INCOME TAX OFFICER v. SMT. NANKIBAI & ORS
[Citation -1986-LL-0611-2]

Citation 1986-LL-0611-2
Appellant Name INCOME TAX OFFICER
Respondent Name SMT. NANKIBAI & ORS.
Court ITAT
Relevant Act Income-tax
Date of Order 11/06/1986
Assessment Year 1980-81
Judgment View Judgment
Keyword Tags time-limit for completion of • period of limitation • fresh assessment • issue of notice • share income
Bot Summary: The above order is described as order under s. 143(3) and 143(2) of the Act and therefore according to assessee these orders were to be passed before 31st March, 1983 a s per limitation prescribed under s. 153 of the Act and therefore, the orders passed on 12th April, 1983 were barred by limitation. The original order of assessment under s. 143(1) were passed on 14th Jan., 1983 and the said order was well within the period of limitation prescribed under s. 153 of the Act. Of sub-s. of s. 43 of the Act and argued that fresh assessment order is to be passed only in a case where the ITO is of the opinion that the assessment made under s. 143(1) of the Act is incorrect inadequate or incomplete in any material respect. Counsel for the assessee on the other hand argued that the assessment order under s. 143(1) was wiped off as soon as application under s. 143(2) is made by the assessee objecting to the above assessment and then the ITO has to complete a fresh assessment under cl. No order of assessment shall be made under s. 143 or s. 144 at any time after: xxx xxx two years from the end of the assessment year in which the income w a s first assessable, where such assessment year is an assessment year commencing on or after 1st April, 1969. Of sub-s. of s. 153 bars making of any order of assessment under s. 143 after two years from the end of the assessment year in which income was first assessable. The above assessment made has to be treated as an order of assessment under s. 163 of the IT Act to which provisions of s. 153 of the Act are made applicable.


VIMAL GANDHI, J.M.: These are five appeals by Revenue against identical order of AAC dt. 10th May, 1983 by which he cancelled assessments made by ITO. Facts leading to these appeals are that assessees were partner in firm M/s Murlidhar Kanhayalal, Bhopal and had been shown share income from firm in their returns for asst. yr. 1980-81. assessments were made under s. 143(1) of Act on 14th Jan., 1983. assessee filed applications under s. 143(2) (a) of Act objecting to above assessments vide their applications filed in March 1983. Vide order dt. 12th April, 1983 ITO held above objections to be mis-conceived un-maintainable and untenable. above order is described as order under s. 143(3) (a) and 143(2) (b) of Act and therefore according to assessee these orders were to be passed before 31st March, 1983 s per limitation prescribed under s. 153 of Act and therefore, orders passed on 12th April, 1983 were barred by limitation. AAC accepted above contention of assessee and annulled order passed but he ITO. Hence these appeals by Revenue. ground of appeal in all five appeal is common under: "On facts and in circumstances of case learned AAC erred i n concelling order passed by ITO rejecting application of assessee filed in form No. 6A" Before us, Shri O.P. Gujarat ld. DR submitted that order passed by ITO on 12th April, 1983 cannot be said to be order of assessment to which period of limitation as prescribed under s. 153 of Act was applicable. original order of assessment under s. 143(1) were passed on 14th Jan., 1983 (AAC has written 13th Jan., 1983) and said order was well within period of limitation prescribed under s. 153 of Act. In order dt. 12th April, 1983 ITO has simply rejected application of assessee under s. 143(2) (a) of Act and above cannot be said to be order of assessment. He drew our attention to cl. (b) of sub-s. (3) of s. 43 of Act and argued that fresh assessment order is to be passed only in case where ITO is of opinion that assessment made under s. 143(1) of Act is incorrect inadequate or incomplete in any material respect. Simple rejection of application of assessee on form no 6-A cannot be said to be fresh assessment. period o f limitation was not applicable to rejection order passed by ITO and, therefore, AAC was wrong in annulling above order dt. 12th April, 1983. Shri B.M. Gupta ld. Counsel for assessee on other hand argued that assessment order under s. 143(1) was wiped off as soon as application under s. 143(2) (a) is made by assessee objecting to above assessment and then ITO has to complete fresh assessment under cl. (b) of s. 143 (3) of Act. counsel further argued that this is what in fact fact ITO has done as is clear from title of order which says "it is order under: s. 143(2) (a) and 143 (3) (b) of IT Act". Shri Gupta referred to provisions of s. 153 of Act and said that it bars passing of any order of assessment after two years form end of assessment year in which income was first assessable. assessment year being 1980-81 all orders of assessment were required to be completed by 31st March, 1983 and thus order passed on 12th April, 1983 was clearly berred by time. Shri Gupta relied upon decision of M.P. High Court in case reported in 1. CIT vs. Tej Kumar Sethi (HUF) (1983) 37CTR (MP) 177: (1983) 143 ITR 757 (MP), 2. Gauri Shankar Deity & Ors vs. Union of India (1984) 145 ITR 67 (MP), 3. ITO vs. V. Ethirajulu Chettiar (1983) 6 ITD 63 (MP) and 4. Raja Jagdambika Pratap Narain Singh vs. CBDT(1975) 100 ITR 698 (SC) . He also drew our attention to cl. (d) added in s. 153 (1) of Act w.e.f. 19th Jan., 1984 by Taxation Laws Amendment Act 1984 providing for making of assessment within six months from end of month in which application on form No. 6-A is made by assessee. He drew our attention to object and notes of above amendment as contained in (1984) 150 ITR (st) 11. He thus pleaded that AAC was right in annulling order dt. 12th April, 1983 holding it to be assessment order passed beyond time. We have heard parties and examined record produced before us. only point required to be determined in these appeals is whether order dt. 12th April, 1983 can be said to be assessment order hit by period of