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Date:17th February 2010 |
Compiled by: |
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Background : Recently the Bangalore Tribunal in the case =
of Maruthi
Mercantile Pvt. Ltd. v. ACIT, (2009 TIOL 142 ITAT Bang.) has held to =
the
effect that proviso to S. 147 of the Income-tax Act, 1961 (hereinafter
referred to as the ‘Act’) does not curtail the time limit
prescribed u/s.153(2) of the Act. In said decision the learned AR relied =
upon
the decision of the very Tribunal in the case of Amitronics Pvt. Ltd. (ITA
No. 299-302/Bang./2003 dated 7-4-2006) and contended that no action can be
taken after the end of four years from the relevant assessment year and a=
s no
action also includes completion of assessment, no assessment order can be
passed after end of four years from the end of the relevant assessment ye=
ar. However, the Bangalore Tribunal following the
decision of the Ahmedabad Tribunal Special Bench in the case of Gujarat
Credit Corporation Ltd. v. ACIT, (113 ITD 133) held that limitation of
four years applies to the initiation of reassessment proceedings and held
that proviso to S. 147 of the Act does not curtail the time limit prescri=
bed
u/s.153(2) of the Act and consequently the reopening was held as valid. The main reasons for rejecting the plea of t=
he
assessee in the said case were as under : 1. Proviso to S. 147 of the Act refers to on=
ly
initiation/reopening of assessment/reassessment. It does not provide for =
an
assessment u/s.147 of the Act. 2. For making an assessment u/s.147 of the A=
ct,
the AO is required to follow the procedures laid down similar to the
assessment u/s.143 (3) of the Act and hence provisions of S. 147 of the A=
ct
are not separate code in itself. 3. Provisions of S. 153(2) of the Act are
specific as against proviso to S. 147 of the Act. Let us discuss each of the pleas of the ITAT
Ahmedabad in details. 1. What is an assessment =
or
reassessment ? 1.1 With reference to the first contention of
the Revenue that proviso to S. 147 of the Act does not deal with making an
assessment, it would be necessary to find out the meaning of
‘assessment or reassessment’. 1.2 Assessment is defined u/s.2(8) of the Ac=
t as
‘assessment includes reassessment’. In view of the fact that =
the
word has not been appropriately defined under the Act, it would be necess=
ary
to look to the meaning of the word ‘assessment’ as held by
several courts. 1.2.1 The Apex Court in the case of S.
Sankappa v. ITO, (1968) 68 ITR 760 has defined the word
‘assessment’. The Apex Court has observed that the word
‘assessment’ is used in the Act in a number of provisions in a
comprehensive sense and refers to all proceedings, starting with
the filing of the return or issue of notice and ending with determination=
of
the tax payable by the assessee. Though in some Sections, the word
‘assessment’ is used only with reference to computation of
income, in other Sections it has more comprehensive meaning mentioned
above. 1.2.2 The word ‘assessment’ is n=
ot
confined to the definite act of making an order of assessment — =
Sir
Rajendranath Mukerjee v. CIT, (1934) 2 ITR 71 (PC). 1.2.3 In the normal sense ‘to
assess’ means to fix the amount of tax or to determine such amount.=
The
process of reassessment is to the same purpose and is included in the
connotation of the term ‘assessment’ — ITO v. K. N.
Guruswamy, (1958) 34 ITR 601 (SC). 1.2.4 The word ‘assessment’ bears
different meanings, and in one sense it comprehends the entire process of
computation and levy of tax — Addl. ITO v. E. Alfred, (1962)
44 ITR 442 (SC). 1.2.5 Based on the above interpretation give=
n to
the word ‘assessment’, it can be said that
‘assessment’ is not merely an act in itself but it denotes th=
e entire
processes. Even though the same word is to be interpreted in a most
restrictive sense, it includes computation or determination of tax. 1.3 From the above it would be noted that
assessment is not merely passing an order but is a process; normally, ass=
essment
proceedings involve the following actions : ·
Filing of return of
income ·
Review/processing of
return of income ·
Issuance of notice ·
Service of notice ·
Giving of opportunity=
of
being heard ·
Recording of the
proceedings ·
Passing of an order
relating to the proceedings ·
Service of demand not=
ice,
if any demand is raised pursuant to the said order. In statute generally separate provisions are
prescribed for filing of return of income, processing of return of income,
issuance of notice, so on and so forth till service of demand notice. 1.4 As per S. 2(8) of the Act, assessment
includes reassessment. Hence, whatever is stated above in respect of the =
word
‘assessment’ will also apply in respect of
‘reassessment’. It would thus be clear that reassessment incl=
udes
not merely forming an opinion on escaped income or reopening of an assess=
ment
but also making an assessment. 1.5 In addition to the above, it may be
worthwhile to refer to specific provisions relating to re-assessment
proceedings which have been enacted in S. 147 to S. 152 of the Act :=
·
S. 147 of the Act
provides for assessment of escaped income. ·
S. 148 of the Act
provides for issuance of notice before starting of re-assessment proceedi=
ngs.
