Case Law Details
Brief of the Case
ITAT Delhi held in the case of ITO vs. M/s. Neetee Clothing (P) Ltd. that CIT (A) has rightly observed that section 150(2) enacts the situation where the provisions for assessment pursuant to appeal u/s 150(1) will not be applicable. Provisions of section 150(1) shall not apply where the reassessment proceedings would have been barred by time even at the time when the order, which was the subject-matter of appeal, revision, etc., was passed. So, it is clear that if the issuing of a notice for assessment or reassessment for a particular assessment year had become time-barred at the time of the order, which was the subject-matter of the appeal, the provisions of section 150 (1) cannot be invoked for making an assessment or reassessment. Also the order of Hon’ble High Court was passed for AY 2003-04 and the year before us for consideration is AY 2002-03. Accordingly in view of the order of Hon’ble High Court which is not in respect of AY 2002-03; and also no proceeding is pending for the year under consideration; in the said factual scenario, the proceedings initiated u/s 147 for the AY 2002-03 are impermissible and, therefore, the AO is not empowered to reopen the same u/s 150(1), considering the restriction placed by section 150 (2).
Facts of the Case
In return of income for the year under consideration i.e. AY 2002-03, gross total income had been computed at Rs.1,47,16,979/-. Out of this total income, the assessee has claimed two deductions under chapter VIA as under:- U/s 80HHC of Rs.1,02,21,587/- and U/s 80-IA/B @ 30% of Rs. 44,95,392/- .The notice u/s 148 read with section 150 dated 15.03.2011 was issued to the assessee. In reply vide letter dated 24.03.2011, the assessee had submitted that no appeal had been preferred before any authority for the year under consideration i.e. AY 2002-03, therefore, no notice could be issued u/s 148 beyond the time limit mentioned in section 149 and submitted that as per section 149(1) (b) notice can be issued only within six years from the end of the assessment year, therefore, last date for the issue of notice was 31-03-2009 whereas notice was issued on 15.03.2011. It was submitted by the assessee that since the notice issued was not legally valid, since being time barred the proceedings for AY 2002-03 may be dropped.
But the AO did not accept the assessee’s reply and following the decisions of the Hon’ble Supreme Court in the case of CIT Vs. Sterling Foods 237 ITR 579, the AO observed that this aspect was also covered by the provisions of section 150(1). The AO held that no deduction at all was allowable to the assessee u/s 80-IB whereas, the amount of Rs.44,95,392/- had been allowed to the assessee u/s 143(1) because the said amount was claimed by the assessee in the return of income.
Contention of the Assessee
The ld counsel of the assessee submitted that the AO erred in interpreting section 150(1) since the order of the Hon’ble High Court was for AY 2003-04 and not for AY 02-03. The object of enacting section 150(1) is to really give effect to the orders made by the superior authorities/Courts under the Act or the Constitution and, thus, bring the assessments for the year or years, as the case may be, in conformity with those orders without any time limit. However, the words ‘in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceedings under this Act by way of appeal, reference or revision,’ used in section 150(1) must necessarily relate to an order with reference to a particular assessment year or years and that must necessarily be by a superior authority or Court competent to make the same. The words ‘any proceedings under this Act by way of appeal, reference or revision’ cannot be read as to give effect to an order made in any case and for any period and of any person. So, therefore, the AR wants us not to interfere with the order of the CIT (A) and the same may be upheld.
Contention of the Revenue
The ld counsel of the revenue submitted that the CIT (A) was not justified in deleting the disallowance u/s 80IA/80IB amounting to Rs.44,95,392/- u/s 148/150 (1) . He submitted that the CIT (A) has also erred in holding that no notice can be issued u/s 148 to the assessee for AY 2002-03 even though the same was issued pursuant to the order of the Hon’ble Delhi High Court in the case of the assessee for AY 2003-04. So, therefore, he wants us to reverse the order of the CIT (A) and uphold the order of the AO.
Held by CIT (A)
CIT (A) deleted the addition and allowed the appeal of the assessee. It was held section 150(1) shows that where the reassessment proceedings are initiated in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference or revision, the time-limits prescribed in Section 149 shall not apply, and that notice u/s 148 can be issued at any time. Sub-section (2), however, is again in the nature of a proviso to sub-s. (1). It says that the provisions of section 50 (1) shall not apply where, by virtue of any other provision limiting the time within which action for assessment, reassessment or re-computation may be taken, such assessment, reassessment, or re-computation is barred on the date of the order which is the subject-matter of the appeal, reference or revision in which the finding or direction is contained.
Reliance is placed on CIT V. G. Vishwanatham, (1998) 172 ITR 401 (AP). In view of the above as the order of Hon’ble High Court is not in respect of AY 2002-03, as no proceeding is pending for the said assessment year and as the proceeding initiated u/s 147 for the A.Y. 2002-03 are barred by limitation provided u/s 149, therefore, the AO is not empowered to reopen the same u/s 150(1), considering the restrictions placed by section 150 (2). The action of the AO is beyond the jurisdiction.
Held by ITAT
ITAT held that after going through the provisions of Section 150, the CIT(A) has rightly interpreted that the object of enacting section 150 (1) is to give effect to the orders made by he superior authorities/Tribunals under the Act or the Constitutional Courts; and to bring the assessments for the year or years, as the case may be, in conformity with those orders without any prescribed time-limit; and in a case covered by section 150 (1), the question of limitation does not arise. The ld CIT (A) rightly observed that the words “in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision” must necessarily relate to an order made with reference to a particular assessment year or years and that must necessarily be by a superior authority or court competent to make the same from proceedings before it as per law. Further, we concur with the opinion of the ld CIT(A) that the words “any proceeding under this Act by way of appeal reference or revision” cannot be read as to give effect to an order made in any case and for any period and of any person. These words should be so construed as referable to an order made for a particular year or years of that particular assessee and not of others.
Further CIT (A) has rightly observed that subsection (2) of section 150 enacts the situation where the provisions of subsection (1) will not be applicable. Accordingly, we find that the provisions of sub-section (1) shall not apply where the reassessment proceedings would have been barred by time even at the time when the order, which was the subject-matter of appeal, revision, etc., was passed. If the issuing of a notice for assessment or reassessment for a particular assessment year had become time-barred at the time of the order, which was the subject-matter of the appeal, the provisions of section 150 (1) cannot be invoked for making an assessment or reassessment.
Also, the order of Hon’ble High Court was passed for AY 2003-04 and the year before us for consideration is AY 2002-03. Since the order of Hon’ble High Court is not in respect of AY 2002-03; and it is not in dispute that no proceeding is pending for the year under consideration; in the said factual scenario, the proceedings initiated u/s 147 for the AY 2002-03 are impermissible and, therefore, the AO is not empowered to reopen the same u/s 150(1), considering the restriction placed by section 150 (2). Accordingly, we do not find any infirmity in the order of the CIT (A) and the same is upheld.
Accordingly appeal of the revenue dismissed.
