SUPER SERVICE STATION V. INCOME TAX OFFICER WARD 6(1)(5)

SCA/2850/2020

AI Insights

The case involves Super Service Station, a partnership firm operating an authorized petrol pump, which challenged an assessment order issued by the Income Tax Officer under the Income Tax Act, 1961. The assessment order made significant additions to the petitioners' income based on alleged unaccounted cash deposits during the demonetization period. The petitioners argued that the order was passed without adequate opportunity for hearing and without considering the documents and details they had submitted. The court found that the principles of natural justice were violated as the petitioners were not provided with the information in possession of the Assessing Officer which was used to make the additions. The court also noted that the assessment order was passed under Section 143(3) of the Act, which requires an opportunity for the assessee to rebut the proposed additions, unlike a best judgment assessment under Section 144.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 682454 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 19-02-2020
• Assessment Year: misc
• Other Referred Cases: Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, Rashid Ahmad vs. Municipal Board, Kairana, K.S. Rashid & Son Vs. The Income Tax Investigation Commissioner, State of U.P. vs. Mohd. Nooh, A.V. Venkateswaran, Collector of Customs, Bombay vs Ramchand Sobhraj Wadhwani & Anr., Calcutta Discount Co. Ltd. vs Income Tax Officer Companies Distt. I, T.M. Kousali v. Sixth Income Tax Officer, New Jehangir Vakil Mills Co. Ltd. vs. Income Tax Officer, Rajinder Nath and Others v. Commissioner of Income Tax, Delhi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: UCHIT SHETH
• Keywords: Assessment Order; Cash deposit; Demonetization; Income Tax; Natural Justice; Quash and set aside
• Section: 144; 143(2); 143(1); 133(6); 226(3)

Judgement Text

"C/SCA/2850/2020 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 2850 of 2020 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? Yes 2 To be referred to the Reporter or not ? Yes 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? No ================================================================ SUPER SERVICE STATION Versus INCOME TAX OFFICER WARD 6(1)(5) ================================================================ Appearance: UCHIT N SHETH(7336) for the Petitioner(s) No. 1,2 MRS MAUNA M BHATT(174) for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 19/02/2020 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Rule, returnable forthwith. Learned Standing Counsel Mrs. Mauna M. Bhatt waives service of notice of Rule for the respondent. Page 1 of 31 C/SCA/2850/2020 JUDGMENT 2. By this petition under Articles 226 of the Constitution of India, the petitioner has prayed for the following reliefs: “A. This Hon'ble Court may be pleased to issue a writ of certiorari or a writ in nature of certiorari or any other appropriate writ or order quashing and setting aside impugned order dated 30.12.2019 alongwith consequential demand notice dated 30.12.2019 (collectively annexed at Annexure A) issued by the Respondent authority; B. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to stay the operation and implementation of the impugned order dated 30.12.2019 and impugned demand notice dated 30.12.2019 (collectively annexed at Annexure A) as well as stay penalty proceedings ordered to be commenced as per the impugned order dated 30.12.2019; C. Ex parte ad interim relief in terms of prayer B may kindly be granted. C1. This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate writ or order quashing and setting aside the bank attachment notices dated 13.2.2020 (collectively annexed at Annexure R) issued for recovery of assessed dues which are subject matter of the present petition. C2. Pending admission and final hearing of this petition, this Hon'ble Court may be pleased to stay the operation, execution and implementation of the bank attachment notices dated 13.02.2020 (collectively annexed at Annexure R) and the petitioner may please be allowed to operate the bank accounts in question. Page 2 of 31 C/SCA/2850/2020 JUDGMENT D. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray.” 3. The brief facts of the case are as under: 3.1. The petitioner no.1 a partnership firm, has filed this petition through its partner­ petitioner no.2. 3.2. The petitioners are engaged in the business of operating an authorized petrol pump of Hindustan Petroleum Corporation Limited. 3.3. The petitioners filed online statement on 07.02.2017 showing total cash deposited by the petitioner, in compliance of the online report demanded by the respondent – Income Tax Department on account of the demonetization of Rs.500/­ and Rs.1000/­ currency notes w.e.f. 08.11.2016. 3.4. It is the case of the petitioners that, the Assistant Director of Income Tax (Investigation) issued summons dated 21.03.2017 to the petitioners along with the questionnaire, wherein, it was mentioned that Page 3 of 31 C/SCA/2850/2020 JUDGMENT the petitioners had made a cash deposit of Rs.4,19,92,190/­ with HDFC Bank Limited. The petitioners in compliance of the summons, furnished the details, and further clarified that petitioners had deposited cash in the bank after the demonetization amounting to Rs.7,82,90,640/­ and not Rs.4,19,92,190/­ as mentioned in the summons. 3.5. The petitioners filed return of income for A.Y. 2017­18 on 24.10.2017 declaring total income of Rs.12,18,570/­. The return of income filed by the petitioners was processed under Section 143(1) of the Income Tax Act, 1961 (for short 'the Act, 1961'). 