·
S. 149 of the Act pre=
scribes
time limit for issuance of notice for re-assessment. ·
S. 150 of the Act
prescribes time limit for issuance of notice for assessment or reassessme=
nt
in pursuance of the order under an appeal. ·
S. 151 of the Act
stipulates that in case where assessment has been made u/s.143(3) or u/s.=
147
of the Act, notice u/s.148 of the Act would be required to be issued by an
officer of the rank of ACIT1 or above and if the officer below the rank of
ACIT issues notice, then sanction of JCIT2 would be required. Proviso to =
S.
151 of the Act states that no notice should be issued after the end of fo=
ur
years from the end of relevant assessment year unless CCIT3 or CIT4 is
satisfied for the reasons recorded by the AO5 that the same is a fit case=
for
issuance of such notice. ·
S. 152 of the Act
prescribes that tax on such income should be levied as if the income under
reference has not escaped assessment. From the above, it would be clear that speci=
al
provisions dealing with the reassessment or recomputation have been presc=
ribed
u/s.147 to u/s.152 of the Act, which call for an assessment u/s.147 of the
Act. 1.6 Reference may also be made to S. 153 of =
the
Act, which prescribes time limit for completion of assessments. S. 153(1)
refers to time limit for completion of assessment u/s.143(3) of the Act,
whereas S. 153(2) of the Act refers to completion of assessment u/s.147 of
the Act. 1.7 S. 246A of the Act prescribes orders whi=
ch
are appealable before the Commissioner (Appeals). Clause (a) to Ss.(1) re=
fers
to the order of assessment passed u/s.143 (3) of the Act as an
appealable order, whereas clause (b) to Ss.(1) refers to the order of
assessment passed u/s.147 of the Act. 1.8 In the said Special Bench decision, the
Ahmedabad Tribunal has relied upon Gujarat High Court decision in the cas=
e of
Praful Chunilal Patel v. M. J. Makwana, ACIT (236 ITR 832). The IT=
AT
in its decision in the case of Gujarat Credit Corporation Ltd. (supra<=
/i>)
has stated that the additional ground raised by Gujarat Credit Corporation
Ltd. is squarely covered by the decision of the Gujarat High Court. Howev=
er,
the ITAT Special Bench has erred inas-much as facts and the question befo=
re
the adjudicating authority in each of the two cases were different. The c=
ase
before the CIT(A) was validity of reopening of the assessment and meaning=
of
‘reason to believe’ when assessment u/s.143(3) of the Act has
been concluded by the Assessing Officer, whereas the additional ground ra=
ised
before the Special Bench talks about limitation on making assessment after
end of 4 years from the relevant assessment year. Hence, reliance on the
Gujarat High Court decision is totally misplaced and the decision of the
Gujarat High Court is totally distinguishable. In substance, the Gujarat =
High
Court has dealt with a case when the Assessing Officer has reopened the
completed assessment based on the point which was not discussed/dealt wit=
h in
the regular assessment or was missed out by the Assessing Officer. Hence,=
to
that extent the decision of the Gujarat High Court is not applicable to t=
he
facts and circumstances of the case of Gujarat Credit Corporation Ltd. 1.9 From the above, it would be clear that o=
rder
of assessment is required to be made u/s.147 of the Act and assessment is=
not
restricted to merely initiation of proceedings but includes actions up to=
and
including service of notice of demand. 2. It m=
ay
worthwhile to consider as to whether any other interpretation is
possible ? 2.1 The intention of the statute has been ex=
plained
by Explanatory notes to the Direct Tax Laws Amendment Act, 1987 as initia=
tion
of proceedings is required to be done within four years from the end of t=
he
relevant year. However, the wording of the provisions indicates the other
way, hence this leads us to a question as to whether a statutory provision
can be given a meaning other than or rather broader than what was
required/intended ? 2.2 One classic and interesting case before =
us
is of interpretation given to the provisions of Chapter XII-H of the Act
relating to fringe benefit tax. The Legislature has intended to tax only
those expenses which are expended by the organisation and result into ben=
efit
to more than one employee of the organisation rather than one specified or
identified employee so that deficiency of not being able to tax the benef=
it
as perquisite can be cured. However, by virtue of the wording of the
provisions of the Act, the intention has been lost and the scope has been
broadened to include all such expenses which come within the listed categ=
ory
of expenses by virtue of deeming fiction created by using different langu=
age
in the statutory provision. 2.3 The comparison with provisions of Chapter
XII-H of the Act have been made with one specific reason that both the
provisions, viz. provisions of S. 147 of the Act and provisions of=
S.
