* THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on : 10.09.2008
+ ITA No.1038/2008
Commissioner of Income Tax Delhi-IV ..... Appellant
versus
Goyal M.G.Gases Pvt. Ltd. ..... Respondent
Advocates who appeared in this case:
For the Appellant : Ms Prem Lata Bansal
For the Respondent : Mr Prakash Kumar
CORAM :-
HON’BLE MR JUSTICE BADAR DURREZ AHMED
HON’BLE MR JUSTICE RAJIV SHAKDHER
1. Whether the Reporters of local papers may
be allowed to see the judgment ?
2. To be referred to Reporters or not ?
3. Whether the judgment should be reported
in the Digest ?
BADAR DURREZ AHMED, J (ORAL)
1. This appeal is directed against the order passed by the Income
Tax Appellate Tribunal on 23.11.2007 in the assessee’s appeal
before it for the assessment year 1999-2000. The facts relevant for
the present appeal are that an assessment was framed under Section
143(3) of the Income Tax Act, 1961. The Commissioner, Income
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Tax invoking the provisions of Section 263 of the said Act passed an
order on 25.3.2004 setting aside the said assessment order and
directing the Assessing Officer to calculate taxable income
according to the merchantile system of accounting. The
Commissioner of Income Tax gave a specific direction that the
Assessing Officer shall pass the consequential orders “within a
period of three months approximately”.
The assessee being aggrieved by this order passed by the
Commissioner, Income Tax preferred the said appeal before the
Tribunal. When the appeal came to be heard by the Tribunal on
13.11.2007, the learned counsel for the assessee pointed out that the
Assessing Officer had not framed any assessment order in
consequence of the impugned order and that the time limit for
framing such order had already expired. The learned counsel for the
appellant submitted that the appeal had, therefore, become
infructuous. The Tribunal had directed the departmental
representative to examine the case records and inform as to whether
any consequential order had been passed pursuant to the order
passed by the Commissioner Income Tax on 25.3.2004. The
impugned order indicates that the departmental representative
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produced their case records on 15.11.2007 and pointed out that no
such consequential order had been passed by the Assessing Officer.
The learned counsel for the assessee also made a statement at the
Bar that no consequential order had been passed pursuant to the
order passed by the Commissioner. In these circumstances, the
Tribunal was of the view that the appeal before it had become
infructuous and any decision on any of the grounds of appeal would
only be of academic interest. The Tribunal, therefore, dismissed the
appeal as having become infructuous by virtue of the impugned
order dated 23.11.2007.
It is the revenue’s contention in this appeal before us that no
period of limitation has been prescribed in respect of orders which
are to give consequential effect to orders passed by the
Commissioner of Income Tax in exercise of his powers under
Section 263 of the Act. The learned counsel for the appellant
referred to the provisions of Section 153(2A) and 153(3)(ii) to
submit that no period of limitation has been prescribed for passing
orders consequential to the order passed by the Commissioner
Income Tax under Section 263. She submitted that the period of
limitation that has been prescribed by virtue of Section 153(2A) only
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relates to cases where the entire assessment order has been set aside
and a fresh assessment has been directed by the Commissioner in
exercise of his powers under Section 263 of the said Act. She
submits that to this extent the Tribunal has gone wrong in agreeing
with the assessee that the appeal had become infructuous because no
assessment order was framed within the time limit for framing such
an order.
Having heard counsel for the parties, we are of the view that
the order passed by the Tribunal does not call for any interference.
There are several reasons for this. First of all, the Tribunal has not
invoked any statutory provision to set up a statutory bar of limitation
for passing a consequential order. Therefore, the submissions made
by the learned counsel for the appellant pertaining to the provisions
of Section 153(2A) and 153(3)(ii) are of no consequence. This is so
because the Tribunal has not referred to these provisions. Secondly,
the Tribunal has only gone by the direction given by the
Commissioner in his order passed under Section 263 of the said Act.
Under Section 263(1) the Commissioner is empowered to call for
and examine the record of any proceeding under the Act and if he
considers that any order passed by an Assessing Officer is erroneous
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in so far as it is prejudicial to the interest of the revenue, he may,
after giving the assessee an opportunity of being heard and after
making or causing to make such enquiry as he deems fit, “pass such
order thereon as the circumstances of the case justify”, including an
order enhancing or modifying the assessment, or cancelling the
assessment and directing a fresh assessment. In view of this
provision it is clear that the Commissioner may pass any order as the
circumstances of the case justify. In the present case we find that the
Commissioner while passing the order under Section 263 has given a
specific direction that the Assessing Officer shall pass the
consequential orders within a period of three months approximately.
This direction would certainly fall within the expression “such order
thereon as the circumstances of the case justify” appearing in
Section 263(1) of the said Act. It appears that it is in this context
that the Tribunal concluded that the time for passing the order had
expired. The consequential order had not been passed for over a
period of approximately three years and eight months. Thirdly, we
are of the view that where no period of limitation is prescribed then,
in any event, a reasonable period of limitation ought to be adopted.
The non-specification of a period of limitation does mean that the
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Assessing Officer can wait interminably or for an infinite period
before passing the consequential order. And, in the context of the
direction given by the Commissioner for passing the consequential
orders within three months approximately, a period of three years
and eight months is certainly much beyond the reasonable period
that could be allowed to the Assessing Officer to pass the
consequential order.
For all these reasons, we find that the Tribunal has come to the
correct conclusion that the time limit for framing the consequential
order had expired and in accepting the assessee’s plea that its appeal
before the Tribunal had consequently become infructuous. We see
no reason to interfere with the impugned order. No substantial
question of law arises for our consideration. The appeal is
dismissed.
BADAR DURREZ AHMED, J
RAJIV SHAKDHER, J
September 10, 2008
mb
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