limitation or provided under s. 153 of Act. At this stage, we deem it necessary to set out material provisions of s. 143 of IT Act. relevant necessary to set out material provisions of s. 143 of IT Act. relevant provisions of s. 143 with which we are concerned are as follows: "144. (1) xxxx xxxx (2) Where return has been made under s. 139 and (a) assessment having been made under sub-sec. (1) assessee makes within one month from date of service of notice of demand issued i n consequence of such assessment application to ITO objecting to assessment, or (b) xxxx xxxxx ITO shall serve on assessee notice requiring him on date to be therein specified either to attend at ITOs office or to produce or to cause to be there produced any evidence on which assessee may rely in support of return: xxxx xxxxx (3) On day specified in notice issued under sub-s. (2) or as soon afterwards as may be after hearing such evidence as assessee may produce and such other evidence as ITO may require on specified points and after taking into account all relevant material which he has gathered: xxxx xxxx (b) in case where assessment has been made under sub s. (1), if either such assessment has been objected to by assessee by application under cl. (a) of sub-s. (2) or ITO is of opinion that such assessment is incorrect inadequate or incomplete in any material respect ITO, shall by order in writing, make fresh assessment of total income of loss of assessee and determine sum payable by him or refundable to him on basis of such assessment." Clause (iii) or sub-s. (1) of s. 153 which is applicable in this case reads as under: "153. (1) No order of assessment shall be made under s. 143 or s. 144 at any time after: (i)xxx (ii) xxx (iii) two years from end of assessment year in which income w s first assessable, where such assessment year is assessment year commencing on or after 1st April, 1969." above cl. (iii) of sub-s. (1) of s. 153 bars making of any order of assessment under s. 143 after two years from end of assessment year in which income was first assessable. We are thus required to determine whether order dt. 12th April, 1983 is order of assessment under s. 143. ITO has described above order to be order under s. 143(2) (a) and 143 (3) (a) o f Act but above nomenclature may not be conclusive in holding above order to be order under s. 143 of IT Act. However as is evident from relevant provisions of s. 143 of Act quoted above, when assessee files application under s. 143(2) (a) objecting to assessment made under s. 143(1) of Act, it is mandatory for ITO to issue notice in terms of s. 143(2) of Act. said provision has used word ITO shall serve notice on assessee. After issue of notice, ITO s required to make fresh assessment of total income in terms of cl. (b) of sub-s (3) of s. 143 of Act. In every case where objection is raised by assessee under s. 143(2) (a) of Act, it is mandatory for ITO to make fresh assessment. above assessment made has to be treated as order of assessment under s. 163 of IT Act to which provisions of s. 153 of Act are made applicable. contention of ld. DR that fresh assessment is to be made only where order of assessment made under s. 143 in opinion of ITO is incorrect, inadequate or incomplete in any material respect is misconceived. above is made applicable only to cases where notice under s. 143(2) (b) is issued by ITO with previous approval of IAC and not to cases where assessments made are objected to by assessee. As observed earlier in such cases it is mandatory for ITO to make fresh assessment under s. 153 of Act to which period of limitation of two years as prescribed under s. 153 of Act is applicable. Our above view is further supported by amendment brought about in s. 153(1) of Act inserting cl. (4) in above provision w.e.f. 1st Oct., 1984. In explanatory notes given along with provision it is stated as under: "Amendment of s. 153 of IT Act, relating to time-limit for completion of assessment in certain cases. Under s. 153(1) of IT Act, order of assessment cannot ordinarily, be made after expiry of two years from end of assessment year in which income was first assessable or expiry of one year from date of filing of return or revised return whichever is later. This provision has resulted in practical difficulty in cases where order of assessment is made by ITO under s. 143 (1) of Act without requiring presence of assessee or production by him of any evidence in support of return filed by him. In such cases, assessee is entitled under s. 143(2) (a) of Act to make application within one month to ITO objecting to such assessment. On receipt of application under this provision, ITO is required to make fresh assessment after considering objections raised by assessee. It had come to notice that, in certain cases, where order of assessment under s. 143(1) of Act was made towards expiry of period of limitation laid down in s. 153(1) ITO was not in position to make fresh assessment because period of limitation had expired by time that application filed by assessee under s. 143(2) (a) raising objections against said assessment order was taken up for consideration by ITO. With view to removing this difficulty, Amending Act has inserted new cl. (C) in sub-s. (1) of s. 153 of Act to secure that in such cases, fresh assessment may be made by ITO within period of limitation laid down under existing provisions of s. 153(1) or before expiry of six months from end of month in which application under cl. (a) of sub-s (2) of s. 143 of Act is made by assessee, whichever is later. aforesaid amendment takes effect from 1st Oct., 1984. (Sec. 28 (a) of Amending Act)" Thus, above amendment was made to remove difficulty in making fresh assessments under s. 143 of IT Act. Amendment has come into force w.e.f. 1st Oct., 1984 whereas order was not passed on 12th April, 1983 to which above amendment was not applicable. above order of assessment passed under s. 143 were clearly barred by time and AAC was right in annulling same. We accordingly uphold decision of AAC and dismiss these appeals. *** INCOME TAX OFFICER v. SMT. NANKIBAI & ORS.
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