High Court Of Gujarat
CIT vs. Sorabji Nusserwanji Parekh
Sections 10(22), 11
Asst. Year 1972-73
S.B. Majmudar & S.D. Shah, JJ.
IT Ref. No. 138 of 1978
17th August, 1992
Counsel Appeared
Mrs. Ketty A. Mehta, for the Assessee : B. J. Shelat, instructed by M. R.Bhatt, for M/s. R. B. Bhatt & Co., for the Revenue
S. D. SHAH J.:
The petitioner is a public limited company. It is an assessee under the Agrl. IT Act. In this batch of four cases, we are concerned with four asst. yrs. 1980-81, 1981-82, 1982-83 and 1983-84. For the first three years 1980-81, 1981-82 and 1982-83, assessments were made under the Agrl. IT Act on 20th March, 1985. The assessment for the year 1983-84 was made on 16th Feb., 1986. The Commr. of Agrl. IT took the view that the aforesaid assessment orders dt. 20th March, 1985, and 16th Feb., 1986, are vitiated and prejudice has been caused to the Revenue. Therefore, he initiated proceedings in revision under s. 34 of the Agrl. IT Act by issue of notices dt. 14th Nov., 1990, and 18th Dec., 1990. They were served on the petitioner-assessee. Notwithstanding the objections of the assessee, the Commr. of Agrl. IT, by a common order dt. 24th Sept., 1991, set aside the assessments of the petitioner-assessee for the four years and ordered a remit of the case to the Agrl. ITO, Perinthalmanna, for the limited purpose of re-examining the company’s claim for deduction of gratuity. The said common order passed by the Commr. of Agrl. IT for the four years is assailed in these revisions.
We heard counsel for the petitioner, Mr. Premjit Nagendran, and also counsel for the respondent-Revenue, Senior
Government Pleader, Mr. V. C. James.
Counsel for the assessee argued that the order passed in suo motu revision by the Commr. of Agrl. IT dt. 24th Sept., 1991, is unreasonable and unfair. Though the plea taken before the Commr. of Agrl. IT and in the revision memorandum is to the effect that the revisional proceedings are barred by limitation, the argument proceeded on the basis that the revisional order was not passed within a reasonable time. In other words, the CIT exercised the powers vested in him under s. 34 of the Act unfairly and unreasonably. We find that the point was mooted before the Commissioner. He took the view that the proceedings were initiated within a reasonable time. No reason is stated. Counsel for the assessee heavily relied on a Bench decision of this Court in Nelliampathy Tea and Produce Co. Ltd. vs. Commr. of Agrl. I. T. (1991) 190 ITR 227 ; (1991) ILR 2 Ker 68 and contended that the order passed under s. 34 of the Act is prima facie unreasonable and so deserves to be annulled. In Nelliampathy Tea and Produce Co. Ltd. vs. Commr. of Agrl. I. T., (supra) at pages 234, 235, this Bench had occasion to state the law thus : “The normal period within which an assessment, once made, can be reopened under s. 35 of the Act, is five years from the end of the assessment year. Under s. 36, a mistake could be rectified within three years from the date of the assessment order. Once a final assessment is rendered (after the appeal or revision or reference, as the case may be), the finality attached to the order can be put in peril and the assessment can be reopened normally only in proceedings under s. 35 or 36 of the Act. To reopen the final assessment after the said periods, in exercise of the powers under s. 34 of the Act, demands cogent and sufficient reasons. The power vested in the CIT of Agrl. IT should be exercised bona fide and within a reasonable period. The Revenue should be able to demonstrate that there were circumstances beyond control or other supervening events or insurmountable difficulties for not setting in motion the proceedings under s. 34 of the Act within the normal period provided in ss. 35 and 36 of the Act. Whether there were exceptional or extenuating circumstances, explaining the reason for not setting in motion the proceedings under s. 34 of the Act within the normal period, to revise or reopen an assessment which will affect the assessee adversely, would depend upon the facts and circumstances of each case.
Since the question whether the power has been exercised within a reasonable period depends upon the facts of each case, it is initially for the statutory authority before whom such objection is raised to advert to all the facts and circumstances and then come to a decision on the said question. That has not been done in this case.”
The aforesaid Bench decision was followed in a later decision in K. Iswara Bhat vs. Commr. of Agrl. I. T. (1992) 104 CTR (Kar) 392 : (1993) 200 ITR 238 (Ker).
In the light of the Bench decision in Nelliampathy Tea and Produce Co. Ltd. vs. Commr. of Agrl. I. T., (supra), it is evident that the period of five years to reopen the assessments under s. 35 of the Act expired on the following dates, 31st March, 1986, 31st March, 1987, 31st March, 1988, and 31st March, 1989. The period within which the assessment orders could have been rectified for the first three years expired on 20th March, 1988. The period within which the assessments for the year 1984- 85 could have been rectified expired on 16th Feb., 1989. So the periods within which the assessments could have been reopened under s. 35 of the Act and rectified under s. 36 of the Act had expired long before the issue of the notices for suo motu revision by the CIT under s. 35 of the Act on 14th Dec., 1990 and 18th Dec., 1990. Prima facie the revisional proceedings are beyond the period fixed for reopening the assessments under s. 35 of the Act or for rectifying them under s. 36 of the Act. So, in the light of the decision in Nelliampathy Tea and Produce Co. Ltd. vs. Commr. of Agrl. I. T. (supra), to exercise the powers vested in s. 34 of the Act, it requires cogent and sufficient reasons. The Revenue should be able to demonstrate that there were circumstances beyond control or other supervening events or insurmountable difficulties for not setting in motion the proceedings under s. 34 of the Act within the normal period provided in ss. 35 and 36 of the Act. This aspect has not been borne in mind by the Commr. of Agrl. IT when he passed the common order for all the four years on 24th Sept., 1991. Since this is a question of fact, it is for the CIT to apply his mind, to advert to all the facts and circumstances and come to a positive finding on this aspect. The common order passed by the Commr. of Agril. IT on 24th Sept., 1991, discloses an error of law, viz., that the CIT has not stated as to why and on what basis the orders passed in revision can be considered to be reasonable as stated by this Court in Nelliampathy Tea and Produce Co. Ltd. vs. Commr. of Agrl. I. T. (supra).
6. We, therefore, set aside the common order passed by the Commr. of Agrl. IT dt. 24th Sept., 1991, for all the four years. The matter is remitted to the CIT for passing fresh orders in accordance with law. The revisions are allowed.
No costs.
[Citation : 203 ITR 504]