3.6. It appears that, the case of the petitioners was selected for scrutiny assessment and notice was issued under Section 143(2) of the Act on 21.09.2018 and the assessment proceedings for the year in question was conducted by way of e­ assessment. Accordingly, the proceedings including issuance of notice as well as submission of reply were to be filed online. The petitioners received an online notice dated 19.05.2019 calling for information and documents for the purpose of assessment. Page 4 of 31 C/SCA/2850/2020 JUDGMENT 3.7. According to the petitioners, all the documents and details as demanded were submitted online on 24.06.2019 and uploaded on the portal of the Income Tax Department. The petitioners provided all the details regarding cash deposits made by the petitioners as part of the reply in Annexure­ 1. The petitioners also submitted bank statement and bank book along with the certificate from the bank certifying the old currency notes deposited by the petitioners during the period of demonetization. 3.8. According to the petitioner in spite of submitting the details, the respondent issued a notice on 13.11.2019 alleging that the petitioners did not submit the details as per notices dated 19.05.2019 and 10.10.2019. 3.9. It is the case of the petitioners that, petitioners by letter dated 18.11.2019 addressed to the respondent Assessing Officer pointed out that petitioners had already submitted the documents in detail with reply dated 24.06.2019. The petitioners also submitted the tabular details required as per the notice dated 13.11.2019 regarding cash sales and cash deposits with letter dated 27.11.2019. Page 5 of 31 C/SCA/2850/2020 JUDGMENT 3.10. The petitioners received another notice dated 06.12.2019 from the respondent alleging that the details as called for by notices dated 19.05.2019, 10.10.2019 and 13.11.2019 were not submitted. The petitioners by reply dated 12.12.2019 again clarified that the petitioners has submitted all the documents and details called for by the earlier notices. The petitioners also visited the office of the respondent to inform him about the online submission of details, so as to avoid communication gap in this regard. 3.11. The petitioners, thereafter, received the impugned assessment order dated 30.12.2019 passed by the respondent making huge addition of more than Rs.13 Crore to the income of the petitioners, for which neither notice was given by the respondent to the petitioner to show cause nor the respondent relied upon the documents and information furnished by the petitioners. The respondent on the basis of the Income Tax details with the department came to the conclusion that the petitioners deposited cash amounting to Rs.19,76,23,060/­ during the period of demonetization. The respondent, therefore, Page 6 of 31 C/SCA/2850/2020 JUDGMENT made an addition of Rs.11,81,85,010/­ on account of cash deposited by the petitioners. The Assessing Officer also made an addition of Rs.51,99,656/­ on account of cash on hand and further added Rs.99,25,000/­ on account of time deposits with the bank, as per the information received and information collected under Section 133(6) of the Act, 1961. The Assessing Officer thus assessed the income of Rs.13,45,28,236/­. 4. Learned advocate Mr. Uchit N. Sheth appearing for the petitioners submitted that without giving an opportunity of hearing and without taking into consideration any of the replies to the show cause notices, the respondent has passed the impugned assessment order by making the additions only on the basis of the details available with the respondent is not tenable in law. 4.1. It was submitted that, the impugned order is passed in breach of principles of natural justice as the respondent has made additions without giving any opportunity of hearing to the petitioners. The respondent never parted with the information in his possession with regard to the total cash deposits made by the petitioner during the demonetization period amounting to Page 7 of 31 C/SCA/2850/2020 JUDGMENT Rs.19,76,23,060/­, no notice was given by the respondent calling upon the petitioners to show cause with regard to the additions made in the assessment order. It was, therefore, submitted that, the impugned assessment order is required to be quashed and set aside. 4.2. The learned advocate for the petitioners also invited our attention that after issuance of the notice by this Court on 03.02.2020, the respondent has issued notice under Section 226(3) of the Act, 1961 for attachment of the bank account of the petitioners on 13.02.2020 for recovery of dues, which are the subject matter of the present petition. 4.3. During the course of hearing, it was submitted that the respondent has recovered the sum of Rs.15,50,657.60 lying in the bank account of the petitioners. 5.1. On the other hand, learned Senior Advocate Mr. M.R. Bhatt assisted by learned Senior Standing Counsel Mrs. Mauna M. Bhatt for the respondent submitted that the petition is not maintainable, as there is an alternative efficacious remedy available under the provision of the Act, 1961 to prefer an Appeal before the CIT (Appeals), if the petitioner is aggrieved by the impugned assessment order. Page 8 of 31 C/SCA/2850/2020 JUDGMENT 5.2. It was further submitted that, on merits without prejudice to the plea of alternative remedy available to the petitioners, that the Assessing Officer was justified in passing the impugned order on the basis of the information in his possession which is available from the bank of the petitioners. 