115WE of the Act refer to assessment. 2.4 In view of the above, if the language of=
the
provisions is clear, and the intention of the statute is not required to =
be
given undue importance, then the provisions of S. 147 should be
interpreted to include all actions up to and including service of notice
rather than merely initiation of proceedings. Now reverting back to the issue of curtailing
limitation period u/s.153(2) of the Act to the decision on the Ahmedabad
Special Bench in the case of Gujarat Credit Corporation Ltd. v. ACIT,<=
/i>
(supra), the Special Bench has decided that the proviso to S. 147 =
of
the Act does not curtail the time limit prescribed under the provisions o=
f S.
153(2) of the Act. 3. Whet=
her
provision of S. 147 of the Act is complete code in itself ? 3.1 The Apex Court in the case of R. Dalm=
ia
& Anr. v. CIT, 236 ITR 480 has held that provision of S. 147 is n=
ot a
separate code in itself. It goes on to say that as the assessment u/s.147=
is
to be made as per the procedure laid down u/s.143 or 144 of the Act, the =
same
is an assessment u/s.143(3) r.w. S. 147 of the Act. With due respect to I=
TAT
Special Bench’s decision it may be stated that the entire issue has
been misdirected in the sense that the issue was whether the phrase ̵=
6;no
action’ denotes only initiation or also includes ‘making
assessment’. By referring to the Apex Court’s decision which
categorically stated that "in making
assessment and re-assessment u/s.147, the procedure laid down in Section
subsequent to S. 139 including that laid down by S. 144B has to be
followed". Hence, if =
it can
be inferred that following procedure leads to passing an order u/s.143 of=
the
Act instead of u/s.147, it will result in number of issues. 3.2 Only by adhering to the procedure prescr=
ibed
will not alter the order to be passed. This can be explained very well by=
an
illustration regarding deduction u/s.80IB of the Act. Deduction u/s.80IB =
of
the Act is subject to compliance with certain conditions as specified u/s=
.80IA
of the Act. This does not lead to an interpretation that deduction is
effectively allowed or claimed u/s.80IA of the Act. The very nature of the
deduction will remain unchanged with regard to deduction u/s.80IB of the =
Act,
even though the same is subject to certain conditions prescribed u/s.80IA=
of
the Act. 3.3 Similarly, following machinery procedures
laid down subsequent to S. 139 of the Act up to S. 144B of the Act merely
enable the AO to ask for certain information in certain manner as far as
assessment u/s.147 of the Act is required to be done. However, the very
nature of assessment will remain unchanged at reassessment or recomputati=
on
u/s.147. Moreover, the language of provisions of S. 147 of the Act clearly
states that it covers in its scope "he may assess, reassess such
income". 3.4 Even the Apex Court in the decision of <=
i>R.
