT IN ORDER TO RENDER A FINDING IN RESPECT OF A, A FINDI NG IN A RESPECT OF B MAY BE CALLED FOR. FOR INSTANCE, WHERE THE FACTS SHOW THAT THE INCOME CAN BELONG EITHER TO A OR B AND TO NO ONE ELSE, A FINDING THAT IT BELONGS TO B OR DOES NOT BELONG TO B WOULD BE DETERMINATIVE OF THE ISSUE WHETHER IT CAN BE TAXED AS A'S INCOME. A FINDING RESPECTING B IS INITIALLY INVOLVED AS A STEP IN THE PROCESS OF REACHING THE ULTIMATE FINDING RESPECTING A. IF, HOWEVER, THE FINDING AS TO A'S LIABILITY CAN BE DIRECTLY ARRIVED AT WITHOUT NECESSITATING A FINDING IN RESPECT OF B, THEN A FINDING MADE IN RESPECT OF B IS AN INCIDENTAL FINDING ONLY. IT IS NOT A FINDING NECESSARY FOR THE DISPOSAL OF THE CASE PERTAINING TO A. AS REGARDS THE EXPRESSION 'DIRECTION' IN SECTION 153(3)(II) OF THE ACT, IT IS NOW WELL SETTLED THAT IT MUST BE AN EXP RESS DIRECTION NECESSARY FOR THE DISPOSAL OF THE CASE BEFORE THE AUTHORITY OR COURT. IT MUST ALSO BE A DIRECTION WHICH THE AUTHORITY OR COURT IS EMPOWERED TO GIVE WHILE DECIDING THE CASE BEFORE IT. 11 . THEREFORE, IT IS ABSOLUTELY CLEAR THAT THE TERM FINDIN G AND DIRECTION HAS TO BE A SPECIFIC FINDING AND DIRECTION. THEY CANNOT BE INCIDENTAL; RATHER FINDING AND DIRECTION SHOULD BE OF THE CASE AND OF THE ORDER WHICH IS BEFORE THE AUTHORITY ADJUDICATING THE SAME. IN THE CASE ITA NO.320/LKW/2018 PAGE 6 OF 8 OF THE ASSESSEE, THE ORDER PASS ED BY THE LD. CIT(A) DATED 28/2/2013 SIMPLY SAYS THAT SINCE THE ISSUE BEFORE HIM RELATES TO ASSESSMENT YEAR 2008 - 09, THERE IS NO LIABILITY FOR CAPITAL GAIN TAX DURING THAT YEAR. THEREAFTER, THE LD. CIT(A) FURTHER STATES THAT THE ASSESSING OFFICER MAY CONS IDER COMPUTATION OF CAPITAL GAINS IN ASSESSMENT YEAR 2005 - 06. HAD T HE WORD MAY BEEN USED AS SHALL , IT WOULD HAVE A SPECIFIC DIRECTION OR FINDING. WITH THE WORD MAY IT IS AN OBSERVATION, A PLAUSIBLE VIEW OF THE LD. CIT(A). HAVING SAID SO, WE FIND T HAT THE ASSESSMENT YEAR ENDS ON 31/3/2006 AND AS PER SECTION 149 , WITHIN SIX YEARS I.E. MAXIMUM WITHIN 31/3/2012 NOTICE UNDER SECTION 148 COULD HAVE BEEN ISSUED. BUT IN THE CASE OF THE ASSESSEE, APPELLATE ORDER ITSELF WAS PASSED ON 28/2/2013. BY THE TIME APPELLATE ORDER WAS PASSED, THE PERIOD OF LIMITATION I.E. 31/3/2012 HAS ALREADY EXPIRED. SO FAR AS REVENUE IS CONCERNED, SECTION 150(1) FINDINGS AND DIRECTIONS WHICH IS EMBEDDED THEREIN IN THE CASE OF THE ASSESSEE THAT IS NOT APPLICABLE SINCE THE LD. CIT (A) HAS MERELY STATED HIS VIEW AND OPINION. HAVING SAID SO, IN MERITS EMBARGO ENSHRINED IN SECTION 149 IS OPERATIVE AND HERE WITHIN SIX YEARS NOTICE SHOULD HAVE BEEN ISSUED BUT IN THE CASE OF THE ASSESSEE, IT WAS NOT DONE AND THE APPELLATE ORDER ITSELF, W HICH IS THE BASIS OF ISSUE OF NOTICE UNDER SECTION 148 AND VERY BASIS FOR INVOKING PROVISIONS OF SECTION 150(1), WAS PASSED ON 28/2/2013. NOTICE UNDER SECTION 148 WAS ISSUED THEREAFTER, THEREFORE, IT IS BEYOND THE PERIOD OF LIMITATION. 