6. Having heard the learned advocates appearing for the respective parties and having gone through the materials on record, we are of the opinion that the impugned assessment order passed by the respondent is in violation of the principles of natural justice, as the petitioner was never provided with the information in possession of the respondent Assessing Officer which is made the basis for making the additions. Moreover, the respondent has not taken into consideration the replies along with the various details and documents submitted by the petitioners online. Thus, the impugned assessment order is in nature of ex­parte, in nature of best judgment assessment order under Section 144 of the Act, 1961. However, the respondent has passed the impugned assessment order under Section 143(3) of the Act, 1961 which requires providing an opportunity to the assessee to rebut the proposed additions to be made as there are provisions under the Act, 1961 to issue show Page 9 of 31 C/SCA/2850/2020 JUDGMENT cause notices under Section 142(1) and under Section 143(2) of the Act calling upon the assessee to furnish the details and explanation for the additions proposed to be made by the Assessing Officer. 7. On perusal of the impugned assessment order, it appears that, the Assessing Officer has never provided the information in his possession with regard to the cash deposits of Rs.19,76,23,060/­, as against, the details of cash deposits provided by the petitioners amounting for Rs.7,94,38,050/­. Similarly, the details with regard to the information collected under Section 133(6) of the Act from the bank for the time deposit of Rs.99,25,000/­ was also not provided to the petitioners, so as to seek explanation before making additions. 8. In view of the above undisputed facts, the impugned assessment order is liable to be quashed and set aside. 9. With regard to the contention made on the part of the respondent that there is an alternative efficacious remedy available to the petitioners, we may note that when the impugned assessment order is passed in breach of the principles of natural justice, this petition would be maintainable under Article 226 of the Page 10 of 31 C/SCA/2850/2020 JUDGMENT Constitution of India, as held by the Hon'ble Apex Court in the case of Whirlpool Coproation v. Registrar of Trade Marks, Mumbai and others, reported in (1998) 8 SCC 1, wherein, the Supreme Court held as under: “14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the fundamental rights contained in Part III of the Constitution but also for “any other purpose”. 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the Writ Petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point but to cut down this circle of forensic whirlpool, we would rely or some old decisions of the evolutionary era of the constitutional law as they still hold the field. 16. Rashid Ahmad vs. Municipal Board , kairana, AIR 1960 SC 163, laid down that existence of an adequate legal remedy was a factor to be taken into consideration in the matter of granting Writs. This was followed by another Rashid case, namely, K.S.Rashid & Son Vs. The Income Tax Investigation Commissioner AIR 1954 SC 207 which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to Page 11 of 31 C/SCA/2850/2020 JUDGMENT interfere in a petition under Article 226. This proposition was, however, qualified by the significant words, \"unless there are good grounds therefor\", which indicated that alternative remedy would not operate as an absolute bar and that Writ Petition under Article 226 could still be entertained in exceptional circumstances. 17. A specific and clear rule was laid down in State of U.P. vs. Mohd. Nooh 1958 SCR 595 = AIR 1958 SC 86, as under : \"But this rule requiring the exhaustion of statutory remedies before the Writ will be granted is a rule of policy convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.\" 18. This proposition was considered by a Constitution Bench of this Court in A.V.Venkateswaran, Collector of Customs. Bombay vs Ramchand Sobhraj Wadhwani & Anr. AIR 1961 SC 1506 and was affirmed and followed in the following words: \"The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the learned solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus per­eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court\". Page 12 of 31 C/SCA/2850/2020 JUDGMENT 19. Another Constitution Bench decision in Calcutta Discount co.Ltd. vs Income Tax Officer Companies Distt. I AIR 1961 SC 372 laid down : \"Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment. the High Court will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against Income Tax Officer acting without jurisdiction under 8.34 I.T.Act\". 20. Much water has since flown beneath the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a Writ Petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the Writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.” 