Dalmia & Anr. v. CIT, (236 ITR 480) has held that
‘procedure’ to be followed and has not commented anything on
‘action’. Provisions subsequent to S. 139 and up to and inclu=
ding
S. 144B prescribe various Sections for procedure to be followed for makin=
g an
assessment and also assessment provisions. However, the Apex Court decisi=
on
requires that ‘procedure’ as contained in provisions subseque=
nt
to S. 139 up to S. 144B of the Act are required to be followed. Hence, the
Apex Court has expressed its view only regarding ‘procedure’.
Reliance is totally misplaced on the said decisions along with other
decisions like Punjab and Haryana High Court, Andhra Pradesh High Court a=
nd
Delhi Special Bench Decision when the Special Bench was dealing the word
‘action’ which is much wider in its meaning and application t=
han
‘procedure’. 3.5 This leads us to the practice followed in
general by tax authorities as well as assessees. When order is passed in
respect of any reassessment proceedings, the same is termed as order
u/s.143(3) read with S. 147 of the Act. However, in light of the above
discussion, the same should be order u/s.147 read with S. 143(3) of the A=
ct.
The above change of phrase is important as when we refer to the former
phrase, it indicates that the order is primarily passed u/s.143(3) of the=
Act
by observing procedure laid down as per S. 147 of the Act, however, the s=
ame
is not correct as S. 147 of the Act is a separate code in itself. The very
fact is indicated by the intention of the statute which has reference in =
many
other Sections of the Act, which say ‘order of assessment/reassessm=
ent
u/s.147’. Hence, ideally, the order should be referred as order u/s=
.147
read with S. 143(3) of the Act as it provides procedures applicable to or=
der
passed u/s.143(3) of the Act. 4. Whet=
her
proviso to S. 147 is special provision or provisions of S. 153(2) of the
Act ? 4.1 The Special Bench has held that as S. 15=
3 prescribes
time limit for various types of assessments/reassessments and S. 147 of t=
he
Act are ‘subject to’ provisions of S. 148 to S. 153 of the Ac=
t,
S. 153(2) of the Act is a special provision over proviso to S. 147 of the
Act. 4.2 The Special Bench has relied on the phra=
se
‘subject to provisions of S. 148 to S. 153’ as used in S. 147=
of
the Act and held that the proviso to S. 147 is also subject to provisions=
of
S. 148 to S. 153 including provisions of S. 153(2) of the Act. This leads=
us
to the basic interpretation issue as to when any Section is made subject =
to
provisions of some other Section, then the effect of such other Section is
required to be given first, hence provisions of such other Section would
override the basic Section which makes itself subject to other provisions=
of
the Act. 4.3 Hence, when provisions of S. 147 of the =
Act
are concerned, the assessment or reassessment u/s.147 of the Act should be
done subject to provisions of S. 148 to S. 153 of the Act. Hence, before
making assessment u/s.147, notice as required u/s.148 of the Act should be
provided within the time limit prescribed u/s.149 and complying with other
provisions of S. 150 and S. 151 if applicable. Tax should be levied in ma=
nner
prescribed u/s.152 of the Act and the order of assessment u/s.147 of the =
Act
should be passed in time prescribed u/s.153(2) of the Act. 4.4 Proviso to S. 147 of the Act has been wo=
rded
as under : Provided that where an assessment U/ss.(3) o=
f S.
