Section 153, read with section 148 of the Income tax Act

HIGH COURT OF ALLAHABAD Commissioner of Income-tax-II, Lucknow v. S.P. Mishra PRADEEP KANT AND S.N. SHUKLA, JJ. IT APPEAL NOS. 64 TO 68 OF 2006 February 7, 2006 Section 153, read with section 148 of the Income tax Act, 1961 - Income escaping assessment - Time limit for completion of reassessment - Assessment years 1992-93 to 1996-97 - For relevant years, assessee disclosed certain income as agricultural income which was accepted by Assessing Officer - For subsequent assessment year 1997-98, Assessing Officer treated similar income declared by assessee as his income from other sources - Commissioner (Appeals) upheld said finding but did not make any comment on agricultural income declared and accepted by revenue for earlier assessment years besides assessment year 1997-98 - On basis of this order, Assessing Officer initiated reassessment proceedings against assessee by issue of notice under section 148, dated March 2001, for all relevant years and completed reassessment in March, 2003 - Whether since there was no direction in order of Commissioner (Appeals) in respect of assessment years in question, it could not be said that reassessment orders were passed for giving effect to said appellate order - Held, yes - Whether therefore, in view of section 153(2), reassessment orders having passed after expiry of one year from end of financial year in which notice under section 148 was served, was time barred - Held, yes FACTS In his returns of income for the assessment years 1992-93 to 1996-97, the assessee disclosed certain income as ‘agricultural income’. These returns were accepted. However, the Assessing Officer which completing the assessment for the assessment year 1997-98, recorded a finding that certain income which had been declared as agricultural income was not an agricultural income. Therefore, he treated it as income of the assessee from other sources. On appeal, the Commissioner (Appeals) upheld the findings of the Assessing Officer but did not make any comment on the agricultural income declared and accepted by the revenue for the assessment years in question besides the assessment year 1997-98. Thereafter, the Assessing Officer collected an impression that the income, which had been taken as agricultural income in the assessment years in question, was a case of escaped assessment and, therefore, he issued notice under section 148 on 23-3-2001 for the said years. The reassessment orders were passed on 26-3-2003 in which certain additions were made. On appeal, the assessee pleaded that in view of section 153(2), the re-assessments made were barred by limitation as they were completed after the expiry of one year from the end of the financial year, for which the notice under section 148 was served. According to the assessee, admittedly the notice under section 148 was given in March, 2001 and, therefore, assessment under section 147/153(3) should have been completed by 31-3-2002, whereas reassessment orders were made much thereafter i.e. on 26-3-2003. As against that, the revenue contended that as the notice under section 148 had been issued considering the finding of the Commissioner (Appeals) in assessment year 1997-98, the reassessment orders for the assessment years in question were passed ‘in consequence of the appellate order’ therefore, the one year time limit as provided in section 153(2) would not apply. The Commissioner (Appeals) held that sub-section (2) of section 153 would apply and, therefore, the re-assessment made after the period of limitation provided in section 153(2) was without jurisdiction. On revenue’s appeal the Tribunal confirmed the order of the Commissioner (Appeals). On appeal: HELD The scheme of section 153 provides the limitation during which the reassessment order can be made, if the case is covered by provisions of sub-section (1) and sub-section (2). Sub-section (3) of section 153 excludes the applicability of the aforesaid period of limitation in the circumstances more precisely indicated in paras (ii) and (iii) thereof. The instant case was not covered under section 153(1) or 153(2). [Para 12] Sub-section (2A) of section 153 again prescribes the period of limitation in respect of the orders passed under sections 250, 254, 263 or 264, as the case may be. [Para 13] The findings recorded by the Commissioner (Appeals) for the year 1997-98 revealed that it considered a fresh plea taken by the assessee in appeal, to rebut the finding recorded by the Assessing Officer in respect of alleged agricultural land but this finding could not be extended to the period covered by the assessment years 1992-93, 1993-94, 1994-95, 1995-96 and 1996-97. There was no direction in the aforesaid order to the effect that the finding recorded in respect of the agricultural income, assessee being possessed of the agricultural land, be given effect to, much less in the earlier assessment years. [Para 15] The Tribunal did not commit any error in recording a finding that the instant was not a case for giving effect to any finding recorded or direction issued by the Commissioner (Appeals) in its order passed for the assessment year 1997-98. That being so, the period of limitation could not be saved by applying the provisions of section 153(3)(ii). [Para 17] Therefore, no substantial question of law arose from the order of the Tribunal and, consequently, the appeals were to be dismissed.