10. The only question, which arises, if the assessment order is quashed and the matter is remanded back to the assessing officer, whether the Assessing Officer would be entitled to pass afresh assessment order, in view of the limitation for passing the assessment order as provided under Section 153 of the Act, 1961 as the assessment would lapse for want of limitation. Page 13 of 31 C/SCA/2850/2020 JUDGMENT 11. Learned advocate Mr. Uchit Sheth for the petitioner submitted that as per Section 153(6) of the Act, 1961, the Assessing Officer has time to pass an assessment order within a period of twelve months from the date of the order passed by this Court. He relied upon the decision of the Apex Court in the case of The Director of Inspection of Income Tax (Investigation), New Delhi and Another v. M/s. Pooran Mal & Sons and Another reported in (1975) 4 SCC 568, wherein, the Apex Court has held as under: “6. Even if the period of time fixed under Section 132 (5) is held to be mandatory that was satisfied when the first order was made. Thereafter if any direction is given under Section 132 (12) or by a Court in writ proceedings, as in this case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under Section 132 (5). Once the order has been made within ninety days the aggrieved person has got the right to approach the notified authority under Section 132 (11) within thirty days and that authority can direct the Income­ tax Officer to pass a fresh order. We cannot accept the contention on behalf of the respondents that even such a fresh order should be passed within ninety days. It would make the sub­sections (11) and (12) of S. 132 ridiculous and useless. It cannot be said that what the notified authority could direct under Section 132 could not be done by a Court which exercises its powers under Article 226 of the Constitution. To hold otherwise would make the powers of courts under Article 226 wholly ineffective. The Court in exercising its powers under Article 226 has to mould the remedy to split the facts of a case. If in a particular case a Court takes the view that Page 14 of 31 C/SCA/2850/2020 JUDGMENT the Income­tax Officer while passing an order under Section 132 (5) did not give an adequate opportunity to the party concerned it should not be left with the only option of quashing it and putting the party at an advantage even though it may be satisfied that on the material before him the conclusion arrived at by the Income­tax Officer was correct or dismissing the petition because otherwise the party would get unfair advantage. The power to quash an order under Article 226 can be exercised not merely when the order sought to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be directed to deal with it. But in the circumstances of a case the Court might take the view that another authority has the jurisdiction to deal with the matter and may direct that authority to deal with it or where the order of the authority which has the jurisdiction is vitiated by circumstances like failure to observe the principles of natural justice the Court may quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party a reasonable opportunity of putting forward its case. Otherwise, it would mean that where a Court quashes an order because the principles of natural justice have not been complied with it should not while passing that order permit the Tribunal or the authority to deal with it again irrespective of the merits of the case. A Division Bench of the Punjab High Court, in C. I. T. v. Ramesh Chander ,93 ITR 450 at p. 478 = (1973) Tax LR 1427 at p. 1440 (Punj) ) took the view that what the notified authority could do under Section 132 (12) a Court could do in writ proceedings. Though the observation was obiter we consider that it is correct. In this connection we must refer to the decision of the Gujarat High Court, relied upon by the respondents, in Ramjibhai Kalidas v. I. G. Desai, (1971) 80 ITR 721 (Guj). In that case it was held that Rule 112­A, which provides that a show cause notice in respect of an inquiry under Section 132 (5) is to be made Page 15 of 31 C/SCA/2850/2020 JUDGMENT within 15 days from the date of the seizure, is mandatory and if that is not done no order under Section 132 (5) can be passed. It seems to have been admitted before the Bench by the Advocate General who appeared on behalf of the Revenue that he did not dispute that the period of ninety days prescribed under Section 132 (5) is a mandatory period. That decision is, therefore, no authority for the proposition that the period fixed under Section 132 (5) is mandatory. But even if it were the decision that R. 112­A is also mandatory is clearly erroneous. When Section 132 (5) permits an Income­tax Officer to pass an order within ninety days that power cannot be in any way whittled down by a rule made under that section. 7. On behalf of the respondents a number of decisions were relied upon for contending that no equitable consideration should enter into in deciding the matter. Reliance was placed. on the observations of Rowlatt. J. in Cape Brandy Syndicate v. Inland Revenue Commissioners; (1921­1KB 64 at p. 71), referred to with approval in the decision in Commr. of Income­tax v. Ajax Products Ltd., 55 ITR 741 at p. 747 = (AIR 1965 SC 1358 at pp. 1361, 1362), that : \"In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.