Rich Capital and Finance Services Ltd. Vs CIT And Another (Allahabad High Court)
The Allahabad High Court considered appeals arising from the ITAT Lucknow order concerning Assessment Years 1993-94, 1994-95 and 1995-96 under Section 21 of the Interest Tax Act, 1974 read with Section 260A of the Income Tax Act, 1961.
For AY 1993-94, the assessee was reassessed under Sections 8(3) and 10 of the Interest Tax Act, with interest tax of ₹3,67,360 assessed pursuant to a reassessment notice stated to have been dispatched on 01.05.1998. The CIT(A), by order dated 07.03.2002, noted that there was no proof of service of the notice, set aside the reassessment order and remitted the proceedings to the Assessing Authority. A fresh reassessment order was subsequently passed on 10.11.2003, reiterating the earlier view. The CIT(A) sustained it on 04.02.2005, and the ITAT confirmed the order on 20.03.2008.
The principal question before the High Court was whether the reassessment proceedings were time-barred under Section 10A of the Interest Tax Act.
The Court noted that Section 10A(2) permits an order to be passed within two years from the date of issuance of notice. It held that the fresh reassessment order dated 10.11.2003 was passed within two years from the remand by the CIT(A) on 07.03.2002. Since the revenue authority was permitted to issue a fresh show-cause notice and there was no dispute regarding its existence, the limitation bar under Section 10A(2) was not attracted. The Court found no error in the ITAT’s conclusion.
The assessee also raised an issue concerning absence of “reason to believe” for initiating reassessment under Section 10. The Court declined to entertain this question because it had neither been raised before the CIT(A) nor raised or decided before the Tribunal. The Court observed that the issue depended upon factual findings and therefore did not involve a substantial question of law in the present appeals.
Accordingly, the High Court found no merit in the appeals and dismissed them.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Suyash Agrawal, learned counsel for the assessee-appellant, Sri Ankur Agarwal, learned counsel for the revenue and perused the record.
2. Present appeals have arisen against the order dated 20.03.2008 passed by the Income Tax Appellate Tribunal, Lucknow Bench ‘B’, Lucknow in I.T.A. No. 6/LUC/2005 for Assessment Years 1993-94, 1994-95 and 1995-96, under Section 21 of the Interest Tax Act, 1974 (hereinafter referred to as ‘the Act’) read with Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Parent Act’). The present appeal has been admitted on the following question of law:
“Whether on the facts and circumstances of the case the I.T. A.T. was right in holding that the reassessment proceedings initiated u/s 10 of the Interest Tax Act was not time barred as the assessment framed was beyond time specified u/s 10A of the Act. “
3. The Assessment Years in question are 1993-94, 1994-95 and 1995-96. For the purposes of the disposal of these appeals, the facts pertaining to Assessment Year 1993-94 are being noted. The assessee was subjected to reassessment under Section 8(3) read with Section 10 of the Act. Vide order dated 28.02.2001-01.03.2001, the assessee was assessed to interest tax Rs.3,67,360/- being tax arising from a reassessment notice described to have been dispatched on 01.05.1998. That order was subjected to challenge by the assessee before the Commissioner of Income Tax (Appeals)-II, Kanpur. Vide his order dated 07.03.2002, it was noted that there was no proof of service of that notice. Therefore, the reassessment order was set aside and the proceedings were remitted to the Assessing Authority. Thereafter, the Assessing Authority passed a fresh order dated 10.11.2003 and reiterated its earlier opinion. That order was sustained in an appeal preferred before the Commissioner of Income Tax (Appeals)-II, Kanpur vide his order dated 04.02.2005 and it was confirmed in the second appeal by means of the impugned order.
4. The common order dated 20.03.2008 was passed by the Income Tax Appellate Tribunal, Lucknow Bench ‘B’, Lucknow in I.T.A. No. 6/LUC/2005 for Assessment Years 1993-94, 1994-95, and 1995-96.
5. To the extent, Section 10A(2) of the Act, allows an order to be passed within two years from the date of issuance of notice, here, it cannot be disputed that the first order of the CIT (Appeals) is dated 07.03.2002, whereby the first reassessment order dated 01.03.2001 was set aside. The second reassessment order was passed on 10.11.2003, clearly within two years from the date of the proceedings being remanded. To the extent, the revenue authority has been allowed to issue a fresh show-cause notice and further to the extent there is no dispute as to the existence of such notice, the bar of limitation prescribed in Section 10A(2) of the Act was not attracted. There is no error in the order of the tribunal, on that count.
6. At this stage, learned counsel for the assessee pressed another question regarding the absence of “reason to believe” to initiate reassessment proceedings under Section 10 of the Act. While the issue raised is relevant, plainly, that ground was neither raised before the Commissioner of Income Tax (Appeals) nor raised or decided before the Tribunal. Thus, it does not ‘involve’ a substantial question of law. That substantial question of law is not ‘involved’ in this case as unless an issue is raised and pressed before the fact-finding Tribunal and is followed by a reasoning and finding of the Tribunal on that issue, no party may successfully canvas before this Court-by way of right, that such an issue was involved in the appeal. Barring purely legal issues which may stand on their own strength and may, therefore, be permitted to be raised, the issue presently pressed is premised on findings of fact that would have to be recorded first, i.e., whether any “reason to believe” had been recorded (as a fact) before the reassessment notice was issued. Therefore, that question of law is not involved in this case.
7. In view of the above, we find no merit in the contentions raised in the present appeals. Accordingly, the present appeals are dismissed.