143 or this Section has been made for the relevant assessment year, no ac=
tion
shall be taken under this section =
after
the expiry of four years from the end of the relevant assessment year, un=
less
any income chargeable to tax has escaped assessment for such assessment y=
ear
by reason of the failure on the part of the assessee to make a return u/s=
.139
or in response to a notice issued U/ss.(1) of S. 142 or S. 148 or to disc=
lose
fully and truly all material facts necessary for his assessment, for that
assessment year. (emphasis supplied) 4.5 The proviso has been made applicable to =
the
entire S. 147 of the Act, hence the same makes an exception to the entire
Section. In view of this, the issue is whether ‘subject to’ h=
as
to be read first or proviso has to be read first and then to apply the ot=
her
so as to restrict one by another ? 4.6 Action u/s.147 is subject to provisions =
of
S. 148 to S. 153 of the Act i.e., any action u/s.147 of the Act ca=
n be
taken by satisfying the conditions and procedures laid down u/s.148 to
u/s.153 of the Act. This includes taking an action of completion of an
assessment u/s.147 of the Act within the time limit prescribed u/s.153(2)=
of
the Act. This applies to all the reassessment proceedings whether all the
material and information relating to income which has escaped assessment =
have
been disclosed by the assessee or not disclosed by the assessee. 4.7 However, the proviso provides for an
exception to the reassessment made u/s.147 of the Act, which (i.e.,
reassessment) should be in conformity with the provisions/conditions laid
down u/s.148 to u/s.153 of the Act, and state that such action (i.e.,<=
/i>
any action from initiation of proceedings to service of demand notice) sh=
ould
not be taken after certain time period. 4.8 This clearly indicates that even though
action u/s.147 of the Act which requires making of an assessment or
reassessment to be completed within time frame prescribed u/s.153(2) of t=
he
Act, such action (which is in conformity with provisions of S. 148 to S. =
153
of the Act) cannot be taken after the end of four years from the end of
relevant assessment year. This means that any action u/s.147 of the Act is
required to be in conformity with the provisions of S. 148 to S. 153 of t=
he
Act and hence whether proviso applies or not, all the reassessments need =
to
be in compliance with provisions of S. 148 to S. 153 of the Act. In the c=
ases
where proviso is applicable due to the satisfaction of the conditions
prescribed thereunder, the action which otherwise would have been validly
taken up will now not be taken up. 4.9 Proviso restricts application of main
Section which is also supported by the legal interpretation of applicatio=
n of
‘proviso’ in any tax statute. 4.10 Another issue raised by the Special Ben=
ch
is regarding application of rule of special provision over general provis=
ion.
S. 153(2) of the Act which provides for time limit for completion of the
assessment, is a special provision and will override proviso to S. 147 of=
the
Act, which is general in its ap-plication. 4.11 S. 153 of the Act prescribes time limits
for completion of assessments/reassessments under various provisions of t=
he
Act. S. 153(2) of the Act prescribes time limit for completion of assessm=
ent
u/s.147 of the Act. Hence, any reassessment u/s.147 of the Act requires t=
o be
completed within the time limit prescribed u/s.153(2) of the Act if no ot=
her
exception is provided thereto. Hence, provisions of S. 153(2) of the Act
apply in all the reassessment proceedings irrespective whether assessee h=
as
disclosed all the material facts or not or whether assessment has been ma=
de
u/s.143(3) or u/s.144 or u/s.147 of the Act. 4.12 This indicates that S. 153(2) of the Ac=
t is
a general provision prescribing time limit for completion of the reassess=
ment
proceedings as far as application of or making of reassessment u/s.147 of=
the
Act is concerned. 4.13 However, proviso to S. 147 of the Act
provides for some exceptions for taking an action (which also includes
completion of assessment as discussed above), where the following conditi=
ons
are fulfilled : (i) The assessment for the concerned year ha=
s been
completed u/s.143(3) or u/s.147 of the Act, and
(ii) The assessee has not defaulted in any of
the followings : (a) Making return u/s.139 of the Act (b) Making return in pursuance to notice
u/s.142(1) of the Act (c) Making return in pursuance to notice u/s=
.148
of the Act (d) Disclosing fully and truly all material
facts important for making assessment for the concerned assessment year. =
4.14 Hence, if all the above conditions are
fulfilled, the proviso would apply in respect of the reassessment being o=
therwise
validly completed within the time limit prescribed u/s.153(2) of the Act.=
The
proviso provides for an action (which includes completion of assessment as
discussed above) within four years from the end of the relevant assessment
year. 4.15 From the above, it is clear that as far=
as
completion of reassessment is concerned, proviso to S. 147 of the Act is a
special provision as compared to provisions of S. 153(2) of the Act. Henc=
e,
in the event any judicial authority holds that rule of special over gener=
al
will apply, then also proviso will apply and proviso to S. 147 of the Act
will override provisions of S. 153(2) of the Act. 5. If p=
roviso
to S. 147 overrides provisions of S. 153(2), it would result in
absurdity : 5.1 Another issue raised by the Special Benc=
h of
Ahmedabad is regarding absurd results if proviso overrides provisions of =
S.