\" We do not consider that every provision of a taxing statute will fall within this rule. The question whether a certain provision of law is directory does not fall to be decided on different standards because it is found in a taxing statute. There is no rule that every provision in a taxing statute is mandatory. The strict construction that a citizen does not become liable to tax unless he comes within the specific words of a statute is a different proposition. That a person cannot be Page 16 of 31 C/SCA/2850/2020 JUDGMENT taxed on the principle of estoppel does not admit of much argument. Article 265 of the Constitution lays down that no tax shall be levied except when authorised by law. 8. It was also argued based on Explanation 1 to Section 132 and similar provision in certain other sections which lay down that in computing the period of limitation any period during which any proceeding is stayed by an order or injunction of any court shall be excluded, that where it is intended that the period of limitation prescribed by any of the provisions of the Income­tax Act should not be strictly enforced the law itself makes a specific provision. It is a well established principle of judicial procedure that where any proceedings are stayed by an order of a Court or by an injunction issued by any Court that period should be excluded in computing any period of limitation laid down by law. Especially after the Limitation Act 1963, the provisions of which are now applicable to all proceedings, a provision like Explanation 1 to Section 132 is superfluous and no argument can be based on it. 14. In, Wright v. John Bagnall and Sons Ltd., (1900) 2 QB 240, a case arising under the Workmen's Compensation Act, 1897 which requires the claim for compensation to be made within six months of the occurrence of the accident causing the injury, it was held that: \"An agreement arrived at between the parties shortly after the accident that there is a statutory liability on the employer to pay compensation, the amount of compensation being left open for future settlement, is evidence upon which the judge or arbitrator may properly find that the employer is estopped from setting up the defence that the request for arbitration was not filed within six months of the accident\". The agreement between the parties in this case that the Income­tax Officer may pass a fresh order within two months of the order of the High Court is an agreement which proceeded on the basis that the Income­tax Officer had Page 17 of 31 C/SCA/2850/2020 JUDGMENT jurisdiction to pass a fresh order. The principle of these decisions is also stated in Craies on Statute Law (6th Edn.) at page 269 as follows: \"As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court.\" There is no question of the period of limitation in Section 132 (5) involving public interests. It is intended for the benefit of the parties.” 12. On the other hand, learned Senior Advocate Mr. Bhatt appearing for the respondent submitted that, the Assessing Officer would not be entitled to pass any order on remand made by this Court under Section 153(6) of the Act, 1961. The reliance was placed on the decision of the Apex Court in the case of Rajinder Nath and Others v. Commissioner of Income Tax, Delhi reported in (1979) 120 ITR 14 (SC). The Hon'ble Apex Court in the said decision held as under: “10. The case has been dealt with throughout on the basis that if S. 153 (3) (ii) of the Act applies, and the bar of limitation thereby removed, it is immaterial that the assessments have been made under S. 147 (a) of the Act. The question, therefore, is whether S. 153 (3) (ii) can be invoked. It is not contended on behalf of the assessees that they are not Page 18 of 31 C/SCA/2850/2020 JUDGMENT covered by the expression \"any person\" in S. 153 (3) (ii) of the Act. The only contention is that there is no \"finding\" or \"direction\" within the meaning of S. 153 (3) (ii) of the Act in the order of the Appellant Assistant Commissioner in consequence of which or to give effect to which the impugned assessments have been made. 11. The expression \"finding\" and \"direction\" 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 respect 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 finding in 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 intimately 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. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regard the expression \"direction\" in S. 153 (3) (ii) of the Act, it is now well settled that if must be an express 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. The expressions \"finding\" and Page 19 of 31 C/SCA/2850/2020 JUDGMENT \"direction\" in Section 153 (3) (ii) of the Act must be accordingly confined. Section 153 (3) (ii) is not a provision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation for making an assessment order under S. 143 or Section 144 of S. 147. Income­ tax Officer, A­Ward, Sitapur v. Murlidhar Bhagwan Das (1964) 52 ITR 335 (SC) and N. Kt.Sivalingam Chettiar v. Commr. of Income­tax Madras (1967) 66 ITR 586 (SC). The question formulated by the Tribunal raises the point whether the Appellate Assistant Commissioner could convert the provisions of S. 147 (1) into those of Section 153 (3) (ii) of the Act. In view of Section 153 (3) (ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point. 12. In the present case, the Appellate Assistant Commissioner found that the cost of constructing the two buildings had not been met by the partnership firm. The firm had merely advanced money to the individual four co­owners, whose personal accounts in the books of the firm had been debited accordingly. On the material the Appellate Assistant Commissioner held that the partnership was not the owner of the property and consequently any excess over the disclosed cost of construction could not be added in the assessments of the firm. All that has been recorded is the finding that the partnership firm is not the owner of the properties. It is true that the finding proceeds on the basis that the cost has been debited in the accounts of the four co­owners. But that does not mean, without anything more, that the excess over the disclosed cost of construction