HIGH
COURT OF ORISSA
Commissioner
of Income-tax
v.
Orissa
Forest Development Corpn. Ltd.
B.
P. DAS AND A. K. SAMANTARAY, JJ.
S.
J. C. NO. 100(A) OF 1991
August
10, 2006
Section 153, read with section 146, of the Income-tax Act,
1961-Assessment - Time limit for completion of - Assessment year
1978-79-Assessment of assessee for relevant assessment year was made under
section 144 - Subsequently, reopening order was passed under section 146 on
18-3-1983 on ground that assessee was prevented by sufficient cause not to
comply with order of Assessing Officer and therefore, assessment under section
144 was cancelled and assessment was reopened - Assessee filed revised return
on 20-3-1985 and order of assessment was passed on 21-1-1986-Assessee contended
that said assessment order was barred by limitation as it was not completed
within period prescribed under section 153(2A) - Revenue however, contended
that as assessee had filed revised return showing its willingness to be
assessed, question of limitation was not material - Whether since
sub-section (2A) of section 153 makes
no reference to revised return, fresh assessment in assessee’s case had to be
made before two years from end of financial year in which order under section
146 cancelling assessment order under section 144 was passed - Held, yes -
Whether since aforesaid period of two years expired on 31-3-1985, and
assessment order was passed on 21-1-1986, assessment order was barred by
limitation - Held, yes
The Government in the Forest Department entered into an agreement with the assessee and appointed it as the selling agent for disposal of the kendu leaves purchased by the Forest Department. During the period relevant to the assessment year 1978-79, kendu leaves were sold at a price higher than the price fixed and specified in the agreement. The Assessing Officer was of the opinion that the extra profit earned was assessable in the hands of the assessee. The assessment was framed under section 144 but the same was subsequently set aside on the ground that the assessee was prevented by sufficient cause not to comply with the Assessing Officer’s order and thereafter the assessment was reopened under section 146 on 18-3-1983. The assessee filed a revised return on 20-3-1985, and the order of assessment was passed on 21-1-1986. On appeal, the assessee contended that the fresh assessment order was barred by limitation as it was not completed within the limit prescribed under section 153(2A). The Commissioner (Appeals) rejected the assessee’s contention on the ground that the limitation period prescribed in section 153(2A) got extended due to assessee’s filing of revised return. On second appeal, the Tribunal, allowed assessee’s appeal.
On reference:
A bare reading of the provisions of section 153(1) will go to show that the same deal with the time limit for completion of normal assessment made under section 143(3) or 144. Sub-section (2) of section 153 deals with the time limit for assessment under section 147 to assess or reassess the escaped income. Section 153(2A) pertains to fresh assessment made in pursuance of an order of the Assessing Officer under section 146. Section 146, as it stood then, is the provision for reopening assessment at the instance of the assessee or in pursuance of an order under section 250, section 254, section 263 or section 264, setting aside or cancelling an assessment made at any time before the expiry of two years from the end of the financial year in which the order under section 146 cancelling the assessment is passed by the Income-tax Officer or the order under section 250 or section 254 is received by the Commissioner, or as the case may be. From the aforesaid provisions of law, it is clear that sub-section(1)(c) of section 153 deals with the period of limitation regarding revised return but sub-section (2A) of section 153 is silent regarding that and makes no reference to revised return. So, the case of the assessee would come within the purview of section 153(2A) and fresh assessment in the instant case had to be made before two years from the end of the financial year in which the order under section 146 cancelling the assessment order was passed. The order in the instant case under section 146 was passed on 18-3-1983. The period of two years expired on 31-3-1985, and the assessment order was passed on 21-1-1986. The argument of the revenue that as the assessee had filed the revised return showing its willingness to be assessed, the question of limitation was not material and the Assessing Officer had the option to make the assessment after the expiry of two years period was not acceptable because there is no provision under section 153(2A) like that of the provision under section 153(1)(c) which provides for completion of assessment within one year from the date of filing of a return or revised return. Hence, the order of assessment was clearly barred by limitation and was an invalid one. [Para 7]