153(2) of the Act. 5.2 First and most important thing to be
understood is when there does not exist any doubt and statute is clear in=
its
words, absurdity cannot be a ground to give another meaning to the provis=
ions
of a taxing statute. 5.3 The answer to the issue raised by the Special Bench of Ahmedabad regarding absurdity of statutory provisions if proviso overrides provisions of S. 153(2) of the Act, lies in change brou= ght out vide the Direct Tax Laws (Amendment) Act, 1987 w.e.f. April 1, 1989.<= o:p> 5.4 The Tribunal has erred in not referring =
to
the scheme of provisions of S. 147 and amendment brought in the said
provisions of the Act vide the Finance Act, 1989 w.e.f. 1-4-1989. For bet=
ter
understanding of the provisions of S. 147 of the Act, provision existing =
and
in force prior to 1-4-1989 u/s.147 and u/s.153(2) of the Act are reproduc=
ed.
5.5 Provisions of S. 147 and S. 153(3) of the
Act before and after amendment need to be noted. 5.6 From the above, we can note the following
amendments (without referring to Departmental Circular as the same is not
binding on the assessee) : l Provisions of S. 147 of the Act had two
sub-sections (a) and (b) to deal with two separate situations and similar=
ly
provisions of S. 153(2) of the Act had two clauses (a) and (b) to provide=
for
time limits for both the situations separately. l Provisions of sub-sections (a) and (b) of =
S.
147 of the Act have been merged into one Section. Moreover, one may notice
that the condition of S. 153(2)(a) of the Act is merely repetitive and has
already been taken care of vide clause (b)(i) or (b)(ii) of S. 153(2) of =
the
Act. Hence the same has been removed in view of merger of two sub-section=
s u/s.147
of the Act. l Provisions of S. 147(b) of the Act refer to
the situation where there is no mistake or omission on the part of the
assessee to disclose all the materials truly and correctly. The same
situation is envisaged by proviso to S. 147 of the Act with further reduc=
tion
in scope of the proviso, the statute has provided for the condition that
there should have been an assessment or reassessment u/s.143(3) or u/s.14=
7 of
the Act. Therefore, it can be said that proviso provides for the situation
which was envisaged in provisions of S. 147(b) of the Act as the former is
narrower in scope than the latter. l Hence, for cases falling u/s.147(b) of the
Act, the time limit applicable prior to amendment of S. 153(2)(b) of the =
Act
was later of the two time limits which resulted into redundancy of condit=
ion
mentioned in S. 153(2)(b)(i) of the Act. In the cases where all the mater=
ials
are disclosed to the tax officer, reassessment will be initiated after en=
d of
2 years only, which will result in applicability of condition prescribed
u/s.153(2)(b)(ii) of the Act as the same would only be later date than S.
153(2)(b)(i) of the Act. l However, now one may say that out of the t=
wo
time limits, only one remains in S. 153(2) of the Act and the second
condition of erstwhile S. 153(2)(b) of the Act has been made a part of the
proviso to S. 147 of the Act. Interestingly, one may note that there is
absence of phrase ‘whichever is later’ which was existing in
provisions of S. 153(2)(b) of the Act. In light of absence of such phrase=
, we
need to give harmonised construction to both the conditions so that none =
of
the provisions become redundant. l This is also supported by the reason for
amendment in provisions of S. 147 of the Act by amending Act, 1987 which =
says
the same as ‘rationalisation’ of the provisions of S. 147 of =
the
Act. Vide the Amending Act, 1987, new scheme of assessment has been inser=
ted
which has brought into practice assessment by exception i.e., the
Assessing Officer will not be required to pass an assessment order in all=
the
cases and will be required to pass assessment order only in cases where t=
he
case has been selected for scrutiny. Here, the rationalisation can be seen
from the amended provisions of S. 147 of the Act also as reference to
assessment order u/s.143(3) of the Act which was missing in earlier
provisions has been introduced to restrict the application of provisions =
of
S. 147 of the Act in the cases where the Assessing Officer has already
exercised his power and right to investigate the claims of the assessee o=
ver
a period of not less than 2 years. Hence, the amended provisions support =
the
view by naming the same as rationalising the provisions of S. 147 of the =
Act
as once the case of the assessee has been scrutinised u/s.143(3) of the A=
ct
and there is no mistake on the part of assessee, then extra-ordinary or
special provision should not apply to all the cases which otherwise get