constitutes the concealed income of the assessees. The finding that the excess represents their individual income re­quires a proper enquiry and for that purpose an opportunity of being heard is needed to be given to the assessees. In deed, that is now plainly required by Page 20 of 31 C/SCA/2850/2020 JUDGMENT Explanation 3 to S. 153 (3). The expression \"another persons\" in the Explanation would include persons intimately connected with the person in whose case the order is made in the sense explained by this Court in Murlidhar Bhagwan Das (supra). It is one thing for the partners of a firm to be required to explain the source of a receipt by the firm, it is quite another for them in their individual status to be asked to explain the source of amounts received by them as separate individuals. On such opportunity being provided it would have been open to the assessees to show that the excess alleged over the disclosed cost of construction did not constitute any taxable income. The finding contemplated in Explanation 3, it will be noted, is a finding that the amount represents the income of another person. We are unable to hold that the observation of the Appellant Assistant Commissioner can be described as such a finding in relation to the assessees. 13. It is also not possible to say that the order of the Appellate Assistant Commissioner contains a direction that the excess should be assessed in the hands of the co­owners. What is a \"direction\" for the purposes of S. 153 (3) (ii) of the Act has already been discussed. In any event, whatever else it may amount to, on its very terms the observation that the Income­tax Officer \"is free to take action\" to assess the excess in the hands of the co­owners cannot be described as a \"direction\". A direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the Income­tax Officer whether or not to take action it cannot, in our opinion, be described as a direction. 14. Therefore, in our judgment the order of the Appellant Assistant Commissioner contains neither a finding nor a direction within the meaning of Section 153 (3) (ii) of the Income­ Page 21 of 31 C/SCA/2850/2020 JUDGMENT tax Act in consequence of which or to give effect to which the impugned assessment proceedings can be said to have been taken. 15. Reliance was placed by the Revenue on Commr. of I. T. Andh. Pradesh v. Vadde Pullaiah and Co. (1973) 89 ITR 240 (SC). In that case, there were two appeals before the Appellate Assistant Commissioner, an appeal by the firm and another by Pullaiah a partner of the firm, filed in his individual status. The question was whether the business was the business of the firm or that of Pullaiah. In order to decide the appeal of the firm as well as that of Pullaiah, the Appellate Assistant Commissioner had to decide whether the business was that of the firm or that of Pullaiah. In finding that the business was that of the firm and not of Pullaiah, the Appellate Assistant Commissioner had necessarily to inquire into a matter which covered the subject matter of both the appeals. 16. In the circumstances, differing from the High Court, we hold that the provisions of S. 153 (3) (ii) of the Income­tax Act are not applicable to the instant case. The question is answered in favour of the assessees and against the Revenue. 17. The High Court did not enter into the first question formulated for its opinion, that is to say, whether the provisions of S. 147 (a) of the Income­tax Act are applicable for the assessment years 1955­56 and 1956­57. It is agreed by the parties that if S. 153 (3) (ii) of the Act cannot be invoked by the Revenue, it is necessary to decide the first question formulated by the Tribunal. In view of the opinion expressed by us on the application of S. 153 (3) (ii) of the Act, the case must go back to the High Court for its opinion on the first question. 18. The appeals are allowed, the judgment Page 22 of 31 C/SCA/2850/2020 JUDGMENT dated Sept. 17, 1971 of the High Court governing the cases of the different assessee for the assessment years 1955­56 and 1956­57 is set aside. The provisions of S. 153 (3) (ii) of the Income­tax Act, 1961 are not applicable to the instant case. Accordingly, the second question is answered in favour of the assessees and against the Revenue. The cases are remanded to the High Court for its opinion on the first question formulated by the Income­tax Appellate Tribunal. The assessee are entitled to their costs of these appeals.” 13. In order to understand the issue, it would be germane to refer to the provisions of Section 153(6) of the Act, which reads thus: “Time limit for completion of assessment, reassessment and recomputation. 153. (6) Nothing contained in sub­sections (1) and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of sub­sections (3) and (5), be completed— (i) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the Principal Commissioner or Commissioner, as the case may be; or (ii) where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm Page 23 of 31 C/SCA/2850/2020 JUDGMENT under section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed.” 14. On perusal of the aforesaid provision of Section 153(6)(i) of the Act, 1961 which applies to assessment, reassessment or recomputation irrespective of what is contained in sub­section 1 and sub­section 2, subject to the provision of sub­section 3 and sub­section 5 for the assessment, etc. to be completed to give effect to any finding or direction in order of any Court in a proceeding before the expiry of twelve months from the