12 . WE FURTHER TAKE G UIDANCE FROM THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF K.M. SHARMA VS. ITO [2002] 122 TAXMAN 426 (SC) WHEREIN IT WAS HELD THAT F ISCAL STATUTE MORE PARTICULARLY ON A PROVISION SUCH AS THE PRESENT ONE REGULATING PERIOD OF LIMITATION MUST RECEIVE STRICT CONSTRUCTION. LAW OF LIMITATION IS INTENDED TO GIVE CERTAINTY AND FINALITY TO LEGAL PROCEEDINGS AND TO AVOID EXPOSURE TO RISK OF LITIGATION TO LITIGANT. PROCEEDINGS, WHICH HAVE ATTAINED FINALITY UNDER ITA NO.320/LKW/2018 PAGE 7 OF 8 EXISTING LAW DUE TO BAR OF LIMITATION CANNOT BE HELD TO BE OPEN FOR REVIVAL UNLESS THE AMENDED PROVISION IS CLEARLY GIVEN RETROSPECTIVE OPERATION SO AS TO ALLOW UPSETTING OF PROCEEDINGS, WHICH HAD ALREADY BEEN CONCLUDED AND ATTAINED FINALITY. THE AMENDMENT TO SUB - SECTION (1) OF SECTION 150 IS NOT EXPRE SSED TO BE RETROSPECTIVE AND, THEREFORE, HAS TO BE HELD AS ONLY PROSPECTIVE. THE AMENDMENT MADE TO SUB - SECTION (1) OF SECTION 150 WHICH INTENDS TO LIFT EMBARGO OF PERIOD OF LIMITATION UNDER SECTION 149 TO ENABLE AUTHORITIES TO REOPEN ASSESSMENTS NOT ONLY O N THE BASIS OF ORDERS PASSED IN PROCEEDINGS UNDER THE I . T . ACT BUT ALSO ON ORDER OF A COURT IN ANY PROCEEDINGS UNDER ANY LAW HAS TO BE APPLIED PROSPECTIVELY . THEREFORE, EVEN AS PER RULE , STRICT CONSTRUCTION AND LIMITATION OF SECTION 149 APPLIES UNTIL AND U NLESS INGREDIENTS OF SECTION 150(1) IS FULFILLED. IN THE CASE BEFORE US , THE INGREDIENTS OF SECTION 15 0 (1) , WHICH THE REVENUE HAS MADE THE BASIS FOR ISSUE OF NOTICE UNDER SECTION 148 , ITSELF IS NOT SATISFIED, THEREFORE, ISSUANCE OF NOTICE UNDER SECTION 14 8 IS DIRECTLY HIT BY THE PROVISIONS OF SECTION 149 LIMITATION. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT SINCE ISSUANCE OF 148 NOTICE IS BARRED BY LIMITATION, SERVING OF NOTICE ITSELF IS INVALID AND BAD IN LAW AND , THEREFORE , ANY CONSEQUENT ASSESSMEN T OR RE - ASSESSMENT IS OBVIOUSLY NULL AND VOID. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT QUASHING OF THE RE - ASSESSMENT PROCEEDINGS. SINCE THE LEGAL GROUND OF VALIDITY OF PROCEEDINGS UNDER SECTION 147/148 ITSELF IS DECIDED IN FAVOUR OF THE ASSESSEE, ALL OTHER GROUNDS IN THE GROUNDS OF APPEAL BECOMES INFRUCTUOUS. 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 03 / 0 5 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD MAY , 201 8 JJ: 0205 ITA NO.320/LKW/2018 PAGE 8 OF 8 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR