High Court Of Rajasthan : Jaipur Bench
Peeru Lal Mohan Lal vs. CIT
Sections 143(3), 153(2A), 292B
Asst. Year 1975-76
Y.R. Meena & Shashi Kant Sharma, JJ.
IT Ref. No. 29 of 1987
16th July, 2002
N.M. Ranka, for the Applicant : J.K. Singhi, for the Respondent
BY THE COURT :
On an application filed under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following question for our opinion :
“Whether, on the facts and in the circumstances of the case, the present assessment proceedings should be considered to be barred by law because of the intervening irregularities and the consequent delay ?”
2. The assessee filed return declaring an income of Rs. 43,820. The relevant assessment year is 1975-76. Initially the assessment order was passed on 16th Aug., 1977. In appeal, the AAC set aside that assessment order and directed to make fresh assessment. Fresh assessment order was passed under s. 144 on 25th May, 1978. That assessment order was recalled under s. 146 on 20th Nov., 1978. Thereafter a draft assessment order was prepared and that draft order was sent to IAC on 28th Nov., 1979. IAC later on found that draft assessment order cannot be passed under s. 144B of the Act. A fresh order thereafter was passed again under s. 144 of the IT Act, 1961, on 19th April, 1984. ITO sent the notice of demand after calculating the tax on the income assessed and challan was prepared on 23rd April, 1984.
3. The assessee before CIT(A) raised an issue that notice of demand was sent on 23rd April, 1984, while the assessment had been completed on 28th Nov., 1979, therefore, the same is time-barred and no demand can be raised on the basis of time-barred assessment, but the same was not accepted by the CIT(A). CIT(A) dismissed the appeal of the assessee. In appeal before the Tribunal, Tribunal also considered the issue as to whether the assessment in question is time-barred or not. Tribunal considered the provision of s. 292B of the IT Act, 1961, and held that by mistake ITO sent the draft assessment order for assessment under s. 144B and time has been taken by the IAC, therefore, the ITO could not issue the demand of tax in time and that is a mistake, which can be cured under s. 292B of the IT Act, 1961.
4. Mr. Ranka, learned counsel for the assessee, submits that assessment is not completed unless tax is determined and admittedly tax was determined on 23rd April, 1984, i.e., after two years from the date of order passed in appeal by the IAC (Asst.). He further submits that delay cannot be condoned under s. 292B of the IT Act, 1961, particularly when the assessment has not been completed in time. In support of his contentions he placed reliance on the decisions in CIT vs. Bal Krishna Malhotra (1971) 81 ITR 759 (SC) : TC 10R.133, Kalyan Kumar Ray vs. CIT (1992) 102 CTR (SC) 188 : (1991) 191 ITR 634 (SC) : TC 10R.470 and Smt. Kilasho Devi Burman & Ors. vs. CIT (1996) 132 CTR (SC) 173 : (1996) 219 ITR 214 (SC).
5. Mr. Singhi, learned counsel for the Revenue, submits that if the tax is determined separately after completion of assessment i.e., an irregularity and which can be cured under s. 292B of the IT Act, 1961. In support of his contentions, he placed reliance on the decision reported in (1992) 102 CTR (SC) 188 : (1991) 191 ITR 634 (SC) (supra).
6. When the fresh assessment is made under s. 146 or under s. 250 or under s. 254 or under s. 263 or under s. 264, that should be made before expiry of two years from the end of the financial year in which the order under s. 146 cancelling the assessment is passed by the ITO or order under s. 250 or under s. 254 is received by the CIT or as the case may be, the order under s. 263 or under s. 264 is passed by the CIT. This has been provided in sub-s. (2A) of s. 153 of the Act. Before we go for the limitation, we would like to discuss the issue as to when the assessment is completed.
7. Sub-s. (3) of s. 143 reads as under : “On the day specified in the notice issued under sub-s. (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the ITO may require on specified points, and after taking into account all relevant material which he has gathered,â (a) in a case where no assessment has been made under sub-s. (1), the ITO shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment; (b) in a case where an assessment has been made under sub-s. (1), if either such assessment has been objected to by the assessee by an application under cl. (a) of sub-s. (2) or the ITO is of opinion that such assessment is incorrect, inadequate or incomplete in any material respect, the ITO shall, by an order in writing, make a fresh assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment.” Clause (b) of sub-s. (3) of s. 143 provides that in case where assessment has been made under sub-s. (1) and if assessment has been objected to either by the assessee or by the ITO, being of the opinion that such assessment is incorrect, inadequate or incomplete in any material respect, the ITO shall by an order in writing make a fresh assessment of the total income of the assessee or loss of the assessee and determine the sum payable by him or refundable to him on the basis of such assessment. Therefore, for the purpose of assessment, assessment of income as well determination of the tax both are necessary for completion of the assessment order. Similar provision has been made in s. 144, which requires assessment of income as well as determination of sum payable by the assessee on that income.
The admitted facts are that last day for completion of the assessment order, as per the provisions of the Act, is 31st March, 1981 and assessee received the demand notice on 23rd April, 1984, i.e., beyond two years. Now the pertinent question before us is whether in absence of determination of tax, can it be said that assessment has been made or assessment has been completed. We would like to refer some decisions of the Honâble apex Court.
In the matter of CIT vs. Balkrishna Malhotra (supra) their Lordships observed as under : “It has been stated over and over again by this Court as well as by the Judicial Committee that the words “assessment” and “assessee” are used in different places in the Act with different meanings. Therefore, in finding out the true meaning of those words in any provision, we have to see to the context in which the word is used and the purpose intended to be achieved. It is true that sub-ss. (1), (3) and (4) of s. 23 require the ITO to “assess the total income of the assessee and determine the sum payable by him”. In other words, in those provisions the word “assess” has been used with reference to computation of the income of the assessee and not the determination of his tax liability. But in s. 34(3) the word used is not “assess” but “assessment”. The question for decision is what is the meaning of that word ? As long back as 24th Sept., 1953, the High Court of Madras in Viswanathan Chettiarâs case came to the conclusion that the word “assessment” in the proviso to s. 34(3) means not merely the computation of the income of the assessee but also the determination of the tax payable by him.”
11. In the case of Kalyankumar Ray vs. CIT (supra), the issue before their Lordships was whether computation of tax on the income forms part of the assessment order. At p. 638, their Lordships observed as under : “The statute does not, however, require that both the computations (i.e., of the total income as well as of the sum payable) should be done on the same sheet of paper, the sheet that is superscribed “assessment order”. It does not prescribe any form for the purpose. It will be appreciated that once the assessment of the total income is complete with indications of the deductions, rebates, reliefs and adjustments available to the assessee, the calculation of the net tax payable is a process which is mostly arithmetical but generally time-consuming. If, therefore, the ITO first draws up an order assessing the total income and indicating the adjustments to be made, directs the office to compute the tax payable on that basis and then approves of it, either immediately or some time later, no fault can be found with the process, though it is only when both the computation sheets are signed or initialled by the ITO that the process described in s. 143(3) will be complete.”
12. Mr. Singhi, learned counsel for the Revenue, also placed reliance on the same decision, wherein their Lordships have made it clear that if AO has made the assessment of the income on separate papers and calculated the tax on the separate sheets, that does not make any difference, since both the sheets are signed by the ITO and after that the assessment order is complete.
13. In the case of Kalyankumar Ray vs. CIT (supra) both the sheets were signed before expiry of two years as provided under sub-s. (2A) of s. 153 of the IT Act, 1961, but in the case in hand the assessment had been made in the month of November, 1979, and it was sent to IAC, who sent it back with the direction that no order is needed under s. 144B of the Act. Reference to the IAC was wrong even if the income was assessed on 28th Nov., 1979, but no tax was determined by that date. First time the tax was determined on 19th April, 1984 while the demand notice was served on the assessee on 23rd April, 1984, i.e., after expiry of two years from the last day of financial year in which appeal order has been passed and when the tax had not been determined, assessment was not complete and that was time-barred under s. 292B time-barring assessment cannot be cured as that is not a procedural mistake, which can be rectified. In our view the time-barring assessment does not come within the purview of mistake, defect or omission referred in s. 292B of the Act, 1961, therefore, the order of the Tribunal is erroneous.
14. In the result we answer the question in negative i.e., in favour of the assessee and against the Revenue. Reference so made stands disposed of accordingly.
[Citation : 257 ITR 198]