end of the month in which such order is received or passed, as the case may be. Therefore, the question arises whether the Assessing Officer would be able to complete the assessment before the expiry of twelve months from the end of the month in which the order passed by this Court remanding the matter back to the Assessing Officer or not. 15. According to the petitioner, the Assessing Officer would get period of twelve months to complete the assessment, after remand order passed by this Court, whereas, as per learned senior counsel Mr. Bhatt, the Assessing Officer would not be able to complete the assessment, as it has become time barred by Page 24 of 31 C/SCA/2850/2020 JUDGMENT virtue of the provision of Section 153(1) of the Act, 1961 on 31.12.2019 and he would not get extension of time to complete the assessment under Section 153(6)(i) of the Act, 1961. 16. The Karnataka High Court in the case of T.M. Kousali v. Sixth Income Tax Officer reported in (1985) 155 ITR 739 (KAR.) had an occasion to consider Section 153(3)(2) of the Act, 1961, as it was in existent for the relevant period which was equivalent to Section 153(6) of the Act, 1961 as on today. The Karnataka High Court after considering the decision of this Court in case of Additional CIT v. New Jehangir Vakil Mills Co. Ltd. reported in (1979) 117 ITR 849 held that the proceedings would not be barred by limitation, in view of the Section 153(3)(ii) of the Act, 1961, existing at the relevant time. The Court held as under: “Both sides do not dispute that if s. 153(3) (ii) of the Act does not apply, the impugned notices are barred by time and, therefore, the only question that calls for a critical examination is the true scope and ambit of s. 153(3)(ii) of the Act. That section that is material as amended by the Direct Taxes (Amendment) Act of 1964, which came into force on October 6, 1964, reads thus : \"153. (3) The provisions of sub­sections (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, subject to the provisions of sub­section (2A), be completed Page 25 of 31 C/SCA/2850/2020 JUDGMENT at any time ­... (ii) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act.\" Section 153(3) in clear terms lifts the bar of limitation for reopening of assessments to which certain periods of limitation are prescribed under s. 153(1) and (2) of the Act. Sri Ramabhadran also does not dispute this position also. But, he contends that the words \"or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act\" should be given a restricted meaning and should be read as referable to proceedings of the very assessee for the very assessment period either before a High Court or the Supreme Court that can deal with an assessment under the Constitution and not to every order of every court in other legal proceedings like the land acquisition proceedings. Maxwell on the Interpretation of Statutes (eleventh edition) states the very first principle of construction of statutes in these words : \"A statute is the will of the legislature, and the fundamental rule of interpretation, to which all others are subordinate, is that a statute is to be expounded 'according to the intent of them that made it'. If the words of the statute are in themselves precise and unambiguous, no more is necessary than to expound these words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature.\" Bearing this very first principle, it is necessary to ascertain the true scope and ambit of s. 153(3)(ii) of the Act. Page 26 of 31 C/SCA/2850/2020 JUDGMENT The language of ss. 150 and 153(3)(ii) of the Act, which are not also similar, govern two entirely different situations. The two provisions do not govern one and the same situation. While s. 150 of the Act, as explained by me in Consolidated Coffee Limited's case , is intended to give effect to the orders made by the superior authorities and superior courts without any period of limitation, section 153(3) of the Act has not been enacted to achieve that very purpose. In this view, the very construction placed on s. 150 of the Act cannot legitimately be placed on s. 153(3) of the Act. The first part of s. 153(3)(ii) deals with a finding or direction contained in an order made under ss. 250, 254, 260, 262, 263 and 264 of the Act. When there is an order made under any of these sections then and then only the first part of clause (ii) of sub­s. (3) of s. 153 operates. That there is no order made under any of these sections to invoke s. 153(3) of the Act, is not in dispute also. But, in the second part of clause (ii) of sub­s. (3) of s. 153 of the Act, the words used are \"an order of any court in a proceeding otherwise than by way of appeal or reference under this Act\". \"An order of any court\" means an order of any and every court in the country. The hierarchy and status of the court in the country is not decisive. All that this provision provides is that it must be a court and there must be an order of a court. The nature of the court and the nature of the order made by the court have no relevance. If there is an order of a court, whatever be its status, then the bar of limitation is automatically lifted. Acceptance of any other construction, and more so the construction suggested by Sri Ramabhadran on these words, would really result in legislation in the guise of interpretation, which is impermissible. Section 153(3) is not a charging section but is only a machinery provision. It is well Page 27 of 31 C/SCA/2850/2020 JUDGMENT settled that machinery provisions should be construed liberally. Applying this principle, as also the first principle of construction of statutes, namely, that the statute has to be expounded according to the intent of them who made it, it is not possible to accede to the construction suggested by Sri Ramabhadran. In New Jehangir Vakil Mills' case [1979] 117 ITR 849, the Gujarat High Court, examining a similar question, has expressed thus (p. 857) : \"It is clear that once the amount of compensation is finally determined in judicial proceedings, effect to that finding will have to be given with reference to the year in which possession was taken and since that is so, by virtue of s. 153(3)(ii), the question of limitation would not arise for consideration. That is the prima facie view which appears to us at the present stage.