THE COMM OF INCOME TAX A.P.III HYD V. V.K.STEELS INDUST P.LTD

ITTA/60/2002

AI Insights

The case involves a series of legal proceedings following a search conducted under Section 132 of the Income Tax Act, 1961, at the business and residential premises of the Directors of an unnamed industry. The initial block assessment led to multiple legal challenges and transfers of the case between different authorities. The core issue revolved around the validity of the assessment order passed by the Assessing Authority in Hyderabad, which was initially set aside due to being barred by limitation. However, a subsequent reference by the Revenue clarified that the assessment was indeed within the permissible time limit, leading to the current appeal to have the matter remanded for a decision on the merits.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 718842 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 30-07-2014
• Assessment Year: misc
• Other Referred Cases: 299 ITR 191(AP)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K KUMAR
• Assessee Lawyers: J V PRASAD
• Keywords: Assessment Order; Block assessment; Ex parte order; Limitation; Search and seizure
• Section: 132; 153(1)(b)

Judgement Text

"THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.60 of 2002 JUDGMENT: (per the Hon’ble Sri Justice L.Narasimha Reddy) This appeal is preferred by the Revenue against the order dated 29.08.2001 passed by the Hyderabad ‘B’ Bench of the Income Tax Appellate Tribunal in I.T.A.No.68/Hyd/94. Briefly stated the facts are that the respondent is an industry and assessed under the Income Tax Act, 1961 (for short ‘the Act’). A search was conducted on 24.02.1987 in exercise of powers under Section 132 of the Act in the business premises as well as the residential premises of the Directors. On the basis of the search so made, a block assessment was made. The case was transferred by the Chief Commissioner of Income Tax, Hyderabad, to the Assistant Commissioner (Investigation), Visakhapatnam, through orders dated 28.07.1988. Aggrieved by that, the respondent filed W.P.No.15267 of 1988. In W.P.M.P.No.19396 of 1998, an interim order was passed on 10.10.1988. However, either not being aware of the interim order or otherwise, the Assistant Commissioner (Investigation), Visakhapatnam passed an ex parte order of assessment on 31.03.1989. The respondent filed an appeal before the Commissioner of Income Tax (Appeals) challenging the order of assessment dated 31.03.1989. While the appeal was pending, W.P.No.15267 of 1998 was allowed. Taking the same into account, the Commissioner of Income Tax (Appeals) passed an order dated 07.02.1990 allowing the appeal setting aside the order of assessment dated 31.03.1989 and directing the Assessing Authority to pass fresh order. The case has since been transferred to the Commissioner of Income Tax, Hyderabad. After remand, the Assessing Authority at Hyderabad passed an order dated 16.03.1993 holding that the respondent is liable to pay a sum of Rs.15,19,252/- towards tax due and interest under various provisions of the Act. Assailing the same, the respondent filed I.T.A.No.33 of 1993-94 before the Commissioner of Income Tax (Appeals)-III, Hyderabad. Through order dated 18.10.1993, the Commissioner allowed the appeal taking the view that the order dated 16.03.1993 passed by the Assessing Officer is barred by limitation. In that view of the matter, he did not go into the merits of the matter. Aggrieved by the same, the Revenue filed I.T.A.No.68/Hyd/94. Through the order under appeal, the Tribunal rejected the appeal. Hence, this appeal under Section 260-A of the Act. Heard Sri J.V. Prasad, learned counsel for the appellant and Sri K. Vasanth Kumar, learned counsel for the respondent. After the search was conducted, the case passed through several stages, such as transfer of the proceedings to Visakhapatnam, filing of the writ petition challenging the same, stay thereof by this Court, passing of an order of assessment not being aware of it, setting aside the same by the Commissioner, allowing of the Writ Petition by this Court, passing a fresh order of assessment by the Assessing Authority at Hyderabad and so on. Another important development is that, after the ITA was rejected, the appellant herein i.e., Revenue filed an application seeking reference on a question pertaining to limitation, namely, “whether on the facts and circumstances of the case, the Tribunal, is right in holding that the extended limit as provided under Section 153(1)(b) of the IT Act, 1961 is not available in this case?” to this Court. The same was taken up by this Court as R.C.No.67 of 1995. Through the judgment reported in 299 ITR 191(AP), this Court answered the reference in favour of the Revenue and took the view that the order of assessment was not barred by limitation. The necessity for us to deal with the present appeal in detail is obviated on account of the fact that the reference, which arose out of the very order passed by the Tribunal in I.T.A.No.68/Hyd/94, has been answered in favour of the Revenue. The consequence thereof is that the view taken by the Commissioner (Appeals) that the order of assessment was passed beyond limitation, and his refusal to go into the merits of the matter, become untenable. In view of the opinion expressed by this Court in R.C.No.67 of 1995, the matter has to go back to the Commissioner (Appeals), Hyderabad, for adjudication of the appeal on merits. Hence, we allow this appeal and set aside the order dated 29.08.2001 passed by the Tribunal in I.T.A.No.68/Hyd/94. Consequently, the order dated 18.10.1993 passed by the Commissioner of Income Tax (Appeals)-III, Hyderabad is set aside and the matter is remanded to the Commissioner of Income Tax (Appeals)- III, Hyderabad, for adjudication on merits, by treating that the order of assessment, which was in challenge before him is not barred by limitation. There shall be no order as to costs. The miscellaneous petitions filed in this appeal shall also stand disposed of. L.NARASIMHA REDDY, J Date: 30.07.2014 CHALLA KODANDA RAM, J va "