covered. 5.7 The above discussion clearly suggests th=
at
the provisions had been amended to give proper effect. If we need to take=
an
interpretation that time limit prescribed u/s.153(2) of the Act needs to =
be
seen, the proviso to S. 147 becomes redundant. Hence harmonised construct=
ion
should be applied particularly when the phrase ‘whichever is
later’ is absent in new amended provisions. We need to interpret the
provisions in a manner which does not lead to redundancy in anyone of the=
two
provisions. This implies that we need to read ‘whichever is
earlier’, so as to give due weightage to both the provisions, which
give time limits for completion of assessment u/s.147 of the Act. 5.8 In view of above discussion, it would be
logical to conclude that the issue of whether the proviso to S. 147 should
prevail over provisions of S. 153(2) of the Act when the case of the asse=
ssee
is squarely covered by the conditions prescribed under proviso to
S. 147 of the Act, is based on the
following logical and reasoned observations; 5.8.1 Phrase ‘no action’ as used=
in
the proviso to S. 147 of the Act also includes completion of assessment as
assessment is required to be completed u/s.147 of the Act otherwise even
provisions of S. 147 of the Act should not have used the words ‘sub=
ject
to provisions of S. 148 to 153’ in which provisions of S. 153 of the
Act refer to time limit for completion of the assessment/reassessment. 5.8.2 Proviso to S. 147 of the Act makes an
exception or restriction to the applicability of provisions of S. 147 of =
the
Act to a particular case, which if not so restricted, could have been rig=
htly
been applied. 5.8.3 Proviso to S. 147 of the Act is more
specific than provisions of S. 153(2) of the Act as provisions of S. 153(=
2)
of the Act apply to all reassessment proceedings. However, proviso applie=
s in
specific cases where conditions prescribed thereunder are satisfied. 5.8.4 In light of the fact that amended
provisions of S. 153(2) of the Act do not contain the word ‘whichev=
er
is later’, it indicates that we need to give harmonised constructio=
n to
the provisions of S. 153(2) of the Act and proviso to S. 147 of the Act w=
hich
contains the time limit which was existing prior to amendment in provisio=
ns
of S. 153(2) of the Act. 5.8.5 When the statutory provisions are clear
and unambiguous, natural meaning has to be given rather than the intended
meaning as far as tax statute is concerned. 6. Conc=
lusion :
In view of the above discussions on the
contentions raised not by the Department but by the Tribunal, I can form =
only
one and single opinion that provisions of S. 147 of the Act require makin=
g an
assessment which includes all the acts, procedure and actions from format=
ion
of reason to believe that income has escaped assessment till service of
notice of demand relating to assessment framed u/s.147 of the Act. S. 147=
of
the Act is a special provision enabling tax authority to take recourse
against the assessee in specific situation. To take any action, the condi=
tion
prescribed for the same needs to be fulfilled. Hence assessment needs to =
be
framed within the time limit prescribed u/s.153(2) of the Act read with
proviso to S. 147 of the Act. Hence, the time limit for completion of the
reassessment proceedings shall be earlier=
of
the following two : (i) Time limit prescribed u/s.153(2) of the =
Act;
and (ii) When assessment has already been framed
u/s.143(3) or u/s.147 of the Act and assessee has disclosed all the mater=
ial
fully and truly, then within 4 years from the end of relevant assessment
year. Hence, I am of the opinion that the ITAT
Ahmedabad has without appreciating the statutory provisions in its letter=
and
to some extent, spirit of the statute, has interpreted as per the general
understanding which is not required where interpretation of taxing statut=
e is
involved. Hence, I am of the opinion that harmonious construction is requ=
ired
to be given to both the time limits, so that none of them becomes redunda=
nt.
Hence, the question here is not whether proviso to S. 147 overrides S. 15=
3(2)
or vice-versa, but of giving harmonious interpretation to both the
provisions so that sanctity of both remains. This can be possible only
through reading the phrase ‘whichever is earlier of the
two’, even though unwritten. Hence, the question started with has b=
een
answered in positive only to the extent of its final conclusion or otherw=
ise
it may be a situation when 153(2) of the Act may override proviso to S. 1=
47
of the Act. Article by Tejas Chandulal Shah, Chartered Accountant |
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