\" Sri Ramabhadran contends that this enunciation made by their Lordships of the Gujarat High Court, without any discussion and reasons, was not necessary for deciding the case that arose before this court. Even assuming that Sri Ramabhadran is right in his submission, in that event also, the above conclusion accords with the view expressed by me. With respect, I am in complete agreement with the view expressed by their Lordships in New Jehangir Vakil Mills' case . On the above discussion, it follows that the impugned notices have to be upheld as validly issued under section 147(b) and s. 153(3)(ii) of the Act.” 17. Thus, an order of any Court means an order of any and every Court of the country. The hierarchy in status of the Court in the country is not decisive. As provided in Section 153(6) of Page 28 of 31 C/SCA/2850/2020 JUDGMENT the Act, that there must be a Court, and there must be an order of the Court. Therefore, when this Court remands the matter, it is an order of the Court which would extend the limitation for completing the assessment by the Assessing Officer for another twelve months. This Court in the case of New Jehangir Vakil Mills Co. Ltd. (supra) while dealing with the provisions of Section 153(3)(ii) of the Act has held as under: “Under sub­s. (1) of s. 153, no order of assessment shall be made under s. 143 or s. 144 at any time after the expiry of different periods provided in that sub­section. Under sub­s. (2), no order of assessee, reassessment or recomputation shall be made under s. 147 after the period specified in sub­s. (2) of s. 153. Under Sub­s (3) of s. 153, it is provided that the provisions of sub­ss. (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may be completed any time... (ii) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order,.... or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act. It is clear that once the amount of compensation is finally determined in judicial proceedings, effect to that finding will have to be given with reference to the year in which possession was taken and since that is so, by virtue of s. 153(3)(ii), the question of limitation would not arise for consideration. That is the prima facie view which appears to us at the present stage. In view of this prima facie view, it is not necessary that any direction Page 29 of 31 C/SCA/2850/2020 JUDGMENT should be given so as to save or prevent the bar of limitation from operating against the income­tax authorities as apprehended by them. Under these circumstances, the directions which were sought for availing of alternative remedy are not necessary at all. Under these circumstances, the Tribunal was right in refusing to give directions as it did. The question in Reference No. 124 of 1978 must, therefore, be answered in the affirmative, that is, in favour of the assessee and against the revenue.” 18. In view of the above dictum of law, the contention canvassed on behalf of the revenue that order of any Court in a proceeding otherwise than by way of an appeal or reference under the Act, like order passed under the Land Acquisition matter, etc., is only required to be taken into consideration for the purpose of enabling the Assessing Officer to pass order of assessment, re­assessment, etc., before the expiry of twelve months from the end of the month in which such order is received or passed cannot be accepted, because order of remand which may be passed by this Court would be an order of any Court in a proceeding, otherwise than by way of appeal or reference under the Act, 1961. Therefore, in view of the above discussion, the Assessing Officer would be able to pass fresh assessment order before the expiry of twelve months from the end of the month in which order of remand which may be passed by this Court is received by him. Page 30 of 31 C/SCA/2850/2020 JUDGMENT 19. In view of foregoing reasons, the petition succeeds and is allowed. The impugned assessment order is quashed and set aside and the matter is remanded back to the Assessing Officer to pass fresh de­novo assessment order, after providing all the details and information in possession of Assessing Officer and after providing the adequate opportunity of hearing to the petitioners, within a period of twelve months from the end of the month in which the writ of this order is received as per the provisions of Section 153(6)(i) of the Act, 1961. As the assessment order is quashed and set aside, the respondent is directed to lift the attachment placed on the bank account of the petitioners and pass consequential order for refund of the amount appropriated from such bank account of the petitioners. 20. Rule is made absolute to the aforesaid extent. No order as to costs. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) Pradhyuman/Alok Page 31 of 31 "