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1993 DIGILAW 87 (ORI)

KULAMANI DEO v. COMMISSIONER OF INCOME TAX

1993-03-25

ARIJIT PASAYAT, D.M.PATNAIK

body1993
JUDGMENT : 1. The petitioner was assessed to income tax for the assessment year 1984-85 u/s 144 of the income tax Act, 1961 ('the Act'). The said assessment Was assailed in appeal before the Commissioner (Appeals) [in short CIT (A), Orissa, Cuttack in IT Appeal No. 523 (Orissa) of 1990-91]. By order dated 31-1-1991 the Commissioner (Appeals) set aside the assessment and directed de novo assessment, after giving a fresh opportunity to the appellant-petitioner to state his case. The petitioner has filed second appeal before the Tribunal, Cuttack Bench. By notice dated 18-1-1993 the Assistant Commissioner Circle-II, Bhubaneswar, issued notice to the petitioner to give explanation and comments regarding unexplained investment in house property construction. The notice was issued in pursuance of the direction given by the Commissioner (Appeals). According to the Assistant Commissioner, the assessment is likely to get time barred and, therefore, requested the petitioner to submit his explanation and comments within seven days from the date of receipt of the letter/notice. The petitioner filed an application for adjournment on the ground that the matter is pending before the Tribunal and he is likely to be prejudiced in case of assessment during the pendency of his appeal before the Tribunal. Petitioner's case is that the said prayer has not been considered by the Assistant Commissioner as yet and steps have been taken to complete the assessment. The petitioner also filed an application purported to be one u/s 144A of the Act before the Deputy Commissioner, Bhubaneswar Range, for issuance of direction to the Assessing Officer as regards the assessment. By order dated 17-2-1993, the application was rejected. Petitioner's grievance is two-fold: (1) If any final assessment pursuant to the direction given by the first appellate authority is made, that would effect the result of the appeal before the Tribunal, and the same would be infructuous. (2) The disposal of the application u/s 144A without granting an opportunity to the petitioner of being heard is an act in violation of the principles of natural justice. The learned counsel for the revenue, on the other hand, contended that in terms of section 153(2A) the assessment is to be completed within two years from the end of the financial year in which the order directing the fresh assessment was passed by the Commissioner (Appeals). The learned counsel for the revenue, on the other hand, contended that in terms of section 153(2A) the assessment is to be completed within two years from the end of the financial year in which the order directing the fresh assessment was passed by the Commissioner (Appeals). The appellate order having been passed on 31 -1 -1991, the order of assessment in terms of the direction by the first appellate authority has to be completed by 31 -3-1993. 2. We find from a reading of section 153 that the Assessing Officer is technically correct in holding that the fresh assessment pursuant to the direction given by the Commissioner (Appeals) has to be completed before expiry of two years from the end of the financial year in which the order directing fresh assessment was passed u/s 250 of the Act. 3. Where some modification is made by the Tribunal while disposing of appeal u/s 254 of the Act, the period for fresh assessment in terms of a direction given by the Tribunal shall begin from the date of passing of the second appellate order. If the Tribunal upholds the order passed by the Commissioner (Appeals), obviously the said order is merged with the second appellate order and fresh period of limitation starts running. In case any order is passed by the Tribunal, the same has to be given effect and the provisions of sub-section (3) of section 153 applied. 4. The further question is whether completion of assessment by the Assessing Officer would render the appeal before the Tribunal infructuous. We direct that the assessment may be completed but the demand notice shall not be served on the assessee till disposal of the second appeal. Fresh assessment shall not be treated as a factor against the assessee by the Tribunal when hearing the second appeal. The same has to be disposed of on merits unfettered by completion of fresh assessment by the Assessing Officer. The appeal does not become infructuous by passing of an order in pursuance of the order of remand - See Shiromani Gurdwara Parbandhak Committee and Others Vs. Raja Shiv Rattan Dev Singh and Others. The principle has been recognised by the Privy Council in ShamaPurshad v. Hurro Purshad [1865] 10 MOO Ind. App. 203. The appeal does not become infructuous by passing of an order in pursuance of the order of remand - See Shiromani Gurdwara Parbandhak Committee and Others Vs. Raja Shiv Rattan Dev Singh and Others. The principle has been recognised by the Privy Council in ShamaPurshad v. Hurro Purshad [1865] 10 MOO Ind. App. 203. It is stated by the learned counsel appearing for the assessee that the result of the assessment for the year 1985-86 would affect the assessment relating to 1984-85 and without taking up assessment for 1985-86, any proceeding in respect of the assessment year 1984-85 would be an exercise in futility. The Assessing Officer shall consider this aspect while dealing with the assessment for 1984-85. The writ application is disposed of accordingly.